Oldwick, N.J.-based A.M. Best Co. says it does not expect “a significant number of rating actions” resulting from insurance losses from recent flooding in Alberta, Canada.

Meanwhile, Moody's Rating Service says the event is credit negative for insurers because the losses “will adversely affect their quarterly earnings.”

Estimates put damage from the worst flooding in Canada at C$3 billion to $5 billion in economic damage and insured losses of between C$2.25 billion and $3.75 billion (U.S. $2.14 billion to $3.57 billion).

Canada does not offer national flood insurance and few homeowners have coverage because of affordability. Both Best and Moody's say they expect losses primarily in commercial lines and auto.

Moody's says losses for the country's P&C insurers will depend on the level of exposure to the worst affected areas of southern Alberta. The losses could support price increases going into 2014 and might prompt the Canadian government to introduce a government-backed flood insurance program for homeowners because of the uninsured losses.

Moody's highlighted two carriers—Intact Insurance Group, and AIG Canada (formerly Chartis)—as well-capitalized and for “their effective use of reinsurance to mitigate risk.”

Intact, Canada's largest insurer, holds the lion's share of the personal auto market and stands one percentage point behind the leader, AIG Canada, in its share of the commercial property market. However, Moody's raised questions about other insurers saying their capital could erode if they failed to obtain enough reinsurance.

Best, however, says the Canadian insurers are well positioned from a capital standpoint to absorb estimated losses “and underlying performance trends remain favorable.” Best put insured losses in the range of C$1 billion to $3.75 billion. While there is a “scarcity of property coverage for flooding in Canada” and claims are expected to be low, “this event appears likely to rank among Canada's largest catastrophe losses.”

Up to this point, Best says, the largest loss event in Canada in terms of insured losses was a January 1998 ice storm in eastern Canada that cost the insurance industry C$1.5 billion and flash flooding in Quebec in 1996 that cost insurers a similar amount.

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Best, Moody&rsquo;s Perspectives: Canada Insurers' Outlook After Record Floods

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Best, Moody’s Perspectives: Canada Insurers' Outlook After Record Floods