NU Online News Service, Aug. 31, 12:37 p.m.EDT

Two rating agencies say the property and casualty insuranceindustry can handle losses from Hurricane Irene, but questionwhether more losses this hurricane season could change thatscenario.

A.M. Best and Fitch Rating joined Standard and Poor's and Moody's Rating Service saying the industry can handle thelosses catastrophe modelers have estimated.

Best says the “overall financial impact to both the primary andreinsurance sectors” is expected “to be generally manageable, giventhe current overall capital strength of the industry.”

For its part, Fitch says the losses from Hurricane Irene “arelikely to be material, but manageable, for U.S. property andcasualty insurers and reinsurance companies.”

Catastrophe modelers are estimating losses to be up to $6 billion on the high end and$1.5 billion at the low end.

Fitch notes that the $3 billion to $6 billion estimates placeIrene on par with Hurricane Rita in 2005 and Hurricane Hugo in1989.

When added to the losses suffered during the first half of theyear, Irene “put further strain on the industry's underwritingresults,” says Best, estimating first-half 2011 pre-tax catastrophelosses at $27 billion, based on a survey.

“A.M. Best does not anticipate a significant number of ratingactions to be associated with Hurricane Irene,” the rating servicesays in its report. “However, companies with significant marketshare in the impacted states will be evaluated relative to A.M.Best's previous loss expectations” and “material deviations couldlead to negative rating actions.”

The action could range from review to a downgrade.

Additional, sizable catastrophe losses from additional eventscould “lead to greater ratings vulnerability,” says BrianSchneider, a senior director at Fitch. Any rating action on areinsurer or insurer “would depend on the size of the loss relativeto capital, options pursued to replenish capital and underwritingprospects going forward,” he adds.