Best said the negative outlook reflects concerns over the potential impact on BP from the ongoing oil spill. Given the magnitude of this event, Best said it is currently impossible to assess the impact on BP, in terms of both financial liabilities and reputational damage.

Because significant uncertainties are likely to remain for some time to come, Best said it will continue to monitor the situation.

Best also noted it considers that the financial position of Jupiter will likely remain strong following the incident. Although Jupiter has established loss reserves at its policy limit of $700 million, risk-adjusted capital still soundly supports the rating level.

Moody's observed in its report that claims from the disaster will come from a number of lines, including: marine hull, marine liability, general liability, environmental/pollution liability, control of well, business interruption, D&O liability and workers' compensation.

With several parties involved in the drilling work, dozens of class action lawsuits filed and the ultimate extent of environmental damage unknown, the complexities associated with loss claims are significant and could take many years to be resolved, Moody's noted.

Going forward, "we believe that this event will have a meaningful impact on the market for offshore energy-related insurance coverages," Moody's said. The rating agency observed that early reports indicate that property coverages are 15-25 percent higher for rigs operating in shallow waters and up to 50 percent higher for deepwater rigs.

With hurricane season approaching, any additional losses in the Gulf of Mexico this year could further bolster pricing for this subclass. Likewise, Moody's continued, pricing for offshore energy liability insurance is sure to trend higher as insurers and reinsurers take stock of their losses and reevaluate the complex risks associated with drilling in deep waters.

Several firms are involved in drilling the deepwater oil well at Mississippi Canyon Block 252 in the Gulf of Mexico, Moody's said.

These include:

o BP (operator and 65 percent working interest in the project).

o Anadarko (25 percent working interest).

o Mitsui (10 percent working interest).

o Transocean (owner of the rig and drilling contractor).

o Halliburton and Smith International (drilling services providers).

o Cameron International (manufacturer of blow-out preventer).

In addition, Insurance Information Institute President Robert Hartwig has put together a comprehensive PowerPoint presentation on the insurance implications of the Deepwater rig disaster, available at www.iii.org/presentations/Deepwater-060210/.