AM Best maintains estimate for net asbestos lossesdew
AM Best maintains estimate for net asbestos lossesdew | Insurance Business America
Environmental
AM Best maintains estimate for net asbestos lossesdew
Environmental losses also hold steady
Environmental
By
Abigail Adriatico
AM Best has maintained its estimate for ultimate net asbestos losses as environmental losses also held steady, according to its newly released report.
The report outlined that the agency has maintained its estimate for ultimate net asbestos losses at $100 billion with environmental losses at $46 billion.
The report also noted that the industry has funded 95% of its aggregate asbestos & environmental (A&E) exposures. This means that the unfunded liabilities for asbestos and environmental loss were nearly $6 billion and $2 billion, respectively.
“Given the declining incurred losses but higher levels of paid losses, AM Best’s estimate of ultimate losses remains on target,” said Jieqiu Fan, associate director, AM Best.
“We will continue to monitor the state of A&E losses,” added Fan.
A&E loss reserves have seen a decline for more than a decade as loss payments have been outpacing incurred losses. In the past five years, insurers have paid around $13 billion for A&E claims as they incurred less than $9 billion in losses.
Asbestos reserves declined by 4.9% in 2022, reaching $15.4 billion as environmental reserves saw no changes from 2021, staying at $4.6 billion.
Overall, annual incurred A&E losses have been declining since 2018, with the drop being 4% and 16% in 2022 and 2021, respectively. Asbestos incurred losses have steadily declined in the last five years and decreased by 18% in 2022. Environmental losses have fluctuated – rising by 50% in 2022 after declining by 27% in 2021.
The drop in asbestos losses was due to a reduction in losses from larger groups like Berkshire Hathaway Group (BHSI) and Swiss Re in 2022. Meanwhile, the increase in environmental losses largely came from BHSI, Travelers Group, and Chubb.
“At current payout levels, A&E reserves will run off in about eight years, assuming no additional reserve strengthening,” said Brian O’Larte, director, AM Best.
“Payout levels have been volatile the past five years, with 2022 payouts rising by 9% year over year,” added O’Larte.
In 2022, 30 firms held nearly 96% of the industry’s total net A&E reserves. There were five groups that recorded net incurred A&E losses worth $100 million or more. Four of them posted asbestos losses which exceeded $100 million each while one had environmental losses that also exceeded $100 million.
Asbestos reserves made up 77% of total A&E reserves.
What can you say about this story? Share your thoughts in the comments below.
Related Stories
Keep up with the latest news and events
Join our mailing list, it’s free!
