Moody's Investors Service today became the fourth rating firm to say that insurers' losses from Hurricane Gustav will not significantly impact ratings of U.S. property-casualty carriers or prices in their marketplace.

Yesterday, A.M. Best Co., Standard & Poor's and Fitch announced similar conclusions.

"Given the range of preliminary insurance loss estimates of $3 billion to $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," said Moody's report author Senior Analyst Paul Bauer.

The analyst added that "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."

Moody's said insurers' losses are likely to be split between onshore exposures (consisting of homeowners, commercial property and business interruption) and offshore exposures (consisting primarily of energy platform losses).

"The companies most likely to be impacted by the losses will include Louisiana homeowners' insurers, excess & surplus and marine & energy underwriters, and various property catastrophe reinsurers," said Mr. Bauer.

According to the report, titled "Moody's Comments on Hurricane Gustav: Losses Expected to Impact Insurers' Earnings, But Not Ratings," the relatively manageable size of expected losses means that the industry is unlikely to see a change in the generally declining pricing environment within the p-c sector.

On the positive side, it also noted that the insurance industry's risk management and underwriting practices have improved since Hurricane Katrina in 2005.

Mr. Bauer remarked in a statement, "Though the insurance industry appears to have been spared a potentially more damaging event, the near miss of Hurricane Gustav, as well as the storms brewing right behind it, nevertheless serves as a reminder that catastrophe exposure remains one of the industry's most crucial credit risks, and that its effective management should remain one of the industry's most important disciplines."

Special Reports /

Moody's Also Minimizes Gustav Impact

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