Lloyd’s of London preparing for euro collapse
By Andrew Cave, Daily Telegraph, May 2012
The chief executive of the multi-billion pound Lloyd’s of London has publicly admitted that the world’s leading insurance market is prepared for a collapse in the single currency and has reduced its exposure “as much as possible” to the crisis-ridden continent.
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 fears are likely to be shared by a number of European businesses, which are watching developments in Greece.
On Saturday, Juergen Fitschen, co-chief executive of Deutsche Bank, described Greece as a “failed state” run by corrupt politicians.
“I’m quite worried about Europe,” Mr Ward said in one of the first admissions by a major UK business leader of the scale of the crisis that would be prompted by a eurozone collapse.
“With all the concerns around the eurozone at the moment, we’ve got to be careful doing business in Europe and there are a lot of question marks over writing business in the future in euros.
“I don’t think that if Greece exited the euro it would lead to the collapse of the eurozone, but what we need to do is prepare for that eventuality.”
Mr Ward says Lloyd’s had been working hard on contingency planning and had the capability to switch settlement of European underwriting from euros to other currencies.
The contingency planning comes as German politicians piled the pressure on Greece ahead of elections on June 17.
A conservative member of German chancellor Angela Merkel’s cabinet said today Germany would not “pour money into a bottomless pit”.
On Sunday, Swiss central bank chief Thomas Jordan admitted his country is drawing up an action plan in the event of the euro’s collapse.