Thanks to historic high temperatures and subsequent droughts, the underwriting performance for crop insurance is all but certain to deteriorate in 2012, according to Fitch. The magnitude of the losses suffered are hard to predict because of the complexity of the product line, however after federal and private reinsurance, the losses “are anticipated to have more of an impact on earnings rather than capital.”

Fitch expects the largest crop insurers to absorb these near-term losses and maintain financial strength due to “primary writers' size, diverse portfolios, conservative use of additional reinsurance, and the business line's historical profitability.”

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