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Best sees European floods hitting insurers, but not too hard

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Recent flooding in France and Germany will affect insurers’ half-year results but is not expected to affect their capitalization, according to a briefing note by A.M. Best Co. Inc.

The rating agency said it did not expect to downgrade any insurers as a result of flood losses caused by Storms Elvira and Friederike, which hit parts of France and Germany in quick succession at the end of May and beginning of June.

Insured losses are expected to be between €900 million and €1.4 billion ($1.01 billion to $1.58 billion) in France and about €1.2 billion ($1.35 billion) in Germany, Best said in the note “French and German Floods to Dampen Insurers’ H1 2016 Earnings; Negative Rating Actions not Anticipated.”

In France, about half of the insured losses likely will be picked up by the Caisse Centrale de Reassurance S.A., the country’s state-backed reinsurer.

In Germany, Best said, there is no flood insurance backstop so flood typically is excluded from many coverages, but can be bought as a policy extension.