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€ 800 million is the capital of the insurance companies that are threatened by the possible 50-per cent haircut of the Greek foreign debt. Private insurers in Greece expect bonds and short-term notes worth just over € 2 million to mature only in the next three years. At the same time, if on 30 December, 2010 Greek private insurers held shares traded on the Athens Stock Exchange for € 1.5 billion, now their value is less than € 700 million due to the devaluation of the stock index by 50 per cent.

Particularly adverse economic results are reasonable grounds for concern on the part of the insurance companies themselves and the people who have savings in them. The future of the insurance market in the event of a 50-per cent haircut was the subject of the meeting of representatives of the companies with the Bank of Greece. All investments are frozen and there is no information from the central offices of the international insurance giants, all are in waiting mode. The problem is that since the beginning of 2012, all assessments of shares and bonds will be based on current market prices, and the companies will have to have the adequate capitalization and asset quality required by Solvency II.

If the words of the President of Eurogroup Jean-Claude Juncker about a 50-per cent cut in Greek bonds are true, private insurers will have to choose from several options, namely: to increase capitalization if old shareholders are unable to participate in it, to seek new ones, to sell investment packages and stakes in other companies and to resort to outsourcing, to sell real estate and subsidiaries. The insurance companies that hold large amounts of Greek government bonds are the most vulnerable but also those that have shares in Greek banks in their capital.

Naftemporiki newspaper reports that the National Insurance Company, part of the National Bank of Greece, has recorded losses of € 105.6 million for 2011. This is Greece's largest insurance company with a 25 per cent market share. The National Bank of Greece has pledged to increase its capitalization by 50 to 100 million, if necessary.

A representative of a large Greek insurance company told Imerisia newspaper that the situation is highly critical and it would shake the companies, but significantly less than it would shake the Greek banking sector. The Agricultural Bank of Greece is under pressure to sell its insurance company despite the reluctance of the Board.

Another insurance company with a rich portfolio of Greek bonds is Metlife Alico, but it has managed to cope with the situation because it had savings, which provided it with cash.