XL AND GE GET SUBPOENAS IN US FINITE REINSURANCE PROBE

Bermuda’s XL Capital and the GE Insurance Solutions unit of US General Electric have become the latest companies to be subpoenaed by the SEC in the ongoing investigation of finite reinsurance products. Both XL and GE said that they were co-operating with the investigation. GE said that it made only “limited use” of the deals, which have been “properly structured, properly accounted for with appropriate risk transfer, and properly disclosed”. The Wall Street Journal reported yesterday that MBIA also participated in a hospital group’s 2000 sale of junk bonds to avoid an additional $70m loss on its exposure to bonds issued by the Allegheny Health, Education and Research Foundation. MBIA had persuaded AXA, Converium and Munich Re to cover its initial $170m exposure to the hospital group. Meanwhile, New York attorney-general Eliot Spitzer late yesterday told a meeting of US business journalists to focus their attention on what insurers are doing with offshore companies and subsidiaries. He said that offshore operations have become a “black hole” that demanded a fundamental change in insurance regulations.