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Advisen Front Page News - Friday, April 27, 2018


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Fitch: D&O liability underwriting results fall to seven-year low
Fitch: D&O liability underwriting results fall to seven-year low
Publication Date 04/26/2018
Source: Dow Jones News Service

The following is a press release from Fitch Ratings:

Fitch Ratings-Chicago-26 April 2018: U.S. Director and Officers (D&O) liability insurance underwriting results deteriorated in 2017 to the worst level since 2011, according to Fitch Ratings in a new report.

D&O is a more volatile product line than many other property/casualty (P/C) products. Claims traditionally arise out of matters that lead to securities litigation for public companies. Claims risk in private and non-profit organizations expanded in recent years. Several emerging risk areas are a concern for future D&O exposures, including cyber risks and employment practices. Risks of greater personal liability for an organization's senior management and directors from various D&O-related claims are likely to spur greater future demand for coverage.

"Some larger D&O insurers are seeing higher segment loss ratios, in part, due to the surge in federal class action suits filed last year," said Jim Auden, Managing Director, Fitch Ratings. That said, D&O underwriters are typically larger, multi-line insurers that can absorb or offset potential large losses with results from other segments. As such, 'the likelihood of D&O segment risks individually driving insurer ratings are limited outside of extreme crisis periods and events," Auden added.

Industry aggregate data from statutory supplemental filings that have recorded D&O specific figures since 2011 show annual direct written premium volume was flat again in 2017 at approximately $6.4 billion. Market premiums are virtually unchanged for the last four consecutive years, reflecting unyielding market competition.

Recent D&O pricing trends are at best flat, despite recent poorer underwriting performance and commentary from market participants on the need for rate improvement. Further weakness in performance and a visible retreat of marginal underwriting capacity in the D&O space are likely required for a shift in pricing tends to take place.

Rankings of top underwriters in D&O are relatively unchanged in 2017, with AIG (14.3% of industry direct premiums), Chubb Limited (12.2%) and XL Group Limited (10.3%) still the top-three carriers in market share. A closer look shows that both AIG's and Chubb's market share declined moderately in 2017. There are approximately 40 distinct insurance entities that wrote over $10 million of 2017 D&O premiums.

The full report, "U.S. Director and Officers Liability Market Update," is available at or by clicking on the link.


James B. Auden, CFA

Managing Director


Fitch Ratings, Inc.

70 West Madison Street

Chicago, IL 60602

Gerald B. Glombicki, CPA



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