A.M. Best has revised its view of the U.S. property & casualty industry's ultimate asbestos and environmental (A&E) losses downward to $117 billion from $121 billion.

Asbestos exposures now are estimated at $75 billion, up from $65 billion, and environmental losses at $42 billion, down from $56 billion.

A.M. Best said that the industry posted significantly lower A&E losses in 2008—down nearly 50 percent—and increased its aggregate funding for such liabilities by nearly $5 billion over the past two years.

Through 2008, the industry's incurred-to-date losses for A&E liabilities totaled more than $66 billion for asbestos exposures and nearly $35 billion for environmental costs, net of reinsurance and adjusted for two companies' significant loss portfolio transfers in 2002 and 2005.

The increase in asbestos estimates reflects ongoing, elevated levels of annual incurred losses, as well as a subtle shift of losses away from products liability claims to more costly non-products claims against more peripheral defendants.

Also affecting asbestos losses is a growing proportion of settlements in more serious cases, principally related to mesothelioma, which is increasing the average values of such claims.

The reduction in environmental loss estimates reflects a steady decline in incurred losses since 1999, while the industry's "mega" losses relating to the petrochemical industry largely have been settled.

Paid losses remained consistently high over the past five years, averaging just over $3.0 billion a year for asbestos and just under $1.0 billion a year for environmental.

Nearly 70% of the industry's 2008 A&E incurred losses were concentrated among 10 insurer groups, while 10 insurers also drove 70% of the industry's asbestos losses, and 10 insurer groups generated about 85% of incurred environmental losses.