A major international insurer said its losses from flooding in the United Kingdom would not exceed $400 million, and a rating agency said the event would not affect its rating of the country's insurers.
Yesterday, Zurich Financial Services Group said it estimated losses from the United Kingdom floods in June would not exceed $400 million net of reinsurance. The carrier said its estimate covers flooding from June 14 to 25.
Charges from the event will be recorded in the Zurich, Switzerland-based insurer's first-half results.
Today, Moody's Investors Service, out of London, said the flooding is not expected to affect the credit rating of United Kingdom property-casualty insurers.
The events will have "significant impact" on 2007 earnings, Moody's said, but "strong financial performance and strengthened balanced sheets" translate into manageable losses.
On the reinsurance end, Moody's said the flooding would be treated as two events, end of June and mid-July, and insurers are expected to use their retention levels twice to absorb losses. They also will incur costs for the reinstatement of reinsurance protection, Moody's said.
Dominic Simpson, a Moody's senior credit officer, said in a statement that retentions have increased for primary insurers, and despite the fact that reinsurers will take a hit, primary insurers will bear the brunt of the claims.
The Association of British Insurers said that as of July 27 there were more than 50,000 claims from the floods and estimated insured loss of ?2.5 billion (more than $5 billion U.S. at the current exchange rate).
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