Increasing costs from asbestos-related compensation settlements in the US are forecast by Standard & Poor's (S&P) to have a “negative” effect on the finances of the insurance industry.
However, the credit rating firm believes asbestos claims will not deal a knock-out blow to the industry.
S&P analyst Matthew Coyle said in a report on the issue: “A new wave of law suits by workers who have been exposed to asbestos, but who show no sign of illness, has the potential to impact the commercial lines industry, but to a lesser extent than several other analysts have speculated.”
He added S&P anticipated only a “modest” number of insurers would have their ratings downgraded as a result of the increase in claims costs.
The action follows AFG's release of its second quarter earnings, which show it has suffered an increase in asbestos-related claims.
The insurer also said it expected to review the extent of its exposures to asbestos-related claims in the next few months.