In spite of the early economic damage estimate from the Deepwater Horizon oil rig explosion, insurers may be able to breathe an initial sigh of relief at the news coming out of Standard & Poors (S&P), which is predicting limited claims losses as a result of the spreading disaster.
In a report published yesterday on RatingsDirect, the New York ratings firm reports that despite the spread of the oil and its related contamination, the losses will be spread among multiple markets and reinsurers.
The report, titled "Despite Significant Environmental Damage, The Gulf Oil Spill Losses To Re/Insurers Are Expected To Be Limited," says preliminary net loss estimates by some re/insurance companies indicate that losses could be contained within second-quarter 2010 results.
“Some of the early disclosures include only the property losses, as the liability portion is difficult to estimate at this point. Nevertheless, we expect losses from this event--with the possible exception of a few outliers--to affect earnings rather than capital. Based on these early estimates alone, we do not expect to change any ratings at this time as a result of the oil spill,” said the report.
The report is available to RatingsDirect on the Global Credit Portal subscribers at www.globalcreditportal.com
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