The current financial crisis faced by Californian utilities companies which has lead to black-outs across the state have left Bermuda insurer ACE with an insurance exposure of about $140 million.

However, the Bermuda company said that the loss would probably be substantially less than this and could easily be handled by the group without having an impact on profits.

Last week ACE disclosed the total sum of insurance exposure of its financial guarantee subsidiary following announcements of credit defaults by California's two largest utilities.

Last week, both Pacific Gas and Electric Co and Southern California Edison, have defaulted on debt -- $596 million for Southern California Edison and $76 million for Pacific Gas and Electric.

As a result, both firms are edging closer to declaring bankruptcy and the prospect of being unable to buy power from the state-sanctioned California Power Exchange.

ACE said its ACE Financial Services Inc subsidiary has about $140 million in aggregate exposure.

This is made up of $8 million in bond reinsurance assumed from primary insurers and $30 million in senior unsecured exposure assumed through credit default swaps on SoCal Edison, $6 million in bond reinsurance and $95 million in senior unsecured exposure through credit default swaps on Pacific Gas.

While the nominal exposure stands at about $140 million, ACE said any loss would be substantially less and any financial statement impact for ACE would be mitigated by existing reserves held at ACE Financial.

Pacific Gas & Electric Co is a unit of PG&E Corp, which said last week it would not make upcoming payments to power generators that exceed the revenues it received from customers.

SoCal Edison, part of Edison International, was given another two days on Wednesday to pay the $215 million it owes the California Power Exchange Corp for prior electricity purchases.

PG&E and SoCal Edison have run up about $12 billion of debt. PG&E's customers are in northern and central California, while SoCal Edison, which is based near Los Angeles, serves about 11 million Calfornians.