S & P Expects Limited Ratings Impact on Insurers Exposed to Sandy

Despite uncertainties regarding final loss totals from Hurricane Sandy, Standard & Poor’s Ratings Services expects only a limited ratings impact on insurers and reinsurers exposed to such losses, according to a report, “Hurricane Sandy Brings Unexpected Risks But Limited Credit Impact For (Re)Insurers“, published last week on RatingsDirect.

Hurricane Sandy could upend some previous beliefs regarding catastrophe losses. First, assumptions about automobile-related losses were more benign than the actual losses from Sandy’s flood-related damage. Also, basis risk for nontraditional reinsurance products such as industry loss warranties may have been underestimated.

“We expect losses to reduce the (re)insurance industry’s 2012 earnings, but not to impair industry capital,” said Standard & Poor’s credit analyst Jason Porter. “We will continue to monitor loss information as it becomes available to determine if any companies deplete both annual earnings and at least 5 to 10 percent of capital, at which point we may reevaluate our ratings.”

The report is available to subscribers of RatingsDirect on the Global Credit Portal at www.globalcreditportal.com. If you are not a RatingsDirect subscriber, you may purchase a copy of the report by calling (1) 212-438-7280 or by sending an e-mail to research_request@standardandpoors.com.

Source: S & P