Insolvency? Andersen Insurer Mum
By Daniel Hays
NU Online News Service, April 1, 11:45 a.m. EST?The president of the Bermuda company that insures Arthur Andersen LLP said today he would not comment on a report in The Wall Street Journal that his firm is technically insolvent.
"It's a private company. I'm not at liberty to share anything about it. I don't have anything to say about it," said Scott Hunter, president of Professional Services Insurance in Hamilton, Bermuda.
According to the Journal, the insurer has been insolvent since the accounting firm failed to make a $100 million premium payment.
The newspaper said Andersen mentioned the insurer's condition as a reason for not paying a $217 million settlement payment for an Arizona fraud case.
The Journal said the Professional Services bankruptcy jeopardizes a settlement in the legal action arising from the collapse of its client, the energy supplier Enron Corp.
According to the newspaper report, if the insolvency is not averted in a few weeks, Bermuda regulators could seize the insurer and take over allocation of company reserves.
Shelby Weldon, assistant director of insurance in Bermuda, said he was limited in what he could say about the insurer's finances, but in light of "the fallout from Enron" the company "is under regulatory review by this department."
Mr. Weldon said that after the department finishes its review its total situation will be looked at before any decision is made. The time frame for any final action, he said, is uncertain, but will probably occur "within the next few weeks."
The Journal said an attorney for Andersen told lawyers last week involved in legal proceedings over a settlement between Andersen and the bankrupt Baptist foundation that the insurer could not pay claims at this time.
Professional Services was described as owned by member firms of Andersen Worldwide. The newspaper said various parties involved in legal action with the company said they were misled into thinking the insurer was a captive.
The Andersen media office referred questions to Patrick Dorton, a company spokesman, who did not immediately return a telephone inquiry.
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