CONTINUEThis site uses cookies. By continuing to browse this site you are agreeing to our use of cookies. Find out more.
  1. Front Page
  2. News By Topic
  3. GenRe Fined For Improper Reinsurance Transactions

GenRe Fined For Improper Reinsurance Transactions

by Robin Pilgrim, LawAndTax-News.com, London

23 November 2006


The Financial Services Authority (FSA) announced on Wednesday that it has fined General Reinsurance UK Limited (GenRe UK) GBP1.225m for arranging two improper reinsurance transactions.

In doing so, GenRe UK breached FSA Principle 2 by not conducting its business with due skill, care and diligence and FSA Principle 3 by not organising and controlling its affairs responsibly and effectively.

The first transaction was signed in 1999 and renewed three times until 2003. It enabled a German insurer to gain tax benefits by transferring money between Germany and Ireland where the German insurer had a subsidiary. The second transaction was signed in 2004 and was used to compensate for premium reduction on a reinsurance programme agreed with a client insurer by GenRe UK.

In both these cases, the FSA found that GenRe UK did not have sufficient systems and controls in place to prevent these transactions from being signed. The underwriting, accounting and compliance functions in respect of these transactions were inadequate and the transactions were not fully assessed and monitored. GenRe UK's senior management also failed to oversee the activity properly.

Margaret Cole, Director of Enforcement explained that:

"The FSA expects firms involved in reinsurance business to observe proper standards of conduct, act with due skill, care and diligence and to ensure that they and their staff structure and manage transactions appropriately."

"Both conventional and finite reinsurance transactions should only be used where there is a legitimate commercial purpose and sufficient risk transfer. The FSA will take robust action against reinsurance firms and their staff who act in contravention of these basic principles."

According to the Financial Services Authority, the financial penalty in this case would have been significantly higher had it not been for mitigating factors, including the fact that GenRe UK reported these transactions to the FSA, fully cooperated and undertook prompt and thorough remedial action.

By agreeing to settle at an early stage of the investigation, GenRe UK also qualified for a 30% discount, without which the fine would have been GBP1.75 million.


To see today's news, click here.

 















Tax-News Reviews

Cyprus Review

A review and forecast of Cyprus's international business, legal and investment climate.

Visit Cyprus Review »

Malta Review

A review and forecast of Malta's international business, legal and investment climate.

Visit Malta Review »

Jersey Review

A review and forecast of Jersey's international business, legal and investment climate.

Visit Jersey Review »

Budget Review

A review of the latest budget news and government financial statements from around the world.

Visit Budget Review »



Stay Updated

Please enter your email address to join the Tax-News.com mailing list. View previous newsletters.

By subscribing to our newsletter service, you agree to our Terms and Conditions and Privacy Policy.


To manage your mailing list preferences, please click here »