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Although municipal bonds make up 27 percent of the investment portfolios of property and casualty insurers, even bond losses of $2 billion to $4 billion that could result from extreme stress scenarios are expected to be manageable, Moody's reported.
"In context, even these estimates from an extreme stress test would be moderate given that we expect investment income of more than $10 billion per year from the industry's sizable $370 billion muni-bond portfolio," said Paul Bauer, an analyst for Moody's.
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