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Member, Beacon International Group, Ltd.
NEW YORK (Bloomberg)—Egypt’s anti-government protests, in which demonstrators clash with police and burn buildings, may boost commercial-insurance prices and squeeze supply of political-risk coverage, according to broker Marsh Inc.
Premiums will probably rise and the amount of coverage may fall “immediately in the Middle East and potentially parts of Central Asia and maybe other parts of Asia,” Evan Freely, global head of Marsh’s political-risk and trade-credit practice, said in an interview. Marsh is the insurance-brokerage arm of Marsh & McLennan Cos. Inc.
Political risk insurance, which protects investors, lenders and exporters from losses on violence and events such as government nationalization, may be 10% to 15% more expensive than a month ago in some countries, Mr. Freely said. He didn’t give an estimate of increases in Egypt or Israel. The amount of coverage available per project may fall, he said.
The unrest in Egypt has left about 300 dead, according to a preliminary United Nations toll, as protesters demand President Hosni Mubarak step down. International companies including Amsterdam-based brewer Heineken N.V., Japanese carmaker Nissan Motor Co. and gas explorer BG Group P.L.C. halted operations in the country or evacuated foreign staff since the protests began.
“It’s really thrown people, this event,” said Mr. Freely. “It makes everyone take a step back and say maybe things are a little more risky than we thought they were.”
ACE Ltd., the Zurich-based insurer that operates in more than 50 countries, probably has capital to withstand political risk claims from Egypt, Vinay Misquith, an analyst at Credit Suisse Group A.G., said in a report Monday.
Copyright 2011 Bloomberg
ZURICH (Bloomberg)—ACE Ltd. has capital to withstand Egyptian claims, and investors should buy the insurer’s shares because the firm usually has lower-than-industry-average losses from political upheaval, according to Credit Suisse Group A.G.