Smaller, niche carriers are particularly well positioned to take advantage of favourable conditions in the property and casualty (P&C) re/insurance market, according to analysts at JP Morgan.
In a new report, the firm said it expects smaller players to accelerate their market share gains as larger market leaders retrench in an effort to manage their exposure to troubled product lines.
This dynamic will likely foster a favourable operating environment for specialty underwriters that could drive further top-line growth, JP Morgan said.
However, analysts also maintained that the P&C sector more broadly is set to report strong earnings for the third quarter of 2019, reflecting improvements in commercial rates and manageable hurricane season catastrophe losses.
These factors will be offset to some extent by declining net investment income and slowing favourable prior-year development, they added.
Momentum in commercial lines pricing should also continue as underwriters express more discipline in the deployment of underwriting capital.
Further pricing improvements will likely by driven by strategic management decisions rather than tightening capacity, JP Morgan noted, as the P&C industry remains well capitalised despite heavy cat losses in 2017 and 2018.
Analysts believe that the industry has ample time to sustain gradual but consistent price improvements over the next two years, provided management teams can abstain from undercutting each other.