View this article online: https://www.insurancejournal.com/news/international/2002/07/01/17730.htm
As the fallout from the latest U.S. accounting scandal echoes across the globe, The Netherland’s Aegon and Bermuda’s ACE Limited and Everest Re released statements on their potential WorldCom exposures.
Aegon, which had already said it could have losses of around $200 million and would set aside $268 million to cover them (See IJ Website June 27), announced on Friday that it might have to make “additional provisions” to cover potential defaults in its bond portfolio.
The company, which has current reserves on bond exposure of $215 million, announced in May that it would strengthen them by an additional $185 million this year. According to a report from Reuters News Agency a reassessment of Aegon’s reserve adequacy could result in additional provisions.
ACE issued a statement indicating that “it has reviewed its potential exposures to WorldCom, including directors and officers liability, financial guaranty, and investments, and believes that such exposures would have no material impact on future operating results or book value.”
Everest Re Group announced a preliminary estimate that its loss exposure arising from the “severely deteriorated financial condition of the WorldCom Corporation” is estimated at approximately $30 million after tax recoveries. The impact for the second quarter was expected to affect operating earnings and net income by approximately 10 cents and 60 cents per diluted share, respectively.”
“This estimated unusual loss principally reflects the impairment of the Company’s WorldCom fixed maturity investment holdings although the Company’s credit default and underwriting exposures have also been considered. The effect on Net Income for the quarter will be partially mitigated by net realized gains arising from unrelated investment portfolio actions,” Everest Re’s announcement concluded.