FRANKFURT - Insurance claims from devastating explosions at the Chinese port of Tianjin last week could exceed initial estimates and strain the finances of regional insurers, credit rating agency Fitch said on Tuesday.
Credit Suisse analysts estimated total insurance losses could amount to $1 to 1.5 billion, basing their estimates on Chinese media reports, but Fitch said the bill could go higher.
Local Chinese insurers are set to bear the brunt of the costs and it is not clear how much of their exposure will be transferred to reinsurance companies.
"The high insurance penetration rate in this area could make the blasts one of the most costly catastrophe claims for the Chinese insurance sector in the last few years," Fitch said.
"Claims from the blasts are likely to undermine the financial performance of some regional players and those property and casualty insurers with high risk accumulation in the affected areas," the agency added in a statement.
It was too early to say how the credit strength of China's insurance sector as a whole would be affected, it added.
If claims were to come in at the high end of the forecast, it would represent more than 5 percent of aggregated shareholder capital of the six major insurers in Tianjin, Fitch estimated.
PICC Property and Casualty Company, Ping An Property & Casualty Insurance Company of China, China Pacific Property Insurance, China Continent Property & Casualty Insurance, Sunshine Property & Casualty Insurance and Taiping General Insurance are the most active insurers in the region, Fitch said.
They account for nearly 80 percent of property and casualty premiums.
Property and casualty insurers in the Tianjin region typically pass on about 10-15 percent of risks to local and international reinsurers, Fitch said.
Zurich Insurance and Allianz are among the foreign insurers who have received claims stemming from the blasts, which killed more than 100 people and destroyed or damaged thousands of cars at Tianjin, the world's third largest port in terms of total cargo volume.
However, Germany's Allianz has said it did not expect major financial claims from the explosions, which occurred on August 12.