Higher than estimated losses from the Thai floods could put “significant” pressure on Asian insurers’ capital, Standard & Poor’s (S&P) has warned in a new report.

“Generally, early flood loss estimates were lower than what has been emerging and many insurers have been issuing profit warnings,” the report says.

“S&P estimates the current gross losses for insurers globally between $US16 billion ($15 billion) to $US18 billion ($16.7 billion).

“This is in line with the market’s estimate of ultimate losses of $US15 billion ($14 billion) to $US20 billion ($18.6 billion).”

The ratings agency says the big three Japanese insurance groups – Tokio Marine, MS & AD Insurance and NKSJ – have accumulated gross losses of $US11.9 billion ($11 billion) and net losses of $US5.8 billion ($5.4 billion).

“Insurers’ reported net loss estimates have increased sharply in recent weeks, particularly Japanese insurers,” the report says.

“The spike in loss estimates can be attributed to insurers not being able to enter the affected sites during the early stages of the flood.”

S&P says the losses could result in bigger negative earnings and weakened capitalisation.

“But we don’t expect to know the full extent of the flood losses at least until the second quarter of 2012.”

This has resulted in S&P changing its opinion of Thai insurers as the extent of the catastrophe becomes clear.

“We expect the terms and conditions on catastrophe reinsurance, which is mostly covered under a separate agreement from ordinary policies, to continue to tighten,” the report says.

“We also anticipate that catastrophe reinsurance capacity will remain tight, with reinsurance pricing on catastrophe perils increasing significantly.”

On a more positive note, S&P doesn’t expect the underlying reinsurance pricing for the non-catastrophe business to remain competitive. But it also says it is maintaining a negative outlook on the Thai general insurance market.