Published February 18, 2009

GE writes down exposure to Madoff's funds

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GREAT Eastern has written down $64 million of indirect exposure to Wall Street money manager Bernard Madoff's funds.

This represents 0.15 per cent of Great Eastern's assets of $44 billion at end-2008.

In the fourth quarter ended Dec 31, 2008, Great Eastern saw a $409.6 million increase in provision for impairment of assets.

The increase for the whole of 2008 was $486.6 million.

Madoff's Ponzi scheme that rocked the financial world unravelled last December, claiming seasoned banks and funds among its victims.

Great Eastern's indirect exposure to Madoff funds comprised $7.7 million invested from its Shareholders' Fund and $56.3 million from its Life Fund.

In addition, the local insurer has exposure to some funds of Fairfield Greenwich Group, a hedge fund that invested more than half of its US$14.1 billion of assets with Madoff.

Lion Fairfield Capital Management, a 65-35 joint venture between Great Eastern subsidiary Lion Global Investors and Fairfield Greenwich Group, sold about US$45 million of the Fairfield Sentry fund through private banking channels to accredited investors.

One of Great Eastern Group's funds, the GreatLink Lion Global Flexi Fund, feeds into LionGlobal Flexi Fund, which has an investment of about $350,000 in the Fairfield Sentry fund.

This investment represented less than 1.5 per cent of LionGlobal Flexi Fund's portfolio at Dec 11, 2008.