According to a recent report from credit rating agency Fitch Ratings, subprime lending exposure is not expected to present a significant rating issue for the reinsurance sector. Noting that reinsurers typically seek to generate underwriting income rather than spread-based income, Fitch observes that most reinsurers have avoided heavy investments in subprime mortgage-backed securities. Although the credit market disruption triggered by subprime lending coincided with the 2007 second-quarter earnings season, losses attributable to subprime lending are expected to be comparatively small for most insurers. For more details on the Fitch report, click here.
The report follows an earlier announcement from Fitch projecting only a “minimal” subprime risk exposure for U.S. property and casualty insurers. To review the details of this announcement, click here.
