Despite the abundant risks facing U.S. property/casualty carriers these days, exposure to municipal bond losses is one that shouldn’t be keeping insurers up at night.

 While muni bonds make up 27% of P&C insurers' invested assets, Moody's Investors Service says credit losses would be manageable even under a severe stress scenario. As published in its new report, "U.S. P&C Insurers Face Manageable Credit Risks in their Muni Bond Portfolios," the ratings agency also believes that municipal credit quality will remain generally resilient even through a period of economic stress.

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