Property and casualty excess capital remains robust, although it has declined since July 2010, an analysis shows, while a separate analysis strictly on reinsurers shows a 6 percent decline in capital for the 2011 first quarter as companies contend with, among other issues, insured catastrophe losses.

In a Morgan Stanley analysis on reserves and capital for primary and reinsurance P&C companies, the firm says, “We found overall amounts [of excess capital] have decreased as lower excess reserves, capital deployment…worsening underwriting trends…and higher PMLs (probable maximum loss) from the new RMS 11 model led to lower capital levels than in our July 2010 analysis.”

Morgan Stanley says it estimates that an actuarially reasonable range of reserves is between $512.5 billion and $580.8 billion. “Industry-carried reserves of $561.9 billion fall at the 72nd percentile of this range, or about $15.3 billion above our midpoint,” Morgan Stanley explains.