The boss of Italian insurance giant Generali has pleaded with Eurozone leaders to thrash out a deal to save the euro from collapse amid concerns that continental insurers are getting sucked into the malestrom.
Giovanni Perissinotto, the chief executive of Assicurazioni Generali, said: “Europe faces a serious risk of breaking up into its constituent parts and finding itself and its various member states impoverished.
“Unfortunately we have not seen yet a coordinated response and I urge our central authorities, such as the European Central Bank, to act in a decisive way.”
Since Perissinotto's statements last week, the European Central Bank has today started to hoover up Italian and Spanish sovereigh debt, easing pressure on bond yields and prices.
Generali is heavily exposed to Italian sovereign debt. Without support from the European Central Bank or the European bailout funds, the value of Italian bonds could plummet.
Under mark to market accounting rules, Generali would have to take a hit on its profit and loss account or IFRS equity if the situation deteriorates.
Although Generali is currently rated AA-, falling bond prices could seriously impact its current fairly solid strength.
Groupama is currently suffering a similar problem. Groupama was downgraded by Fitch amid the eurozone deterioration
Allianz, Ageas, Axa are all also exposed to Italian sovereign debt and are watching developments closely.
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