The following is a press release from Moody's Investors Service: "Although the IIF financing offer will crystallise losses in the income statements of some insurers, Moody's believes that it will have a limited impact on the overall capitalisation of the European insurance sector because (i) the sector has limited exposure to Greek sovereign debt, and (ii) the value of government bonds for most of the sector is already marked to market
The following is a press release from Moody's Investors Service:

"Although the IIF financing offer will crystallise losses in the income statements of some insurers, Moody's believes that it will have a limited impact on the overall capitalisation of the European insurance sector because (i) the sector has limited exposure to Greek sovereign debt, and (ii) the value of government bonds for most of the sector is already marked to market.

Moody's estimates that Moody's-rated insurers currently hold a relatively small portion of Greek government debt, at around EUR10 billion. The holdings are mainly concentrated in continental European insurers, representing only on average 0.5% of insurers' investments and around 3% of their shareholders' equity at year-end 2010 before considering policyholder participation.

The IIF states that institutions participating in the offer should expect a 21% net present value loss relative to par, based on a 9% discount rate. However, as most European insurers already mark to market their Greek government bond exposure, participating in the offer is unlikely to lead to any additional reduction in shareholders' equity. In addition, according to most local regulatory treatments, unrealised losses are already included in the calculation of solvency capital. Moody's
consequently expects a limited impact from impairments on the sector's available solvency capital under Solvency I".

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