A.M. Best, one of the most widely followed insurance rating agencies, last night issued warnings about 20 insurers, ten based in Bermuda, because of concerns that Hurricane Katrina losses threaten to undermine each insurer?s financial stability.

The ratings agency said ?the insured losses from Hurricane Katrina have had a significant impact on some insurers, leaving potential capital shortfalls relative to their current rating level and also calling into question the risk management capabilities of some insurers?.

A.M. Best issued one downgrade, and 19 warnings. The downgrade knocked the financial strength rating of Bermuda-based reinsurer Olympus Re Holdings down to B+ (very good) from A- (Excellent) because of concerns the company?s financial stability would be undermined by Katrina losses.

Olympus, a privately-held company says it won?t issue an estimate of its losses from the devastating August 29 storm. (see separate story).

The rating agency put the ratings of 19 other insurers under negative watch, indicating that it will review the individual situation?s with each company?s management, before making a decision on whether to affirm the existing ratings or downgrade ratings.

A.M. Best senior analyst John Laubach told officials would be sitting down with companies as quickly as they could. ?Wetry to get companies off review as quickly as we can,? he said. Further ratings actions against insurers are likely, A.M. Best said.

Katrina is likely to be the costliest ever insured disaster with a bill up to as much as $60 billion.

The total bill for Bermuda?s reinsurers and insurers continues to mount, conservatively falling into the $3 billion to $4 billion range, based on preliminary estimates issued by some of the Island?s companies.

The final amount could be higher with several companies not yet releasing figures for what they expect to pay out in Katrina-related claims.

So far, Bermuda companies look set to foot a bigger bill than the London market with an estimate of the loss being taken by insurance and reinsurance syndicates at Lloyd?s of London weighing in at ?1.4 billion ($2.55 billion), according to a Wednesday report from industry newsletter The Insurance Insider.

On A.M. Best?s watch list are ten Bermuda companies: Olympus Re, DaVinci Re, Endurance Specialty, Imagine Insurance Company Ltd., IPC Re, Montpelier Re, Partner Re, PX Re, XL Capital and units, and the Alea Group. Ratings for each company have fallen under review with negative implications.