Argentina Abandons Dollar Link as Economic Crisis Continues – Conference Scheduled

February 4, 2002

Argentina’s Finance Minister Jorge Remes Lenicov announced that the peso would be allowed to float freely against the dollar beginning Wednesday. The move marks the end of any linkage between the two currencies which many have blamed for deepening Argentina’s economic crisis, as exports became too expensive, and were squeezed out of many markets.

Convertibility will be accompanied by an easing of the freeze on bank accounts, which have led to civil disorders in the country over the last months. The move will affect the investments of foreign banks and insurance companies doing business in the country, as part of the package provides for a straight conversion of loans made in dollars into pesos on a one-for-one basis. The expected fall in value of the peso against the dollar means big losses are in store on loans, as they can be repaid for far less than their original value in dollars.

While the official exchange rate for the peso has been set at 1.4 to 1, its value is expected to slip further when it begins to float freely in the international currency markets. Last week the unofficial rate was around 2 to 1.

Argentina’s ongoing crisis will be one of the topics under discussion at the Latin America Roundtable, March 6-8, 2002 at the Wyndham Miami Beach Resort, in Miami, Florida. The Conference will also hear presentations on new industry regulations and the impact of globalization in discussions by Latin American insurance supervisors and senior private sector decision-makers. The conference is organized by the International Insurance Council (IIC) with support from the Latin American Insurance Federation (FIDES), the Geneva Association, and the International Insurance Foundation. Corporate hosts for the Roundtable are American Re, Liberty International and XL Re Latin America.

The program will also include a spotlight report by Carlos Baldino of Standard & Poor’s on Argentina’s economic situation and it’s impact on local and regional insurance business and a report on recent changes in Mexico’s insurance law by Mexico’s Insurance Superintendent Manuel Aguilera, who is also chairman of the International Association of Insurance Supervisors.

Kevin T. Cronin, president and IIC CEO stated that Latin America “remains a strategically important market for the global insurance industry and for U.S. insurers in particular, ” .He pointed out that in some Latin American countries political and economic changes “are creating new opportunities for the private sector, but in others, such as Argentina, insurers are concerned over future business prospects.”

The conference will cover both the market and the supervisory spectrum. For additional details on the Roundtable visit http://www.iicdc.org or call (202) 682-2345.

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