The losses experienced as a result of the earthquake in Japan appear to be manageable for insurance and reinsurance companies and are not expected to result in negative rating action, according to Fitch Ratings.
In its latest report, Fitch Ratings said that losses should be able to be absorbed by primary and reinsurance industries without any widespread solvency problems or financial strain.
It believes ratings action is unlikely unless a loss causes capital and leverage ratios to deteriorate beyond previous expectations.
However, the agency does say these assessments are subject to change as more information becomes available.
Companies that are financially weakened may look to raise additional capital to mitigate losses and this will by considered before a rating action is taken, according to Fitch.
Insurance companies will also be assessed as part of a peer group review to determine whether a particular company’s loss is proportionally larger than its peers, or Fitch’s expectations.
