Standard & Poor’s Ratings Services said that the reinsurance sector’s strong capital and very strong earnings thus far in 2012 will allow it to withstand losses well outside the range of current insured loss estimates for Superstorm Sandy.

In a report titled, “Global Reinsurers Have A Material Cushion Until Sandy Becomes A Capital Event,” S&P said it beleives that the sector has adequate capital to absorb the losses from Sandy, even if the estimates deteriorate further. The firm estimates that insured losses from Sandy would have to exceed $50 billion to start materially eroding the sector’s capital base.

A “material erosion” is defined as 5 to 10 percent of capital after earnings. S&P said this is based on its earnings estimates for the sector, an allowance for catastrophe loads in reinsurers’ results, an assumption of retention by primary insurers, and the current capital position of the market.

“If our expectations of capital regeneration are not met, our ratings on some individual reinsurers could come under pressure. However, on the whole we continue to believe that Superstorm Sandy will be an earnings event for the sector, and will have a limited impact on our ratings on global reinsurers,” said Standard & Poor’s credit analyst Doug Ostermiller.

On Oct. 31,  S&P said it believed Sandy would not affect most ratings on U.S. property/casualty insurers, global reinsurers, and certain catastrophe bonds.