Insurer Zurich says it provisions British, Irish property
Swiss insurer Zurich Financial Services said on Friday that it had set aside 330 million more dollars to meet potential losses arising from its commercial property loans in Britain and Ireland.
"Given the continuing deterioration in the UK and Irish property markets, the group has carried out a further review of its property development loan books and the respective provisioning levels," said the insurer in a statement.
As a result, it "reported a 330 million dollar (256-million-euro) increase in the loan loss provisions in its commercial property loan books in the UK and Ireland to be taken in the second quarter 2010," it added.
The insurer found after its review that it had to increase provisions for its British loans by 250 million dollars as the value of loan redemptions fell.
In addition, drops in property prices have led to declines in the value of collaterals, "especially in respect of undeveloped land, where market values have experienced significant deterioration."
The insurer also increased its provisions in Ireland by 80 million dollars -- bringing the total provisions on the Irish portfolio to half of loan values.
The insurer had halted new lending for commercial property developments in Ireland and significantly cut back loans in Britain over 2009.
Zurich is scheduled to report its first half earnings on August 5.
© 2010 AFP