Message #17509

[Psalm 51:17]

A&G's AIG Moment Approaching: Moody's Downgrades Generali, Cuts Megainsurer Allianz Outlook To Negative
15 February 2012, by Tyler Durden (Zero Hedge)
http://www.zerohedge.com/news/ags-aig-moment-approaching-moodys-downgrades-generali-cuts-megainsurer-allianz-outlook-negative

For a while now we have said that the very weakest link in Europe is not the banks, not the ECB, not triggered CDS, and not even the shadow banking system (well, infinitely rehypothecated Greek bonds within a daisychain of broker-dealers, which ultimately ends up at the ECB at a negligible repo discount, that could well be the weakest link - we will have more to say about this over the weekend) but two very specific insurers:

Italy's mega insurer Assecurazioni Generali, which at last check had more Greek bonds as a % of TSF than anyone else, and Europe's biggest insurer and Pimco parent, Allianz, which is filled to the gills with pretty much everything (for more on Generali, or as we like to call it by its CDS ticker ASSGEN read here, here, here, and here).

Well, Moody's just gave them, and the entire European space, the evil eye, and soon the layering of margin calls upon margin calls, especially if and when Greece defaults and a third of ASSGEN's balance sheet is found to be insolvent, will make anyone who still is long CDS those two names rich.

Assuming of course the Fed steps in and bails out the counterparty the CDS was purchased from.