US life insurers’ risk
exposure to potential debt defaults by peripheral Eurozone
countries is small, according to Shachar Gonen, an analyst at
rating agency Moody’s Investor Services.
The peripheral countries –
Greece, Ireland, Italy, Portugal and Spain – are those that find
themselves under financial stress, Gonen added.
“Any losses for US life
companies [resulting from a default] will be low relative to their
capital due to their small exposures,” stated Gonen.
Specifically, the total
statutory book value of peripheral Eurozone financial institution
and sovereign exposures held by Moody’s-rated US life insurers at
the end of 2010 was $11.2bn.
This amount represents only
0.4% of the industry’s cash and invested assets and about 4% of its
statutory capital.
Of the $1.2bn, Gonen pointed
out that of which 84% was held by only 10 insurers.
In addition, only one US life
insurer, AFLAC, had exposure to financial institution and sovereign
debt of peripheral eurozone countries of greater than 20% of
statutory capital at year-end 2010.
