ROUGH ROAD FOR COMMERCIAL LINES

Fitch Ratings reports that the commercial line and reinsurance sectors of the domestic property and casualty industry faces greater uncertainty than personal lines, according to a new report published by the ratings agency. In its report, Fitch said its outlook for the commercial lines and reinsurance segments is negative, while the outlook personal lines is stable. The outlooks are unchanged from the previous year. Fitch said rates for personal lines are increasing faster than loss costs and expects that trend to continue. Commercial and reinsurance segments need sustainable improvements in profitability and diminished reserve deficiencies before the outlook can be modified to stable. The report includes an overview of the major events and trends in the P/C insurance industry during 2002 as well as an outlook for 2003. Fitch identifies major events that significantly impacted the U.S. P/C insurance industry in 2002, including the events of Sept. 11, the enactment of terrorism reinsurance legislation, and further deterioration of the investment climate. Other developments of note include the continuation of adverse reserve development woes, the continuing materialization of asbestos related losses, and a stagnant mergers and acquisitions market. The report, “Review & Outlook: 2002/2003 Property/Casualty Insurance,” is available on Fitch’s web site at www.fitchratings.com.