Swaps on Insurers Slow Rise as Market Sees Sandy Loss Manageable

The costs to hedge insurance company debt against losses with credit-default swaps slowed their rise as investors view damages from Hurricane Sandy, the biggest Atlantic storm in history, as manageable.

Reinsurers and insurers including American International Group Inc. may face insured losses, what insurers are contractually bound to pay, of $7 billion to $15 billion from U.S. onshore properties, AIR Worldwide, a Boston-based risk-modeler, said yesterday. That compares with $45 billion for Hurricane Katrina in 2005 and $85 billion for all of 2008, according to Thomas Walsh, head of fundamental credit research at Barclays Plc.