Lloyd’s of London has drawn up emergency plans to deal with the collapse of the euro.
Richard Ward, Chief Executive of the specialist insurance market, which is made up of 80 competing syndicates, admitted to the plans in a newspaper interview published over the weekend.
The news follows increased concerns over the financial well-being of the euro area ahead of another Greek election on 17 June, which is seen as a vote on whether the country sticks to its bailout obligations.
Failure to do so would likely mean Greece leaving the euro, a move which could have a knock on effect on other countries using the currency.
Ward told the Sunday Telegraph he was’quite worried about Europe’ and the insurance market had reduced its exposure ‘as much as possible’ to the euro zone.
‘With all the concerns around the euro zone 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,’ Ward said.
‘We’ve got multi-currency functionality and we would switch to multi-currency settlement if the Greeks abandoned the euro and started using the drachma again,’ he added.
‘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.’
Ward said a euro zone break up would mean Lloyd’s taking writedowns on its £58.9bn pound investment portfolio.
Lloyd’s announced a £516m loss for 2011 following the largest catastrophe claims year on record for the 324-year-old insurance market.
Lloyd’s incurred total net claims of £12.9bn during 2011, including £4.6bn of catastrophe claims.