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Insurer Reports Life Settlement Loss

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AXIS Capital Holdings says it expects its third quarter operating results will suffer after an increase of about $136 million in the fair value liability of an indemnity derivative contract that is exposed to life insurance settlements.

AXIS, Pembroke, Bermuda, attributes the loss to “unfavorable longevity experience in the life settlements portfolio underlying this contract.”

In addition, AXIS, a specialty insurer and reinsurer, expects to lose around $260 million in other-than-temporary-impairment losses in a fixed maturity investment portfolio of medium-term notes.

Despite the losses, Standard & Poor’s Ratings Services said there would be no impact on its ratings for AXIS.

“We consider AXIS’s losses in the indemnity derivative contract modest relative to the group’s capital base,” S&P stated.