Reserve Cushion Nearly Gone; 'Party Is Over,' Moody's Warns.(Industry Overview)(Statistical Data Included)

National Underwriter Property & Casualty-Risk & Benefits Management, October, 1999 by SCLAFANE, SUSANNE

There's nothing left--or at least very little--to reserve redundancies of prior years that have supported property-casualty earnings for the last few years, Moody's Investor Service has warned. Loss- and loss-adjustment expense reserves for 10 liability lines of business (including personal lines) taken together are still redundant, according to Moody's report, "Reserve Adequacy--When Will the Party End?" Estimates in the report put the amount of redundancy (or excess reserves) in the neighborhood of 3 to 4.5 percent of surplus, with the most favorable result translating to a dollar figure of $12.6 billion.

In that respect, the report might "put to rest some of the doomsday scenarios that are out there," William Wilt, vice president, senior analyst and...

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