US insurers have low investment exposure to Dubai World

The investment exposure of US insurers to bonds of Dubai World and its subsidiaries is very limited, totaling $590 mln (or less than 0.02% of cash and invested assets), Moody's Investors Service said in a new report. Consequently, any losses from these direct investment holdings will be quite modest, the agency concluded, and will not result in rating actions.
Although the life industry has more exposure — $458 mln — relative to the p&c industry ($132 mln), most of the US life insurance groups that Moody's rates have no exposure to Dubai World and its subsidiaries at all. The report provides a table listing all US insurance groups that do; most of these hold less than 10 basis points of cash and invested assets based on book value.
For life insurers, the group with the largest absolute and percentage exposure (by a significant amount) was Old Mutual US Life, at $84 mln and 50 basis points of invested assets. In terms of property and casualty insurers, the rated group with the most involvement was CNA Insurance Group, at $58 mln (or 17 basis points).
US insurance companies have exposure to Dubai World primarily through investments in bonds issued by Dubai Ports World and Peninsular and Oriental Steam Company Inc (P&O, not rated by Moody's), which are wholly owned subsidiaries of Dubai World.
"There is no exposure to equity or preferred stock of Dubai World or its subsidiaries," explained Associate Analyst Manoj Jethani. In addition, he said, the insurers appear to have no direct exposure to the government of Dubai. "Our analysis also indicates that there is minimal exposure through investments in structured securities such as CLOs or CDOs to Dubai World and its subsidiaries," the analyst states.