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Insurers well-positioned to cope with fallout from Greece

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The current economic volatility in Greece is unlikely to have a major effect on international insurance companies, ratings agencies say.

While the possibility of Greece exiting the eurozone would “hit market confidence in the region,” insurers and reinsurers operating in Europe “are well-positioned to withstand a continued period of volatility,” A.M. Best Co. Inc. said in a briefing note. The small size of the Greek domestic insurance market is unlikely to cause a “contagion effect” in other eurozone countries, the note said.

Insurers and reinsurers have reduced their exposure to Greek sovereign debt in recent years, the report said.

“European insurers have significantly reduced their direct exposure to Greece since 2010,” Standard & Poor's Corp., which does not rate any domestic Greek insurance companies, said in a report.

“There has also been a general trend for insurers in the core eurozone countries to reduce exposures in the periphery in recent years, reducing the investment risks that could result from a country leaving the eurozone,” it said.

“Market volatility is potentially the greatest area of risk to rated insurers from developments in Greece,” said Mark Button, a credit analyst at S&P in London. “Many insurers based in core eurozone countries have, in recent years, sought to more closely match their local liabilities with domestic assets and have, therefore, reduced potential investment risks associated with a country leaving the eurozone,” he said.

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