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More than bad luck?
01 April 2003
Annuity & Life Re’s future is hanging in the balance. It has closed its doors to new business, is selling off old business and may be unable to fulfil collateral requirements on certain transactions. But its rivals are profitable. Wyn Jenkins looks at what went wrong.
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[insurance]
[reinsurance]
[cedants]
[xl]
[am best]
"It was an unfortunate sequence of events," says Rodney Clark,
analyst at Standard&Poor's (S&P) in New York, commenting on
the situation Annuity&Life Re has now found itself in. An
extraordinary sequence of events has pushed the company to breaking
point. But it is difficult to establish whether unfortunate is the
correct word to describe them.
The Bermudian reinsurer is now hanging by a thread after a
culmination of events forced it to close its doors to new business
in February. It also expects to make a large loss in the fourth
quarter of 2002 and, crucially, faces losing two credit facilities
provided to it by two financial institutions.
The credit facilities ? believed to be provided by Citigroup and
Manulife ? back specific life reinsurance contracts. If it does not
fully renew the agreements, the deals they support will effectively
be annulled. The cedants will not...
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