Share on Facebook Share on Twitter Share on Google+ Share on Linkedin There is a mixed outlook for the U.S. Property and Casualty industry according to A.M. Best. While the industry as a whole is on its second straight year to a strong performance competitive pressure and emerging risks could impact insurers bottom lines. Here, Group Vice President Anthony Diodato discusses the reasons for concern for the U.S. Property and Casualty Industry Outlook where A.M. Best has a “negative” rating outlook for commercial lines and a “stable” outlook for personal lines. According to Mr. Diodato “A.M. Best is estimating that 2014 the second consecutive year that there will be an underwriting profit…and we are projecting that 2015 will be another year of underwriting profitability…” This would be the first time in over 40 years that the P&C industry had three consecutive years of underwriting profitability, he said. There are some areas of concern said Mr. Diodato “that could disrupt these positive trends”. This includes the prolonged low-interest rate environment, persistent competitive market pressures and potential reserve inadequacies. Numerous studies have shown said Mr. Diodato that main reason for impairments or insolvent companies and downgrading is inadequate reserving. The more surplus a company has the greater its ability to pay claims. The key question said Mr. Diodato is “ how is that surplus being deployed?” On the positive side, he has seen companies returning that surplus to stakeholders, investing in new infrastructure that will let companies be more efficient, investing in new capital/pricing models which will let companies price their risks better, and mergers and acquisitions. Mr. Diodato also said that companies need a “proactive risk management process” as well as a committed underwriting discipline. Enterprise Risk Management (ERM) is essential for all companies” he said because risks are changing constantly and it is important that companies have “a process that allows them to identify, manage, mitigate and price profitably.” We’d like to thank A.M. Best for their contribution to our program. If you’d like to see more of the First Monday Series, visit the A.M. Best website.