E&S lines expected to be strong this year: Fitch

Excess and surplus lines are poised to have a strong 2021 after a challenging year in 2020, Fitch Ratings Inc. said in a report Tuesday.

Excess & surplus lines “materially underperformed” the broader property/casualty market in 2020, reporting a 107% combined ratio compared with breakeven results in 2019, the report said.

But, barring severe catastrophes losses, the sector’s underwriting performance is “anticipated to materially improve in 2021, with consecutive rounds of renewal rate increases and tighter policy terms and conditions that are moderately offset by higher ceded reinsurance costs,” the U.S. Excess and Surplus Lines Market Review said.

“Performance changes in E&S should outpace standard P/C market improvement for the next two to three years,” the report said.

The report said the E&S market grew last year to nearly 7% of the total U.S. property/casualty insurance industry, which compares with its share of about 5% over the past decade, as admitted markets continued to shed unprofitable, volatile business.

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