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.