Bermuda-based insurer ACE has received a subpoena from the US Attorney for the Southern District of New York as part of an expanding investigation into finite risk insurance products.
The inquiry is trying to ascertain whether certain insurance companies have been abusing finite reinsurance products, which are a combination of traditional reinsurance and financing in which the risk assumed by the reinsurer can be limited, to manipulate their financial statements. ACE is the latest in a string of insurers contacted by US officials.
The Connecticut Attorney General last month requested information from US life insurer MetLife regarding its reinsurance activities. Since then, insurers including XL Capital, RenaissanceRe Holdings, Assurant, PartnerRe, Platinum Underwriters and Bristol West have all found themselves at the center of the probe.
Last week, Philadelphia Consolidating Holding received a subpoena from the Securities and Exchange Commission (SEC) on its reinsurance products. Another investigation was launched into insurers General Re and American International Group (AIG), in which the former is being accused of conducting a reinsurance transaction that would allow AIG to add $500m in false loss reserves.
ACE earlier reported that it received subpoenas from the SEC and the New York Attorney General Eliot Spitzer in connection with an investigation into its targeted insurance products.
ACE said it intends to comply with the subpoena.