In a new report “Asbestos: Too Hot to Handle for European Insurers?”, rating agency Fitch says asbestos reserving by European insurers will remain a drag on earnings for years to come. Fitch does not expect asbestos to cause solvency issues by and large, as insurers have some years to over which to fund the expected exposures, and downgrades would most likely follow “shock losses” to reserves that have a profound effect on capital. Insurers whose risks are heavily concentrated will face a tougher time than those who have diversified their exposures. Comparing European exposure to that of the U.S., Fitch says the peak of asbestos-related disease is expected to be higher and later. For example mesothelioma is not expected to peak until 2018 in Europe, but is already at its peak in the U.S. Fitch predicts the “target survival ratio” used by insurers will be significantly higher in Europe than in the U.S., where the ratio is 16-times. However, European insurers face a different legal environment than that of the U.S., which should be more favorable for insurers. “This stems from a less litigious culture, the use of judges rather than juries for trial, the lack of “forum shopping”, where litigants in the US can choose where their trial is heard, and the fact that losers in a European trial typically have to pay the legal costs of the winners.” Some European countries also have in place government-sponsored insurance schemes to meet asbestos claims directly, thus shielding insurers. Fitch sasy current disclosure from insurers on exposures is inadequate and calls for greater transparency to aid in market reserving studies.