NEW YORK (Bloomberg) - US property and casualty insurers such as Chubb Corp. and Travelers Cos. face "minimal" risk of investment losses and no prospect of ratings downgrades this year from the subprime mortgage crisis, Fitch Ratings said.

About 98 percent of the industry's fixed income portfolio is investment grade, Fitch said in a statement today, and less than 14 percent is in mortgage-backed securities. Three percent of the investments of the 20 largest publicly traded property and casualty insurers are tied to subprime mortgages, according to Fitch's review of company regulatory filings and public statements.

Rising defaults on US subprime mortgages forced more than 100 lenders to cease operations or seek buyers since last year as investor demand for securities backed by the debt plunged. The 24-member KBW Insurance index fell 8.5 percent since June 30 amid concern over insurers' mortgage-backed investments.

"The exposure is manageable," Mark Rouck a Fitch insurance analyst said in an interview. Even as credit problems spread to commercial paper and elsewhere, "insurers don't have the liquidity concerns that finance companies have," he said.

Among the 20 companies, American International Group Inc., the world's largest insurer, accounts for roughly two-thirds of the investments linked to loans to the riskiest borrowers, Fitch said. AIG, based in New York, said it held $28.7 billion of securities backed by subprime mortgages and $3.9bn in collateralised debt obligations containing subprime mortgage bonds as of June 30.

Chubb, based in Warren, New Jersey, said it has no subprime investments. St. Paul, Minnesota-based Travelers said less than half a percent of its fixed income portfolio is backed by the riskiest mortgages.