Hurricanes Katrina and Rita have prompted Standard & Poor's to revise its global reinsurance outlook to negative from stable.
But the same events have led equity analysts at Morgan Stanley to upgrade the primary and secondary insurance industries from in-line to attractive.
S&P credit analyst Simon Marshall said the negative outlook reflects the near-term strains Katrina losses will impose on the industry.
"It also reflects the uncertainties that necessarily surround the companies' estimations of the effect of an event of Katrina's size and type," Mr. Marshall said.
The number of downgrades may be greater than expected if reinsurers' loss estimates for Katrina prove inadequate, or if additional material catastrophic events occur in the coming months, Mr. Marshall added.
Both S&P and Morgan Stanley agree that the two Gulf hurricanes are likely to ensure continuation of the hard market in the property-casualty sector.
Analyst William Wilt at Morgan Stanley said that as a result of the uncertainty surrounding Katrina and Rita "the key ingredients of a cyclical upturn have fallen into place."
"Our increasing conviction that Katrina loss estimates will carry substantial variability for the next year or more suggests to us insurers will exercise pricing restraint in the period ahead," Mr. Wilt said.
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