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Member, Beacon International Group, Ltd.
LONDON—The ongoing crisis in the eurozone will continue to challenge insurers, Oldwick, N.J.-based ratings firm A.M. Best Co. said on Thursday.
“A.M. Best has a negative view of the overall market environment for European insurers, as a workable solution to the eurozone crisis continues to be elusive,” the ratings firm said in release. “A Greek withdrawal from the common currency could lead to contagion affecting other asset classes and countries in peripheral Europe, particularly Portugal, Spain and Italy.”
Moreover, the widespread austerity measures enacted to curb structural fiscal imbalances are themselves “a source of risk due to the likely short-term negative implications on short-term growth—which is sorely needed to draw the eurozone out of its current recession.”
Taken together, these conditions portend a prolonged adverse with economic environment for insurers, the report concludes. “For insurers, A.M. Best expects a continued period of volatile capital markets, particularly with regard to sovereign debt and financial institution securities.”
LONDON—Insurers in Spain and Italy would be hit harder than those elsewhere in Europe if Greece left the eurozone because they hold more risky sovereign and bank debt, ratings agency Fitch Ratings said on Thursday.