Beechwood Says Clients Secure as Reinsurer Limits Platinum Risks

  • Firm to fully unwind most Platinum-tied loans by year-end
  • Most Platinum loans backed by hard assets, Beechwood says

Beechwood Re said it’s cutting risks related to Platinum Partners after connections to the embattled hedge fund cast doubt on the reinsurer’s ability to meet its obligations.

“Our decision to begin unwinding and severing all ties with the firm starting in late 2014 demonstrates our prudence and diligence in monitoring our relationships,” Beechwood said in a statement Monday. “We have significantly reduced those ties and related loans, and expect to be fully unwound from most Platinum-related loans by the end of 2016.”

CNO Financial Group Inc., which counts on Beechwood to back obligations to some policyholders, has dropped about 16 percent in New York trading since July 26, the day before the Carmel, Indiana-based insurer said it boosted oversight of a 2014 deal to transfer some long-term care risks to the reinsurer.

CNO was placed on CreditWatch with negative implications by S&P Global Ratings on Aug. 1, the day that the company said the majority of investments held in a trust with Beechwood are in the category of the most hard-to-value assets. Platinum was raided by federal agents in June after prosecutors alleged that a manager bribed a union chief.

‘Highly Collateralized’

Beechwood has senior positions on debt investments in Platinum-related businesses, and the holdings are backed by hard assets such as cash, equipment and real estate, according to Monday’s statement. The reinsurer still has an outstanding loan to a Platinum fund, which it said is “highly collateralized” and represents less than 2 percent of its portfolio.

“We have reduced, unwound or restructured any remaining loans to Platinum-related businesses,” according to the statement. “The remaining loans represent a small portion of our overall portfolio.”

Beechwood said it has $165 million in capital and surplus and a $2.4 billion portfolio consisting mostly of liquid securities including Treasuries and corporate debt.

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