A Bank of America analysis has found that property-casualty insurers do not have any significant exposure to the collapse of investment bank Lehman Brothers.
For the 20 p-c insurers included in the Bank of America analysis, Lehman Brothers debt exposure averaged less than 1 percent of equity.
Preferred and common stock exposure also was not significant, Bank of America said. Major insurers with preferred/common stock exposure as of 2007, Bank of America said, are Hartford, $61 million; AIG, $59 million; Allstate, $18 million; and Progressive, $18 million.
"We believe that most p-c companies will write down their preferred/common stock exposure to Lehman Brothers during the third quarter, which has not been significant," the analysis states.
Overall for the p-c market, Bank of America said while pricing competition has intensified, return on equity is expected to remain "relatively solid and above their historical averages through 2009, supported by reserve releases and share buybacks."
The analysis added, "With strong capital positions, conservative investment portfolios and balance sheets, we believe selected p-c stocks seem like an excellent port in a storm."
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