A.M. Best: 2008 A&E losses hit lowest levels in 8 years

A.M. Best Co. has changed its view of the U.S. property-casualty industry's ultimate asbestos and environmental A&E losses down to $117 billion from $121 billion. Asbestos exposures now are estimated at $75 billion, up from $65 billion, and environmental losses at $42 billion, down from $56 billion.

Among the findings:

o The industry posted significantly lower A&E losses in 2008--down nearly 50 percent--and increased its aggregate funding for liabilities by nearly $5 billion over the past 2 years

o Through 2008, the industry's incurred-to-date losses for A&E liabilities is more than $66 billion for asbestos exposures and nearly $35 billion for environmental costs, net of reinsurance and adjusted for 2 companies' significant loss portfolio transfers in 2002 and 2005

o Paid losses remained consistently high over the past 5 years, averaging over $3 billion a year for asbestos and just under $1 billion a year for environmental

o Nearly 70 percent of the industry's 2008 A&E incurred losses were concentrated in 10 insurer groups, while 10 insurers also drove 70 percent of the industry's asbestos losses, and 10 insurer groups generated about 85 percent of incurred environmental losses

o Total A&E net loss reserves declined 8 percent, composed of a 7 percent decrease for asbestos and an 11 percent decline for environmental

o In 2008, the 3-year survival ratio stood at 8.1 times for the total industry on asbestos claims, down from 9.5 times in 2007, as 2 insurers in the commercial lines segment recorded increase in paid losses.

To access a copy of this special report, visit www.ambest.com.