P&C Rates Continue to Stabilize but Hazards Abound

According to Richard Kerr, Founder and CEO of MarketScout, "The trend towards rate moderation is continuing. Underwriters received a better net rate for each risk they wrote in March but their gross premiums probably decreased due to the impact of the current recession on almost all types of exposures, such as payrolls, gross receipts and property values. The moderation in rate reductions will yield more premiums but declining exposures will more than offset the improved rate."

Kerr also commented on the slippery slope insurance company executives are managing in 2009. "Meeting premium growth projections will be a challenge in the current economic environment. In our view, it would be wise for insurers to restate top line premium projections and focus on managing profitability.

Investors would be well advised to carefully monitor companies that do not adjust to the ongoing recession by changing forecasts to reflect the shrinking exposure base. Attempting to make up for premium reductions driven by the downturn in the economy by simply writing more business is dangerous.

We are still in a soft market, moderating, but still soft. Thus, writing new accounts to offset the loss of income from a reduced premium base may have a negative impact on the bottom line. 2009 is a time to carefully protect the balance sheet and wait to make an aggressive move when rates are actually headed up; which should be early 2010."

The composite property and casualty rate index promulgated by MarketScout reflects ongoing moderation in price decreases with an overall rate reduction of minus 7% for March 2009.

Historically, the rates for March over the last five years are as follows:

Market Scout corroborates its data by working with The National Alliance for Insurance Education and Research to conduct in person surveys. These surveys are conducted every month during CIC, CRM and other advanced learning sessions where the participants are relaxed and have ample time to thoroughly complete the survey.

A summary of rates for each coverage and industry class as well as by account size is available for each month at www.marketscout.com <http://www.marketscout.com> . For March 2009, the rates were as follows:

Over 50 "A" rated carriers participate in the MarketScout exchange platform at www.marketscout.com