Fitch: Fannie Mae, Freddie Mac impact limited

Fitch Ratings said it has completed an initial review of the investment exposure to Fannie Mae and Freddie Mac held by U.S. life and property/casualty insurers and based on that review, Fitch believes that the impact on the insurance companies' ratings will be limited.

The focus of Fitch's review was on the insurer's investments in Fannie and Freddie preferred and common stock, the agency said.

Based on the assumption that the value of those investments is zero, Fitch said it estimates the insurer's loss exposure to be about $4 billion, which equates to about 0.5% of combined statutory capital for U.S. life and P/C insurers.

Fitch noted that U.S. insurers do have a material exposure to Fannie and Freddie debt, including mortgage-backed securities, adding that it estimates that Fannie and Freddie debt held by U.S. life and P/C insurers total about $350 billion, which equates to about 11% of total investments and 44% of industry statutory capital.

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