Canadian Underwriter

Insurers tally Enron losses

December 4, 2001   by Canadian Underwriter

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With the failure of U.S. energy giant Enron, insurers are now tallying their exposure to the dying corporation. Among those affected is Chubb, which is estimating its exposure provisionally at US$220 million, pretax. This comes from surety bonds, which act as a guarantee of contracts being filled on time, or other financial contracts being met.
Chubb notes that it is “unable at this time to estimate the actual amount, if any, that it may be required to pay or the timing of any such payment because of contingencies. These include the actions of other parties, possible judicial rulings and amounts that Chubb may recover under the surety bond documents”. The company reports that it has not yet received any claims under the bonds.
Also exposed is The St. Paul Companies, which pegs its maximum exposure at US$85 million, after tax, as well as holding about $23 million of unsecured senior debt in Enron. Much of this exposure is also in surety bonds, including gas supply bonds, financial guarantees and standard construction bonds, the company reports. It also has not yet received any claims on its bonds and predicts its exposure will be well below the maximum limit. About US$19 million of its exposure comes from treaty reinsurance and directors and officers (D&O) liability.
AXA Group pegs its exposure at US$178.4 million, primarily in fixed income securities. And ING Group has had its exposure estimated at US$195 million, according to the Reuters news service.

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