NU Online News Service, July 23, 2:14 p.m.EDT

Fitch Ratings says net losses to private crop insurers willlikely be an earnings event rather than a capital event.

"We believe the leading writers of crop insurance will be ableto absorb any near-term crop losses and are likely to maintaincurrent levels of financial strength," Fitch says in astatement.

The assessment comes as widespread drought blankets a majorityof the United States.

The National Crop Insurance Services says about 83 percent ofthe insurable acres nationwide is covered by crop insurance. Butexperts have been unsure about the extent of the problem to cropscaused by drought.

Some have said it is too early to predict losses whileother reports tell of a situation in which farmersare abandoning withered crops and filing insuranceclaims before investing more money on things likepesticides and weed killers, as farmers have been buying policiesthat offer a greater level of protection.

The U.S. government has taken action,according to a Reuters report, with Agriculture Secretary TomVilsack asking crop insurers to allow farmers more time—until Nov.1 instead of Aug. 1—to pay their premiums so that the farmers canconserve their cash through the drought.

Vilsack also said the USDA will allow haying and grazing onconservation and wetland reserves in counties impacted by drought,according to the Reuters report.

Fitch says losses are difficult to estimate due to the "natureand complexity of the product line."

The rating agency says premium volume among multi-peril cropinsurers will likely be down compared to 2011 due to lowercommodity prices.

The volume of business companies can write each year is derivedby premiums set by the U.S. Department of Agriculture. Premiums areaffected by commodity prices.

Multi-peril crop insurance is sold and serviced by privateinsurers but it is subsidized by the federal government. The USDA'sFederal Crop Insurance Corp. reinsures primary insurers. Fitch saysinsurers typically buy additional reinsurance coverage on theprivate market.

The top providers of multi-peril crop insurance, according toFitch, are ACE Ltd., QBE Insurance Group, Wells Fargo & Co.,American Financial Group, Allianz Insurance Group, and EnduranceSpecialty Holdings—whose total net premium written is 25 percentcrop insurance.

Insurance indemnities for all crops as of July 16 are $446million compared with $230 million at this time a year ago,according to U.S. Department of Agriculture Risk Management Agencydata.