Everest Re under investigation
By David Weidner
May 25, 2005
NEW YORK (MarketWatch) -- Everest Re Group, a Bermuda-based reinsurer, revealed Wednesday that its U.S. subsidiary was under investigation for a controversial insurance product.
The company said it had received a subpoena from the Securities and Exchange Commission seeking information about loss-mitigation insurance. Everest Re said it would cooperate with the investigation.
Everest Re also disclosed that it had received requests about loss-mitigation insurance, otherwise known as "finite risk" insurance, and responded to inquiries by insurance regulators in Delaware and Georgia.
There is no clear definition of finite reinsurance, but generally it's a blend traditional reinsurance and financing. The products are usually purchased by other insurers looking to protect themselves against the financial risk of future liabilities.
Regulators including New York Attorney General Eliot Spitzer and the SEC are investigating whether companies have used finite reinsurance to manipulate their financial statements.
The disclosure comes after Hartford Financial (HIG) said Tuesday it was subpoenaed by the Connecticut attorney general. Other insurers including American International Group (AIG) and Chubb Corp. (CB) have been contacted in the probe.
David Weidner covers Wall Street for MarketWatch.