Fitch: $5 Billion Potential Losses for the Marine Insurance Sector

SadaNews - Fitch Ratings has stated that the withdrawal of marine insurance against war risks on ship structures in the Gulf could negatively impact the credit rating of U.S. companies specializing in property and casualty insurance, which are significantly exposed to shipping activities in the Gulf, while global insurance companies on a broader scale will be able to absorb the repercussions.

The credit rating agency mentioned in a note issued on March 9 that the impact over the next twelve months will depend on the development of losses and the duration of the shipping disruption in the Strait of Hormuz and nearby areas, as "profit volatility and capital adequacy" are the two main factors that differentiate the credit rating between the most vulnerable insurance companies and their stronger counterparts.

Fitch estimated that sector losses due to the crisis could exceed five billion dollars in a possible scenario involving the destruction of several large ships, or irreparable damage, or their actual loss through confiscation.