Insurers slide after Selective Insurance sparks concern on reserve issue

W. R. Berkley

19/07/2024 19:44

** Shares of W.R. Berkley  WRB.N , AIG  AIG.N , Cincinnati
Financial  CINF.O , Chubb  CB.N  and Everest Group  EG.N  fall
between 3% and 8%
    ** Late Thursday, Selective Insurance  SIGI.O  posted a
surprise Q2 loss hurt by unexpected unfavorable reserve
development of $176 mln 
    ** Reserves are a certain amount of funds set aside by
insurers in order to meet any future claims they may have to pay
    ** SIGI said the significant reserve addition was due to
higher severity that it attributes to social inflation
    ** Severity is the cost of a claim while social inflation
refers to the trend of rising insurance costs due to increased
litigation, plaintiff-friendly judgments and higher jury awards
    ** Piper Sandler analyst Paul Newsome says investors will be
concerned that other insurers with reserve issues in Q1 will
also have them in Q2, like SIGI
    ** Oppenheimer analysts say that while SIGI's results were a
clear disappointment, they think the insurer is getting ahead of
what it expects to be a widespread problem for the industry 


 (Reporting by Arasu Kannagi Basil in Bengaluru)
 ((ArasuKannagi.Basil@thomsonreuters.com;))