Moody’s: credit impact of U.S. life insurers’ exposure to Europe is modest

Moody’s notes that a large part of the European holdings comprise higher quality financial institutions and sovereigns with more robust economies. That will protect the industry somewhat even if economic conditions drastically deteriorate in Europe, according to the report.

Still, this exposure is concentrated among a few insurers, with the 10 holding the largest dollar amount representing 75 percent of the industry’s total holdings, says Moody’s.

“The credit impact from the declining macroeconomic situation in Europe will be modest for U.S. life insurers,” says Shachar Gonen, a Moody’s assistant vice president—analyst and author of the report. “Moody’s estimates that a pre-tax loss for the Moody’s-rated U.S. life insurance industry in a severe stress scenario is in the range of $2.1 billion, representing less than 1 percent of year-end statutory capital.”