Kroll Bond Rating Agency (KBRA) releases its U.S. Property and Casualty Insurance 2021 Sector Outlook. Despite the tumultuous year that included the stormiest Atlantic hurricane season on record, KBRA’s Outlook of the U.S. property and casualty (P/C) insurance sector in 2021 remains Stable.
Insurers’ balance sheets were hit hard in Q1 2020, with sizeable unrealized capital losses, as a result of the pandemic. And while most investment losses recovered in the second quarter, catastrophe losses started to accumulate. The cumulative effect from the record-setting hurricane season, severe convective storms, wildfires, and straight-line wind (derecho) are expected to drive a 3.5% decline in policyholders’ surplus in 2020.
KBRA continues to believe the overall P/C segment has sufficient capital entering 2021 to weather a continuation of elevated catastrophe losses and moderate investment losses. However, the dual headwinds of availability/affordability of reinsurance as well as persistent low interest rates may pressure some insurers into M&A, offloading books of business or quota share arrangements, and needing to refocus on underwriting profitability.
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About KBRA and KBRA Europe
KBRA is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider and is a certified Credit Rating Agency (CRA) with the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe is registered with ESMA as a CRA. Kroll Bond Rating Agency Europe is located at 6-8 College Green, Dublin 2, Ireland.
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