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Life Insurers' Enron Exposure

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The U.S. life insurance industry’s direct exposure to Enron Corp. was about $3.9 billion at year-end 2000, says a report from Moody’s Investors Service. Though substantial in dollars, this amounts to less than 2% of the consolidated statutory capital base of Moody’s rated U.S. life insurance universe, it notes. Moody’s believes this exposure will have limited credit impact on those companies.

“Moody’s has not identified any company that we believe has sufficient Enron exposure to cause us to have significant credit concerns,” says Arthur Fliegelman, a vice president and senior credit officer with Moody’s and a co-author of the report.

Moodys does not expect to take any rating action due to Enron-related investment exposures, Fliegelman adds.

Ellen Fagin, an associate analyst at Moodys and coauthor of the report, says the heaviest exposures among life insurers were held by John Hancock ($360 million), Prudential ($311 million), AIG Life ($255 million, excluding another $79 million at its recent acquisition, American General), AEGON USA ($217 million) and New York Life ($197 million).

Twenty-three life insurance groups had an exposure of more than $50 million, and another 11 companies have an exposure of between $25 million and $50 million.

Reproduced from National Underwriter Life & Health/Financial Services Edition, December 17, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.

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