Mixed perspectives on US Casualty, only time will reveal its true state: Citizens Bank

The US casualty market continues to give mixed perspectives influenced by a number of shifts in the market’s landscape, according to insights gathered by Citizens Bank’s analysts at this year’s RVS ahead of the January 1 reinsurance renewals.

“US Casualty continues to have a wide array of viewpoints as significant changes in the market landscape (i.e. pandemic-related court closing/reopening, lower limits exposed potentially fuelling an epidemic of limits tendering, etc.) play havoc with reserving data, making it more difficult to determine the health of both older and more recent accident years. Bottom line is the jury is still out on the health of the U.S. casualty market,” analysts stated.

Despite a general agreement that rate increases are strong and likely to continue, there are conflicting opinions on the profitability of recent written business

While there was broad consensus a few years ago that the 1015-2019 accident years were troubled, views have deviated on the 2020-2021 time frame.

“Bulls will suggest they are solidly profitable, even if less so than original expectations, while bears exercise more caution pointing out that if 2020-2021 are off the mark, that implies 2022 and onward had the wrong starting point and more rate is needed,” Citizens Bank said.

Concluding: “Ultimately, time will tell who is right, but in order to lean in and grow materially in this market one must be willing to convince themselves the former is true (which becomes easier for some as growth opportunities get harder to come by).”