Eastern promise

The fall in central and eastern European currencies has triggered a debt crisis in the region, causing many investors to panic and take flight.But not life insurers, who still see huge potential in the markets there. Blake Evans-Pritchard reports

Over the past decade, as eastern European countries have struggled to throw off their Soviet past and embrace membership of the European Union, many have experienced a steady rise in foreign debt (see figure 1). In good economic times, servicing these loans was not a problem. Investors seemed to have an infinite amount of cash that they were willing to pour into eastern European markets, in anticipation of much better returns than they could experience elsewhere.

But as Klaus Junker, CEO of