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To: Square_Dealings who wrote (80132)	12/21/2001 10:10:16 PM
From: Square_Dealings	Respond to of 116753

Its all unravelling, the credit bubble is developing some major pressure.... Insurers Demand Proof Of Enron Contract From J.P. Morgan WASHINGTON -(Dow Jones)- A group of insurance companies is questioning whether forward sales contracts that they bonded for Enron Corp. (ENE) ever really existed, and are holding off on $965 million in surety bond payments to J.P. Morgan Chase & Co. until they find out. According to court documents, Citigroup Inc.'s (C) Travelers insurance unit and eight other insurers wrote to J.P. Morgan Chase & Co. (JPM) in early December, essentially telling the investment bank that they needed more proof of the forward sales contracts' legitimacy before they would honor their surety bond payments. Those payments, due Friday, total $1.1 billion, including the $965 million owed to J.P. Morgan; the investment bank said Thursday it doesn't expect to get paid on time, but has sued to require the insurers to honor the bonds. The insurers' letters were contained as exhibits in the suit, which was filed in U.S. Federal District Court in New York this week. The forward sales contracts in dispute were made between Enron and two offshore companies, Mahonia Ltd. and Mahonia Natural Gas Ltd, both based in the Channel Islands [*]. Under the contracts, Mahonia was supposed to prepay for the delivery of oil and natural gas from Enron, which in turn was supposed to procure the fuel from various producers for delivery to various end users, according to the insurers' letters. The end- users, in turn, were supposed to pay Mahonia for the oil and gas, they said. The nine insurers bonded Enron's obligation to deliver the oil and gas, but balked when J.P. Morgan Chase asked them on Dec. 7 to honor that commitment, five days after Enron had filed for bankruptcy. The insurers told J.P. Morgan in a letter that day that they have "received credible information that, in fact, there may never have been any producer contracts or end-user contracts. In addition, Enron may never have delivered any oil or natural gas under the forward sales contracts to Mahonia or any other party," according to the letters to J.P. Morgan Chase. Several insurers refused to comment about their surety bond concerns, and the remainder were not immediately able to comment Thursday evening. J.P. Morgan Chase & Co. (JPM) refused to comment. Enron was not immediately available to comment. Besides Travelers, the other insurers involved in the case are Kemper Insurance Co.'s Lumbermens Mutual Casualty Co., Allianz AG's (AZ) Fireman's Fund Insurance Co., Chubb Corp.'s (CB) Federal Insurance Co., St. Paul Cos.'s (SPC) Fire and Marine Insurance, CNA Surety Corp.'s (SUR) Continental Casualty Co., Safeco Corp's (SAFC) Safeco Insurance Co., Hartford Financial Services Group Inc. (HIG), and Liberty Mutual Insurance Co. - - - - -