[November 28, 2012]

Fitch: Asbestos Reserve Deficiency Continues for U.S. Insurance Industry

Fitch Ratings estimates industry asbestos reserves to be deficient by $2 billion to $8 billion at year-end 2011. Asbestos reserves make up approximately 4% of total property/casualty industry reserves with approximately 50% of reserves concentrated in five insurers.

In a new report, Fitch examines a range of loss scenarios and future payments for asbestos losses up to an ultimate industry loss of $85 billion. Based on recent development experience and its latest analysis of loss payment scenarios, Fitch's target industry survival ratio is 11x-14x.

The reported industry survival ratio for asbestos liabilities increased modestly to 10.3x in 2011 from 10.1x in 2010 and 9.9x in 2009, indicating that incurred losses have expanded at a faster rate than paid losses in recent years.

Fitch's analysis reveals that the (re)insurance industry remains strongly capitalized with the capacity to absorb future asbestos claims without risk of material capital depletion. While Fitch does not anticipate broad rating actions related to asbestos, the ratings of individual companies could be adversely affected by the severity of reserve deficiencies relative to capital.

The full report is available on the Fitch web site at 'www.fitchratings.com'.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research: Asbestos Losses: Continued Source (News - Alert) of Reserve Deficiency

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm rpt_id=695246

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON (News - Alert) THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE.

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