Despite 2013 property/casualty catastrophe-related losses being below historic averages, the risk of catastrophe-related loss exposure remains significant for 2014 and beyond, according to a report released Friday by Moody's Investor Service Inc.

Based on modeled annual average losses for the companies Moody's covers, “Catastrophe Exposure Remains Key Risk For US P&C Insurance Firms” expects baseline catastrophe losses on average to amount to between 4% and 6% of a company's earned premium in any given year, Moody's said in the report.

Although the property/casualty industry's strong capital position would enable it to withstand even an event with a 1-in-250 probability, the key credit risk to an insurer is “capital impairment” from a large catastrophe or series of events, Moody's said in its report.

“Based on our surveys of U.S. P&C companies, even severe catastrophes (or series of catastrophes) such as those at the 1-in-100 year or 1-in-250 year level can be absorbed by a moderate portion of equity capital for most companies, rather than threatening solvency,” the Moody's report said.

Among low-probability, high-severity events, hurricanes remain the most prominent catastrophe risk, followed by earthquakes, according to Moody’s. Less severe storms however, which can occur more frequently, are particularly hard to manage.

“Even though severe storms generally do not threaten capital to the degree that hurricanes and earthquakes do, they nevertheless can cause significant earnings volatility, and can significantly slow capital generation. Severe storms are also challenging from a risk management standpoint as several complicating factors make them difficult to model,” said the Moody’s report.

Different companies will have different risk profiles depending on which types of coverage are extended into which areas. “The primary drivers of catastrophe risk, resulting in the divergence in individual company loss estimates, are product line (e.g. homeowners’ and commercial property) and geography (e.g. regions susceptible to hurricanes or earthquakes),” said the Moody’s report.