Japan losses can be absorbed - Fitch

The Japanese earthquake is not expected to result in a ratings downgrade for insurance companies exposed to the disaster, according to Fitch.

In a new report examining the insurance industry's possible exposure to the 11th March earthquake, the rating agency has said a number of loss mitigating factors mean that significant downgrades are unlikely.

It said losses can be absorbed by the insurance and reinsurance industries without any widespread solvency problems, or undue financial strain.

However Fitch added the caveat that the report’s assessments remain subject to change as more information becomes available.

It said that rating action is unlikely unless a loss causes capital and leverage ratios to deteriorate beyond previous expectations.

But the agency said that if companies financially weakened by the disaster do not succeed in raising capital, Fitch will take appropriate rating action.