Canadian Underwriter

Lost Enron investment costs insurers US$3 billion, says A.M. Best

February 7, 2002   by Canadian Underwriter

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Rating agency A.M. Best says the collapse of U.S. energy giant Enron has cost insurers US$3 billion in investment exposures, at least in the early stages. The figure assesses losses as of September 30, 2001.
However, the majority of these losses were from the life and health industry, which had an investment of US$2.8 billion at market value, in corporate bonds, common stocks and preferred stocks. P&c insurers report US$604 million, mainly in corporate bonds.
Among the heaviest hit were U.S.-based John Hancock Financial at US$320 million. Swiss Re lost about US$31 million in Enron corporate bonds, as well as US$28 million in credit default swaps.
Best arrived at the loss estimates using financial figures filed with the National Association of Insurance Commissioners.
P&c insurers have also reported exposures through their surety bond businesses. Chubb, for example, predicted a US$220 million loss from surety bonds, while St. Paul pegged its loss at no more than US$85 million, comprised of surety bonds, treaty reinsurance and directors and officers liability.

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