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.