Swiss Re Reports Enron Exposure
Wednesday, December 26, 2001 04:51:32 PM - A.M. BEST
ZURICH, Switzerland, Dec 20, 2001, (A. M. Best via COMTEX) -- Swiss Re said
that, as a result of its exposure to the bankruptcy filing of energy trading
giant Enron Corp., it estimates loss exposure of US$173 million, the equivalent
of 284 million Swiss francs (US$1 = 1.63 francs) before tax or 184 million
francs after tax.
The company's largest exposure is in U.S. commercial surety reinsurance, with
the majority relating to advance payment bonds, written by U.S. surety companies
for obligations under gas supply contracts which have already been met to a
large extent, the company said in a statement.
The current loss estimate for the surety reinsurance business is $67 million,
the company said.
Swiss Re held Enron bonds in its corporate bond portfolio, which has an
estimated loss of $31 million, based on the current market valuation, the
company said. In addition, the company also had exposure to Enron through its
portfolio of credit default swaps amounting to $28 million, the company said.
Other lines of business impacted by the Enron failure include casualty lines and
other smaller exposures, however the company held no Enron equities, it said.
With many of Swiss Re's clients still reviewing their own involvement, no final
determination of loss exposure has been made, the company said.
Members of the Swiss Re Group are rated A++ (Superior) by A.M. Best Co.
Enron filed for bankruptcy Dec. 2, after the U.S. Securities & Exchange
Commission opened an investigation, investors and stockholders left the company
and the stock price collapsed (BestWire, Dec. 3, 2001).
Enron exposure has hit several insurers, with exposure estimates of more than $4
billion from insurance companies. Among the highest exposure estimates so far
are: John Hancock Financial Services Inc., with $320 million; Aegon N.V., with
an estimated exposure of $300 million, and Chubb Corp. with estimated exposure
of $220 million (BestWire, Dec. 6, 2001).
(By John Hillman, associate editor, BestWeek: john.hillman@ambest.com)
John Hillman
Copyright (C) 2001 by A. M. Best Company, Inc.
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