Insurance P&C Meltdown Alert

From the Wall Street Journal’s Hear on the Street: State of Alert for Insurance Firms (may hit pay wall)

Some property and casualty insurers are particularly vulnerable to a downturn in the municipal bond market.

The list: value of municipal securities holdings as a ratio to common equity:

  • W.R. Berkley  153%
  • Travelers  152%
  • Chubb 1 27%
  • Allstate  87%
  • Everest RE  58%

Munis account for about 30% of property-and-casualty insurers’ invested assets. And companies like Travelers and Chubb have more than half of their fixed-income investment portfolios in the securities…

Those exposures—Travelers has $41 billion in munis; Chubb, $20.2 billion—may hit insurers’ book values if the recent selloff doesn’t reverse, or gets worse. As of Nov. 16, Travelers had likely recorded losses on its muni portfolio of about $1.4 billion, and Chubb, about $670 million, according to a report by UBS.

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