Spitzer, SEC Subpoena Axa Re In Finite Re Probe

NU Online News Service, April 14, 8:59 a.m.EDT?Axa Re, a midsized reinsurance unit of Frenchinsurance giant Axa SA, disclosed that it has been subpoenaed byU.S. regulators over its finite reinsurance transactions with U.S.bond insurer MBIA.[@@]

The Paris-based Axa Re said it has received subpoenas from twoU.S. regulatory groups: the New York Attorney General's Office andthe U.S. Securities and Exchange Commission.

Axa said U.S. authorities are seeking information on Axa Re's1998 reinsurance deals with bond insurer MBIA that related to thebankruptcy of a Pennsylvania hospital group as well as on othernon-traditional products.

Regulators are examining MBIA and its use of finite reinsurancewhich may have covered up holes in its financial picture. MBIAallegedly used non-traditional products from Axa Re, as well asfrom Converium Holding AG and Munich Re, to smooth earningsfollowing the bankruptcy of Allegheny Health, Education andResearch Foundation, whose bonds MBIA had insured.

"Axa Re intends to cooperate fully with the New York AttorneyGeneral's Office and the SEC," the company said.

Axa Re joins a number of other European reinsures alreadysubpoenaed by U.S. authorities over finite reinsurance. Earlierthis month, Georgia Insurance Commissioner John Oxendine issuedsubpoenas to major reinsurers around the world, includingrepresentatives of Lloyd's of London, Munich Re, Zurich Re andHannover Re.