In a look at the direct and indirect exposure U.S. insurers have to Russian and Ukrainian investments, global credit rating agency analysts at AM Best say the impact of Russia’s invasion of Ukraine on U.S. insurers’ direct investments appears to be limited, but their indirect exposures may be more substantial.
“While U.S. insurers have little exposure to Russian companies in their stock portfolios, they do have exposures to companies that derive a share of earnings from Russia,” the ratings company said in a statement accompanying the release of its research report, U.S. Insurers’ Indirect Exposures To Russia May Be Significant.
As concerns and speculation that Russia may default on its debt continue to mount, the ratings agency says “insurers’ direct investments (in) Russia and Ukraine appear to be limited, as they have less than $2-billion in bonds exposed to Russia and Ukraine. However, some insurers’ corporate exposures could be affected because of their dependence on Russia and Ukraine,” they write. “The magnitude of losses will depend largely on the duration of the conflict, the extent of sanctions and the impact on the global markets.”
The firm adds that it estimates the largest exposure at any company is still less than two per cent of capital and surplus. Still, they say “indirect investment through suppliers and customers of U.S. and European companies may still be impacted, similarly to the already substantial impact on commodity and energy prices.”
