PRICE INCREASES ON COMMERCIAL
LINES RATE RENEWALS: Q4 2011
5.7%
2.0% 2.0% 2.1% 2.2% 2.3%
2.7%
3.0%
0.8%
S urety
EPL
Co m m ercial Auto
D&O
General Liability
U m brella
Construction
Business Interruption
Co m m ercial Property
Workers’ Co mp
Source: Council of Insurance Agents and Brokers/l.l.l.
E COMMERCIAL-INSURANCE RATES increased just under 1 percent in Q3
2011 and 2.8 percent in Q4 after 30 straight quarters of price declines. I.I.I.
President Robert Hartwig says there is opportunity for insurers beyond waiting for
more such rate increases. He says energy, natural resources, agriculture, health
care, transportation and infrastructure are at the beginning stages as the country’s newest growth engines, “and many insurers would find that they are underexposed to these sectors.” Hartwig says the industry “needs to not just ride the
rising tide in. There is a new trajectory of growth in the American economy.”
Q4 NON-LIFE CAT BOND ISSUANCE
(2008-2011)
2000
Millions
$2,019 $1,989
$1,602
1500
1000
500
$0
0
2008 2009 2010 2011
Source: WCMA Transaction Database
E WILLIS GROUP HOLDINGS says Q4 2011 catastrophe-bond issuance totaled
close to $2 billion, making for an active quarter, but still down from the Q4 2010
total of $2.02 billion. For the year, total catastrophe-bond issuance was $4.3 billion, compared to 2010’s total of $4.8 billion. Willis says the drop was driven in
part by the uncertainties caused by loss activity in the early part of the year.
OVERVIEW OF INSURANCE SECTOR
EMPLOYMENT CHANGES*
Insurance Subsector
P&C Direct
Reinsurers
Claims Adjusters
Agents/Brokers
Life Direct
Health/Medical Direct
Title & Other Direct
Third-Party Administration
All Other Insurance-Related Activities
Net Total
Nov. 2011
Employment
Dec. 2011
Employment
525,700 526,800
26,200 27,300
49,600 49,500
646,800 646,600
344,300 343,800
429,900 430,900
70,200 71,500
135,600 136,500
53,100 53,800
Change
+1,100
+1,100
-100
-200
-500
+1,000
+1,300
+900
+700
2,281,400 2,286,700 + 5,300
*Data are through December 2011 and are preliminary
(i.e., subject to later revision); not seasonally adjusted.
Source: U.S. Labor Department’s Bureau of Labor Statistics/I.I.I.
E TOTAL INSURANCE-INDUSTRY employment grew by more than
5,000 jobs in December 2011 compared to November, with P&C direct
and reinsurance employment each growing by 1,100 jobs. The agents-and-brokers segment shed 200 jobs after posting an employment
increase in the previous month. The U.S. Labor Department’s Bureau of
Labor Statistics adjusted its calculations for figures in December and
November, based on more accurate surveys, so employment totals in
this report do not directly correlate with totals in previous reports.
0% 20% 40% 60% 80%
Acquiring a company
Acquiring a block of business
Selling a block of business
5
5
15
45
50
50
45
85
P&C CFO M&A PLANS
FOR 2012
100%
Selling a company
Merging with another company
10
5
Highly likely
Possible
Not Likely
90
95
Notes: Survey results based on responses
from 20 P&C CFOs. One respondent
answered for multiple transactions.
Source: Towers Watson
E A TOWERS WATSON SURVEY of 20 P&C CFOs shows 55 percent are
considering acquiring a company in 2012, and 50 percent are looking to
acquire a block of business. However, targets for acquisition may be constrained, as just 5 percent of respondents say they might sell a company,
and only 15 percent are considering selling a block of business over the
next 12 months. Given the possible reality of multiple buyers and few sellers, 35 percent of respondents say they expect to see an increase in bidding wars and hostile-takeover activity this year.
