05/27/2012 ICA
By Andrew Cave, The Telegraph – “Richard Ward said the London market had put in place a contingency plan to switch euro underwriting to multi-currency settlement if Greece abandoned the euro.
In an interview with The Sunday Telegraph he also revealed that Lloyd’s could have to take writedowns on its £58.9bn investment portfolio if the eurozone collapses.
Europe accounts for 18pc of Lloyd’s £23.5bn of gross written premiums, mostly in France, Germany, Spain and Italy. The market also has a fledgling operation in Poland.
Lloyd’s move comes as a major Franco-German provider of credit insurance for eurozone trade, Euler Hermes, said it was considering reducing cover for trade with Greece because of the risk the country might leave the eurozone.
When a company goes bust, it is often sparked by withdrawal of credit insurance for suppliers wanting to trade with it.
A spokesman for Euler Hermes, Bettina Sattler, told Bloomberg: ‘The outcome of the new elections in June remains highly uncertain. Consequently, the situation is further deteriorating. The risk of Greece exiting the eurozone has been revived.
‘In light of the recent developments, Euler Hermes will most probably have to switch to a more prudent approach. [We have] maintained a high level of cover for [our] customers until today. But now we are confronted with a changing situation.’
Lloyd’s fears are likely to be shared by a number of European businesses, which are watching developments in Greece.” Read more.
Greece warned of public finances collapse – “Greece’s public finances could collapse as early as next month, leaving salaries and pensions unpaid unless a stable government emerges from the June 17 election, according to Lucas Papademos, the technocrat prime minister who left office after this month’s inconclusive vote. Mr Papademos warned that conditions were deteriorating faster than expected with cash flow likely to turn negative in early June amid a sharp fall in tax revenues and a loosening of spending controls during two back-to-back election campaigns.” Read more.
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