UK - US companies that provide property/casualty insurance will provide a lucrative investment opportunity for institutional investors, Hiscox Investment Management predicts.
It says the firms, which offer commercial or personal insurance in the event of damage and injuries, will react positively to pricing pressure within the sector over the next three years.
Hiscox Insurance Portfolio fund manager Alec Foster, who has just returned from a visit to the US, said well-managed property/casualty firms would write business equal to 15% and above earnings growth from now until the end of 2005.
“The initial easing in rates in some areas is inevitable given the rises of the past two years and the low loss costs. How-ever, rate movements are only one part of the equation.
“With few signs that underwriters are relaxing terms and conditions the outlook for the bottom line is positive. Further-more, as insurers no longer have the cushion of high investment returns, effective underwriting is the only way to profitability”.
Property/casualty insurers invest largely in high-quality liquid securities which can be sold quickly to pay for claims resulting from events such as a hurricane, earthquake or terrorist attack.
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