Chicago, 6 June 2014 – Aon Benfield, the global reinsurance intermediary and capital advisor of Aon plc (NYSE:AON) today announces the launch of its updated U.S. P&C Industry Statutory Reserve Study, to reflect year-end 2013 data.

The study, compiled by Aon Benfield Analytics, reveals that commercial lines continued to move further into an overall deficiency position of USD2.8 billion at YE2013 compared to an estimated USD0.9 billion deficiency at YE2012. Reserve positions deteriorated across the commercial lines sector, which includes commercial property, commercial liability, and workers’ compensation.  Financial guaranty moved to a slightly less deficient position, though it represents a small portion of the overall commercial lines sector.

The personal lines sector continued to show a redundancy at YE2013, though not as strong as at YE2012 (USD9.3 billion vs USD10.1 billion, respectively). This continues a pattern of behavior of the personal lines carriers of being conservative in posting reserves early in the maturity of recent accident years. These lines are short-tailed lines of business, and any excess reserves tend to be released quickly.

The overall industry redundancy position decreased to USD6.5 billion at YE2013 – equivalent to only 1.1 percent of total booked reserves. This compares to an USD9.2 billion total industry redundancy position at YE2012, while USD14.8 billion was released by insurers during 2013. The amount of reserves released in 2013 was the highest since the 2008 to 2010 period.

Brian Alvers, Chief Actuary for Aon Benfield Americas, said: “It was a surprise to see more reserves released in 2013 as compared to 2011 and 2012, but the prior accident years continue to produce favorable reserve takedowns from the positive claims environment at the time.  Personal lines reserve redundancy continues to support the overall industry reserve position, though almost 45 percent of it had been released at the end of the first quarter of 2014. The overall commercial lines reserves position models as deficient as of year-end 2013, and continued reserve releases of approximately USD1.4 billion in the first quarter of 2014 have made the hole deeper.  Rates increases in commercial lines sector of the U.S. insurance industry seem to be tapering off, therefore creating more risk for those insurers’ balance sheets.”

The Aon Benfield study examines U.S. statutory Schedule P triangles to generate an overall industry position from a by-line analysis. The study is based on U.S. insurers’ ongoing statutory filings, and is therefore subject to future fluctuations in its data.

The full study can be found at the following link:

http://thoughtleadership.aonbenfield.com/Documents/20140604_ab_analytics_industry_reserves_study_2013.pdf

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