Despite suffering massive declines in net assets values due to weak investment conditions and other effects of the financial markets, property/casualty insurers have weathered the economic storm better than other sectors, according to a recent report by Standard & Poor's Corp.
The report states that the P&C sector continues to be financially strong and remains relatively well positioned to deal with future investment volatility.
Maintaining sufficient liquidity to pay claims will remain the main factor that insurers in the sector face when developing their investment strategies.
According to the report, "The asset portfolios of most P&C insurers are risk-averse and tend to be weighted in high-quality, investment-grade municipal, government, and corporate fixed income tables."
The report also found that during the recent economic downturn, many P&C insurers lowered their exposure to equities, alternatives, and other more volatile classes.
Finally, it found that while some insurers continue to have broad exposure to lower-rated or longer-duration investments, the holdings are considered modest compared with total invested assets and policyholders' surplus.