ACE Receives Subpoena in Reinsurance Probe
NEW YORK, Jun 17, 2005 (AP Online) -- Bermuda-based insurer ACE Ltd. said Friday it has received a subpoena from the U.S. Attorney for the Southern District of New York in connection with a widening probe of so-called finite risk insurance products.
Finite risk products involve reinsurance, which authorities contend has been used by some companies to manipulate their financial statements.
ACE earlier received subpoenas from the Securities and Exchange Commission and New York Attorney General Eliot Spitzer in connection with an investigation into these nontraditional products.
ACE said it would comply with the latest subpoena.
A number of other insurance companies have received subpoenas in the probe.
On Thursday, Philadelphia Consolidating Holding Corp. said it received a subpoena from the SEC on reinsurance products.
The Bala Cynwyd, Pa.-based specialty reinsurance provider said it has been asked to provide documents and other information about dealings two of its units have had with General Re Corp. The company - whose units Philadelphia Indemnity Insurance Co. and Philadelphia Insurance Co. are the focus of the probe - said it would cooperate with requests by regulators.
Reinsurance deals are at the center of a probe involving General Re and one of the world's largest insurers, New York-based American International Group Inc.
General Re, a unit of billionaire investor Warren Buffett's Berkshire Hathaway Inc., is accused of structuring a reinsurance transaction to allow AIG to add a total of $500 million in phony loss reserves to its balance sheet. AIG recently restated earnings for five years.
Earlier this week, a number of other smaller reinsurance companies received subpoenas from the U.S. Attorney for the Southern District of New York, including PartnerRe Ltd., Bristol West Holdings Inc., XL Capital Inc. and Renaissance Re.
All of these companies said they were cooperating and that they had previously received subpoenas from the SEC.
ACE shares closed flat at $45.90, in late Friday trading on the New York Stock Exchange.