Insurers Had $3 Billion In Enron Investment Exposures, Best Says
NU Online News Service, Feb. 6, 12:41 p.m. EST?The Enron Corp. bankruptcy damaged insurer investment portfolios in excess of $3 billion–with the life-health segment hit hardest, an insurer rating firm announced today.
A.M. Best Company of Oldwick, N.J. said the collapse of the energy-trading giant impacted insurers with $3 billion in investment exposures as of Sept. 30, 2001.
Best based its findings on a statistical study of insurers' quarterly filings with the National Association of Insurance Commissioners. It found the life-health insurance industry had a market-value investment worth $2.8 billion as of Sept.30, 2001, with the majority of investment in corporate bonds.
The property-casualty industry reported a market-value investment of $604 million for the same period, also with the majority of holdings in Enron's corporate bonds, Best said.
Many life-health and property-casualty insurers hold Enron securities, including corporate bonds, common stocks and preferred stocks, Best noted.
Among the highest reported values was John Hancock Financial Services Inc., with $320 million invested in Enron.
Swiss Re held Enron bonds in its corporate bond portfolio, which has an estimated loss of $31 million, based on the market valuation in mid-December. The company also had exposure through its portfolio of credit default swaps amounting to $28 million, Best reported.
Other companies affected, Best said, include Hartford Financial Services, St. Paul Companies, and Reinsurance Group of America Inc.
The study of the individual investments of the major insurance companies, including their holdings in Enron's common and preferred stock and corporate bonds, shows the number of shares, book value, market value, statement value, and actual costs as of Sept. 30, 2001, the most recent date for which data is available, Best said. The data on corporate bonds also includes the year bonds were acquired, maturity dates and rates.
Best said it plans to update the study with year-end 2001 data when it becomes available, noting that certain company investments might have been reduced after the quarterly filing, and some insurers will have to write down these assets.
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