Aviva Happy With Exposure to Euro Zone Debt: CEO
Insurer Aviva is happy with the exposure it has to indebted euro zone member states and is confident that European leaders will find solutions to the de debt crisis, Aviva CEO Andrew Moss told CNBC Friday.
Aviva has no exposure to government debt in Greece and Portugal, it has "a little bit in Ireland", it has around 300 million pounds ($465 million) worth of Spanish government debt and about 900 million pounds in Italian shareholder funds, Moss said.
"Of course, we have large life businesses in those countries, with that comes a little bit of exposure but we're actually quite happy with the exposure we have right now," he said.
Aviva is a long-term holder of these bonds that match the liabilities they have in the countries, so "as long as they pay at maturity we're perfectly comfortable," although the company tweaked some of its exposure, Moss added.
"We've moved most of our Irish assets out of Irish government bonds into French and German government bonds for instance," he said.
European authorities realize how serious the debt crisis is and will take measures to stop it, although the question is where the line in the sand will be drawn, he explained.
The general consensus is that in Italy, for example, authorities will take all measures to ensure that the creditworthiness persists, according to Moss.
"The capital position of the company is very strong, we've got a 7 billion pound capital surplus, that's there to absorb anything that happens. But my own view is that once you're talking about Italy, the European authorities simply can't allow that [default] to happen…. There are levers that can be pulled," he said.
"Recent events and recent announcements in Europe suggest that the focus is there, action will be taken," he added.
However, Europe must go through deep structural changes for the debt problem to be fixed, he said.
"There is a culture of entitlement… and these things have to change," Moss said, citing the example of his company which pays its employees in Ireland 20 percent more than those in the UK, and "that's not sustainable."