New York (Jan. 3, 2003) -- Financial services giant J.P. Morgan Chase & Co. has reached a deal with 11 insurance companies that issued Enron-related surety bonds to pay it about 60 percent of the $965 million it said it was owed to cover losses on deals related to Enron Corp.
In connection with the agreement, and one additional case that is still pending, the firm will take an after-tax charge of $260 million after-tax in its fourth-quarter 2002 earnings. The firm will also establish a reserve of $900 million related to other litigation and regulatory matters that will result in an after-tax charge of approximately $.30 per share.
According to a report by The Wall Street Journal, J.P. Morgan filed suit against the 11 insurance companies -- including Chubb Corp. and CNA Financial Corp. -- after they refused to pay more than $1 billion for guarantees on failed oil and gas trades arranged between Enron and a Chase-affiliated offshore company called Mahonia Ltd. The affiliate made six deals with the doomed energy trader beginning in 1998.
-- Electronic Accountant Newswire staff
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