Moody’s expects U.S. insurers to handle Gustav losses without difficulty

Insured losses from Hurricane Gustav are not expected to significantly affect the ratings of U.S. property and casualty insurers, according to a new report issued by Moody’s Investors Service.
“Given the range of preliminary insurance loss estimates of [US]$3 billion to [US]$10 billion associated with Hurricane Gustav, Moody’s does not expect the event to significantly impact the credit profile of most property and casualty insurers and reinsures,” says Paul Bauer, a senior analyst at Moody’s and the author of the report.
“Based on our initial discussions with companies, we believe that while Hurricane Gustav will have an earnings impact, it is not likely to have a material capital impact for most industry participants given robust capital generation over the past several years.”
Losses are likely to be split between onshore and offshore exposures, Moody’s reports.
The relatively manageable size of expected losses means the industry is unlikely to see a change in the generally declining pricing environment within the property and casualty sector, according to the report.
The report does note, however, that the insurance industry’s risk management and underwriting practices have improved since Hurricane Katrina in 2005.