Axa Subpoenaed in Insurance Probe

04.13.2005, 10:10 AM



U.S. authorities have subpoenaed the reinsurance arm of French insurer Axa SA, the company said Wednesday, as an investigation into questionable insurance deals gathers pace.



Axa Re said it had received demands for information on its 1998 deals with U.S. insurer MBIA Inc. from New York Attorney General Eliot Spitzer and the Securities and Exchange Commission.



The French reinsurer issued a statement saying it had been notified of the subpoenas concerning MBIA transactions related to the bankruptcy of a Pennsylvania hospital group as well as other "non-traditional products."



"Axa Re intends to cooperate fully with the New York Attorney General and the SEC," the company said. Axa spokesman Christophe Dufraux declined to comment further.



Bond insurer MBIA agreed last month to restate six years of financial results, acknowledging it had not accounted correctly for US$170 million (euro131 million) in payments from Axa, Converium Holding AG of Switzerland and Germany's Munich Re.



The 1998 transaction is among a series of so-called "finite risk" insurance deals that have come under scrutiny for helping companies cover up holes in their balance sheets with cash from the tailor-made transactions.



MBIA carried out the deals after losing money on the bankruptcy of Allegheny Health, Education and Research Foundation, the Pennsylvania hospital group whose bonds it had covered.