LDWICK, N.J.–(Business Wire)–In this A.M.BestTV episode, A.M. Best’s Senior Financial Analyst Robert Valenta and Senior Research Analyst David Blades review a new report that examines the growth of the U.S. surety insurance segment and the forces shaping it. Click on http://www.ambest.com/v.asp?v=surety218 to view the entire program.
Bolstered by strong construction activity, surety underwriters continue to benefit from consistent premium growth and strong levels of underwriting income.
“Underwriters of surety coverage have been producing favorable results over the past decade,” said Blades. “Not only has premium growth been achieved, but despite pretty heavy market competition, underwriting income also has consistently been produced during the same time frame. The post-recession economic recovery, which has positively impacted the construction industry, has been a driver of the premium growth for the surety market in that the construction industry is the main source of business for surety writers,” continued Blades.
The report states that the 2017 premium level is on track to surpass the $6 billion mark for the first time this decade. Valenta believes that competition has played a role in creating this premium level.
“Profitability within the sector has added a lot of new entrants, which has really increased the capacity as well as heightened the level of competitiveness and created a continuation of soft market conditions. Generally, profitability within the top carriers is better than the entire industry, and this is mainly due to increased scale, niche market expertise and strong relationships with agents and brokers,” said Valenta.