Asbestos-related losses are not likely to create any severe capital shocks for property and casualty insurers, but those losses will "continue to bleed through insurers' earnings," and asbestos reserves may be deficient by as much as $9 billion as of year-end 2013, a new analysis says.
Fitch Ratings says U.S. P&C insurers' incurred losses related to asbestos exposures averaged about $2 billion annually for the last five years. The ratings agency says domestic insurers with "material asbestos-related incurred losses in 2013" include Liberty Mutual Holding Co. ($236 million), the Travelers Companies ($190 million) and Factory Mutual Insurance Company ($152 million).
The number of asbestos claims filed annually is declining, Fitch notes, but insurers have strengthened reserves in recent years due to higher loss severity and rising legal costs. Fitch explains a rising percentage of asbestos claims relate to mesothelioma, which involve larger payouts.
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