Insurers heavily exposed as Enron unwinds

The collapse of Enron has numerous implications for the insurance industry, not least on the credit risk side. But identifying them, let alone quantifying them, is not proving to be an easy task – either for the insurers themselves or for the analysts who cover them.

Insurance companies have moved strongly into the credit derivatives business in recent years – writing credit default swaps in particular – and multiline insurers have also moved into the credit enhancement business, which was formerly the preserve of monoline financial guarantee companies such as FSA, MBIA and Ambac.