U.K. insurers expected to withstand severe flood losses from Q4

Despite high loss estimates from the most recent severe flooding in the United Kingdom, insurers there are likely to withstand the impact, rating agency A.M. Best said in a briefing released Monday.

Insured losses from flooding in the last quarter of 2013 are currently estimated at between £750 million and £1.2 billion, according to the firm. As of Monday, £1 was worth $1.85.

“Despite the marginal returns expected for 2013, A.M. Best does not expect an increase in rating downgrades for two reasons: Many U.K. insurers have international business that performed well in 2013, given generally adequate rates and relatively few major catastrophes; and second, insurers have strengthened their balance sheets over the past few years and currently maintain sound capital buffers that exceed requirements for their current rating levels,” Stefan Holzberger, managing director of analytics and author of the briefing said in a press release.

The U.K. government is also currently reviewing legislation that could bring about a national flood reinsurance program, which would take effect in June 2015, A.M. Best added.