Property-Casualty Loss Reserves: A Margin of Safety, but Is It Enough?


Mike Warner  
Conning, Inc.

Conning Research: Despite Soft Market Conditions and Reserve Releases, Property-Casualty Industry 2009 Loss Reserve Position Strengthened Slightly  

- -There is some risk that this improvement is not sustainable
(Hartford, CT) June 21, 2010—Despite $18.6 billion in reserve releases in 2009, the property-casualty industry’s reserve position strengthened slightly, according to the annual study of the industry’s balance sheet position by Conning Research & Consulting.

“In our view, the property-casualty industry reserve position has improved slightly in 2009, when compared with our previous analyses,” said Stephan Christiansen, director of research at Conning Research & Consulting. “At the same time, based on our analysis of preliminary filing data, the industry released $18.6 billion in reserves in 2009. Excluding reserve releases in the financial and mortgage guaranty lines, $11 billion were released in covered lines in 2009 from years 2008 and prior—2.2 percent of reserves carried in the prior year.”

The Conning Research & Consulting study, “Property-Casualty Loss Reserves: A Margin of Safety, but Is It Enough?” analyzes preliminary 2009 statutory data from Schedule P as part of Conning’s ongoing annual review of the balance sheet position of both individual lines of business and the property-casualty industry as a whole.

“Overall, the industry appears to have sufficient reserves under assumptions that current claims settlement patterns continue,” said Christiansen. “However, some of this apparent improvement may be related to a slow-down in the economy affecting loss reserve development, and there is also a range of possible trends that suggest this improvement could reverse with economic recovery. In light of this, insurers should be thinking now about how an increase in liability trends or a significant spike in inflation in the out years might affect legacy loss reserves.”

“Property-Casualty Loss Reserves: A Margin of Safety, but Is It Enough?” is available for purchase from Conning Research & Consulting, by calling (888) 707-1177 or by visiting the company’s web site at

About Conning Research & Consulting  

Conning Research & Consulting is a division of Conning, a provider of asset management and insurance industry research and consulting services to insurers.  Conning Research & Consulting has published independent insurance industry research for 50 years, including market coverage of 30 segments of the industry in addition to industry forecasting and identification and analysis of major strategic issues. As a result of its wealth of experience and intimate knowledge of the insurance industry, Conning understands industry challenges and opportunities and provides in-depth analyses on a wide range of industry products and issues. Conning is headquartered in Hartford, CT.