BUENOS AIRES—Argentina's move to nationalize an energy company has made political risk underwriters even more leery of that country and may result in coverage drying up, at least for some risks.

But while Latin American countries have a history of nationalizing firms that deal in natural resources, many experts do not expect other nations to follow Argentina's lead at this point. But Argentina itself may expand its nationalization efforts as it seeks to add revenues and jobs, some experts say.

Argentine President Cristina Fernandez last week announced the government's intention to take over Yacimientos Petroliferos Fiscales, a subsidiary of Madrid-based Spanish energy company Repsol YPF S.A., which is Argentina's largest oil company. The Argentine government accused Repsol of not spending enough on exploration and said it would compensate the company, with an amount determined after the takeover.

Repsol posted a statement on its website saying that it will take “all legal measures to preserve the value of its assets and interests of all shareholders. The company considers the announced measure to be manifestly unlawful and gravely discriminatory.” A Repsol representative did not immediately respond.

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The seizure of YPF is not the first time Argentina's government has nationalized a private concern, said Eugenio J. Aleman, a senior economist at Wells Fargo Securities in Charlotte, N.C. He said the government took over the pension system a few years ago. Now, “they are starting to step it up, and it will depend on how weak the economy gets,” he said. The government is looking for more money, and nationalizing YPF is a way to get it. The government also is looking to expand employment, and government-owned companies traditionally employ more people than their private counterparts, he said. He said this could be the beginning of a process that involves more utilities.

Mr. Aleman queried Argentina's argument that Repsol did not invest enough in exploration and production. He said the argument ignores the government's efforts to keep domestic oil price artificially low at below $30 a barrel. “Nobody will invest when the international price of petroleum is over $100 per barrel.”

“It'll be a long process of working this out and determining compensation,” said Stuart Barrowcliff, vp and senior underwriter-political risk and trade credits for XL Group P.L.C. in New York.

In addition, Spain and the European Union could take economic measures against Argentina, Mr. Barrowcliff said. He said that for Argentina, foreign direct investment is important, particularly in the oil and gas sector. “This could shoot them in the foot in terms of what they need for production,” he said.

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“There's always technically recourse through the legal systems, but you're going to run into issues of sovereign immunity,” said Roger Schwartz, senior vp in Aon Risk Solutions' political risk practice. He said the dispute could end up in arbitration, but added that Argentina has a “boatload of unhonored arbitration awards.”

Robert Hartwig, president of the Insurance Information Institute Inc. in New York, said that “with the possibility of civil unrest—also covered by political risk coverage—down the road (in Argentina), political risk insurers are likely to be very cautious when it comes to exposing themselves to Argentine political risk for years to come.”

“For all intents and purposes, the political risk market has had an amber flag out for Argentina for some time,” said John T. Lavelle, head of political and credit risks, North America, at Willis Group Holdings P.L.C. in New York. “I think this puts a stop on it.”

Mr. Lavelle added that he believes the move is more of an economic play than a nationalistic play because Argentina is “blowing through a lot of foreign exchange” because of oil imports.

XL's Mr. Barrowcliff said the political risk market has been “cautious” on Argentina for some time. “This will certainly cause everybody to maybe take a further step back. People are willing to look at this to see if this is a trend that might bleed into other sectors.”

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“The concept of resource nationalism in Latin America is nothing new—it goes back to the oil company confiscations in Mexico in 1938,” said Aon's Mr. Schwartz. He noted that the late Chilean President Salvador Allende took over the copper industry.

Nationalizations in Latin America tend to deal with natural resources, said Willis' Mr. Lavelle. He said it was too early to tell whether Argentina's strategy would be copied by other countries. He pointed out, though, that nations such as Brazil, Mexico, Chile and Peru are investment-grade countries with growing economies that would be less likely to do so.

“It is probably going to stay in Argentina,” said Wells Fargo Securities' Mr. Aleman. But he added, “you might see something happening” in countries such as Bolivia or Ecuador that are not friendly toward the United States.

“Recent events have demonstrated that political risk can arise in emerging economies at unpredictable times,” Evan Freely, global leader of Marsh Inc.'s political risk and structured credit practice in New York, said in an email. “It is imperative that energy companies and others operating in these emerging markets be aware of such political risks, and have strong insurance and risk mitigation programs in place to address these concerns when they arise.”