Assessing Risk in the Property and Casualty Industry

COLUMBUS, Ohio – April 28, 2009; Demotech, Inc. analyzed more than 2,900 individual, active Property and Casualty insurance companies on management practices to determine if one segment of the industry displayed an extraordinary appetite for risk, or was significantly less conservative, when compared to other segments.  The purpose of this analysis, Reviewing Property and Casualty Industry Management Practices – The Financial Perspective, was to find if certain classes of Property and Casualty companies displayed more aggressive investment practices and took greater financial risks based on market size or ownership structure.

The companies were divided into five primary categories – Pure Mutual, Mutual, Stock (Public), Stock (Private) and Other.  Each of the defined company types were then further segmented into classification – National, Near National, Super Regional, Regional, Coverage Specialist, State Specialist, Direct Premiums Written of less than $1 million, Reinsurer, Risk Retention Group, Strategic Subsidiary, Surplus Lines Carrier and N/A.

Although no industry, or individual company, is insulated from the effects of an economic downturn, conservative companies that have demonstrated a consistent and long-term lower tolerance for investment risk, will likely fair better than their peers in difficult economic times.  Furthermore, the data supports that regional and smaller insurers are conservatively managed while at the same time demonstrating the capability of maintaining a profit while sustaining growth.

The complete study, Reviewing Property and Casualty Industry Management Practices – The Financial Perspective, is available at

About Demotech, Inc.

Since 1985, Demotech, Inc., a Columbus, Ohio based financial analysis and actuarial services firm, has provided responsive services to address actuarial and financial analysis issues, whether the issues have been for a particular insurer or prevalent throughout the insurance industry.  As the first company to have its rating process formally reviewed and accepted by Fannie Mae, Freddie Mac and HUD, Demotech has been leveling the playing field by offering Financial Stability Ratings® to insurers of all sizes.  Demotech applies its broad actuarial and industry experience to its consulting services, which include pricing analysis and loss and loss adjustment expense reserve reviews.

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Bob Warren, 
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