Moody's Investors Service cut the ratings outlooks for units of Japan's three largest nonlife insurers to negative from stable, saying the nation's strongest earthquake on record will put pressure on their profitability.

Moody's Japan K.K. affirmed ratings on the subsidiaries of MS&AD Insurance Group Holdings Inc., Tokio Marine Holdings Inc. and NKSJ Holdings Inc., the statement said. The affirmation on the ratings reflects an assumption that the insurers will be able to manage the losses, it said.

Payouts for Japanese nonlife insurers may reach a record after the widespread tsunami damage caused by the magnitude 9.0 temblor on March 11, Hisahito Suzuki, chairman of The General Insurance Association of Japan, said last week. The insurers will use reserves set aside, reinsurance and government funds to cover the earthquake payouts, and will not be affected, he said.

"The negative outlook for these property and casualty insurers reflects the view that losses from the event will further pressure the profitability and, to a lesser degree, the capitalization benchmarks of these insurers at their current rating levels," Moody's analysts Natsuko Ishida and Minoru Kubota said in a report Wednesday.

The nation's three-biggest nonlife insurers may have ¥20 billion to ¥80 billion each in commercial losses, according to a report by Keefe Bruyette & Woods Inc. dated March 14. The three have set aside about 88 percent of their ¥593.2 billion maximum liability, Fitch Ratings said in a report last week.

"Given the large number of prefectures and sectors that have been impacted by the earthquake and tsunami, it will likely take many months to ascertain the true extent of insured losses," Moody's said. "This situation magnifies the potential for upward revisions of initial loss estimates."