NEW YORK (Reuters) - U.S. insurance companies should be able to weather current turmoil in the subprime mortgage market with no impact on ratings, Fitch Ratings and Standard & Poor’s said on Wednesday.
Property and casualty insurance companies have minimal exposure to the subprime mortgage market and no ratings are expected to be downgraded this year because of subprime issues, Fitch Ratings said in a report.
Separately, S&P said it has surveyed all the insurance and reinsurance companies it rates globally and found most had only negligible subprime exposure and enough liquidity to meet their financial obligations.
“The level of industry capital should be sufficient to absorb the volatility over the next year,” S&P said in a report. The agency said it is keeping a stable outlook on U.S. property, casualty and life insurers, global reinsurers and managed care sectors.
The 20 largest U.S. public property and casualty companies have about $44 billion of subprime exposure, representing 3 percent of total investments, Fitch said, citing information from regulatory filings and earnings calls.
The results were skewed, however, by holdings of American International Group AIG.N, which accounted for about two-thirds of the total, Fitch said.
Overall, fixed-income investments of property and casualty insurers are of extremely high quality, with 98 percent investment grade, Fitch said. “Exposure to all mortgage-backed securities is very manageable when it is considered that it accounted for less than 14 percent of all fixed income investments,” the rating agency said.
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