When a global leader in the insurance industry is openly admitting that they have reduced their exposure to the crisis in the eurozone and have prepared for its demise, the world should stand up and take notice.
Lloyds of London has recently announced that they have minimized their exposure to the ongoing problems with the single currency. At the heart of the matter, there is a contingency place to switch to multicurrency underwriting should Greece exit the euro zone. According to an interview given to The Telegraph, Richard Ward stated that Lloyd’s of London may lose a percentage of their £23.5 billion portfolio of investments if the euro zone collapses.
Other credit insurers in Europe also are reducing their exposure, specifically Euler Hermes that recently announced they would be reducing Greek trade cover because there is a high risk they will exit the euro. Of course, much is contingent upon the upcoming elections Greece because there is a great deal of uncertainty over the outcome of the pro-austerity versus anti-austerity factions.
In the words of the Deutsche Bank’s co-chief executive, Juergen Fitschen, Greece is a country ruled by politicians who are corrupt and is a “failed state.” CEO Ward of Lloyd’s of London is amongst the first major business leader in the UK to admit that the euro zone is in such great crisis and the outcome could significantly put a damper on the UK economy.
All signs are indicating that other large financial institutions and insurers are planning for contingencies because they believe Greece will exit the single currency. If and when this happens other member states of the euro zone are expected to also collapse. The market indicators are there which is causing further concern within the international community.
