By STEVE TUCKEY, who has written on insurance issues for a decade for several national media outlets
NEW YORK---Insurance industry leaders gave two cheers for 2010 but see greater days ahead this year.
"It was a decent year, not a record one," said Anthony J. Kuczinski, president and chief executive officer of Munich Reinsurance America. "Compared to banking, we had great success."
He spoke at the annual Property Casualty Insurance Joint Industry Forum on Tuesday, Jan. 11, in New York City, an event sponsored by the Insurance Information Institute.
His counterpart at The Hartford, Liam McGee, called the year "acceptable" as fears of a double-dip recession evaporated with steady but slow growth in the economy.
As for 2011, a total of 94 percent of respondents at the event expected greater overall profitability, according to an informal on-site poll. But all the optimism is focused on personal-lines business with majorities predicting declining numbers for commercial lines with a special negative emphasis on workers' comp potential profitability.
McGee said that the industry is nowhere near where it needs to be in terms of pricing "with the main challenge in the middle market with a lot of capital chasing less business."
According to Kuczinski, the reinsurance industry has shown greater price discipline than ceding companies. He rejected the contention that reinsurers are overcapitalized.
Kristian P. Moor, president and CEO of Chartis Inc., said that his company will continue to manage the cycles with discipline, noting its decision to exit $2 billion worth of workers' comp business.
"We will continue to concentrate on higher-margin business," Moor said.
The New York City-based company was spun off from American International Group in 2009 and contains most of the conglomerate's property/casualty operations. Speculation has centered on Chartis' future as part of the conglomerate. Moor said the company would remain "a very integral part of AIG going forward."
McGee also discussed how his agents today are focused on providing new products for their clients.
"It is a more solutions-based approach, particularly in the area of bringing property/casualty and benefits together. We feel the time is right to start thinking about this now," he said.
The banking industry veteran took the reins in 2009 at an insurer that was among the hardest hit by the financial crisis of 2008. The Hartford is adequately capitalized today, he said.
Panelists also agreed that the industry in general dodged a bullet when it came to any new regulatory structure that might have been imposed under federal Dodd-Frank legislation passed last year, which focused mostly on financial service sectors other than insurance.
"It could have been a lot worse," said Jack Salzwedel, chief operating officer for Madison, Wis.-based American Family Insurance. "But we are going to have to keep a close eye on the feds' study of state regulation to see that it doesn't become a way of getting the camel's nose under the tent."
While McGee agreed that Dodd-Frank was managed well, he noted that hundreds of administrative provisions have yet to be written. In addition, the industry must remain vigilant with regard to the "systemic risk" tag.
January 12, 2011
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