Swiss Re announced that its exposure to Enron related losses is $173 million before tax, around $118 million after tax. It also announced the release of its latest sigma study, “World financial centres: New horizons in insurance and banking”, which explores the future of world financial markets by examining the performance of insurers and the financial intermediaries (FIs) that interact with them.
Swiss Re’s largest Enron exposure is $67 million in U.S. commercial surety reinsurance, mainly advance payment bonds, written by U.S. surety companies for obligations under gas supply contracts which have already been met to a large extent. It warned, however that, “As many of Swiss Re’s clients are still reviewing their own involvement, it continues to be difficult to assess the final loss figure.”
The company also faces losses from investment, notably Enron bonds in its corporate bond portfolio and also exposure to Enron through its portfolio of credit default swaps. The estimated loss to the bond portfolio is $31 million, based on the current market valuation and the credit default swaps amounts to $28 million. Swiss Re said it held no Enron equities, but could have other smaller exposures, including “casualty lines.”
The sigma report finds that deregulation has made it easier for intermediaries to cross industry and national boundaries, while technological progress has reduced costs while stimulating innovation.”Because of their many interrelations with other financial intermediaries, insurance industry participants stand to benefit from knowing more about financial intermediaries: how they operate and succeed, compete and collaborate, profit and grow,” said the company’s announcement.
It also discusses the growing importance of FIs operating from major global centers such as London, New York, and Tokyo, where they help clients manage risk, channel funds from savers and investors to businesses seeking capital, and facilitate the clearing and settlement of payments. FIs is a broad term that includes banks, insurers, securities firms, mutual funds, and pension funds .
A copy of the study may be obtained from Swiss Re through the following:
– The English, German, French, Spanish and Italian versions of the sigma study are available electronically on Swiss Re’s website: http://www.swissre.com.
– Printed studies: sigma No. 7/2001 can be ordered. English and German versions are now available, those in French, Spanish, Italian, Chinese and Japanese will be available soon. Please send your orders, complete with your full postal address, to: E-mail: sigma@swissre.com; or by phone and fax to:
Zurich: Silvia Horlacher tel. +41 1 285 2551 fax +41 1 285 4749
New York: Richard Sbaschnig, tel. +1 212 317 5 35 fax +1 212 317 5455
Hong Kong: Eunice Kwok, tel. +852 25 82 5 91 fax +852 25 11 6603
Topics Profit Loss
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