The subprime mortgage market not affecting vast majority of insurers

An increasing number of homeowners who are having a tough time dealing with increasing mortgage payments are defaulting, leading to severe trouble in the subprime mortgage market. Trouble that has President George W. Bush stepping in and U.S. Fed Chair Ben Bernanke pledging that the Fed will act as needed to limit the adverse effects on the broader economy, according to the Toronto Star. But how does this affect insurance groups in North America? According to a report released by Moodys Global Insurance, Moodys Perspective on the Impact of Current Credit Market Conditions on Ratings of Insurers Globally, this market is not affecting the vast majority of insurers from an operations or underwriting perspective. The impact, according to the report, is with insurers who are holding subprime-related assets in their portfolios. The likely losses, however, are manageable relative to the earning capacity of the insurer, especially after a strong financial result, the report notes, adding that life insurers have greater exposure than property and casualty and health insurers. North American insurers generally have stable liquidity profiles and the flexibility to continue to hold these securities through the current market disruption and will not be forced to recognize realized losses by selling into a temporarily unfavorable market, the report notes.