Israeli businessman Shay Jacob Reches bears brunt of fine

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The FCA has handed down total fines of £15.5m to five people and two firms for actions that led to the collapse of three insurance firms: Millburn, Balva and European Risk Insurance Company.

Israeli businessman Shay Jacob Reches, who is at the centre of the actions, has borne the brunt of the FCA fines. He has been fined £1.05m and will pay £13.1m to the failed insurers.

The other people and companies fined and censured are:


  • Millburn chief executive Colin McIntosh (£51,600)
  • Coverall director Robert Bygrave (£37,400)
  • Coverall director Andrea Sadler (£18,700)
  • Bar Professions chief executive Wayne Redgrave (£38,600)


  • Insurance company Millburn (£1,137,500)
  • UK broker Coverall, the principal for managing general agency Aderia (£36,800)
  • Solicitors’ PI broker Bar Professions (public censure)

In a related action, the PRA has fined Millburn £2.9m.

The fines relate to the failure of insurance schemes for solicitors’ professional indemnity (PI) and other types of cover. The schemes were all linked to Reches.

These schemes used binding authorities issued by London-based MGA Aderia to various coverholders.

These included specialist PI broker Bar Professions. Aderia was an appointed representative of UK insurer Millburn and UK insurance broker Coverall.

Reches was a director at Coverall, with responsibility for MGA Aderia UK. He conducted regulated activities that were central to setting up and operating the insurance schemes, despite not being approved by the FCA to do so.

In doing so, the FCA said Reches “recklessly” directed payments of insurance premiums to parties other than the insurers and reinsurers responsible for paying claims, increasing the risk that policyholders’ claims would not be paid.

The failings of management oversight along the distribution chain contributed to the failure of several insurance schemes as well as the three insurers going into administration, the regulator added.

As a result, the Financial Services Compensation Scheme, which compensates the customers of failed financial firms, had to pay claims of £12.7m as at the end of 2015.

As well as controlling Coverall and Aderia, Reches also controlled Sinclair Insurance Company, the main bearer of the risk in the schemes. Sinclair is incorporated in the Comoros Islands and is now known as Klapton Insurance Company. The FCA said that debts owed by Sinclair in part contributed to the collapse of the three insurers.

The FCA said Reches’ planned payment of £13.1m to the failed insurers will make a “substantial contribution” towards the liabilities of the FSCS and UK policyholders.

If he fails to pay this amount or any part of it, the fine will be increased by the amount unpaid.

The FCA said the payments would deprive Reches of the indirect benefit that the FCA considers he gained from his misconduct.

The actions were taken as a result of a joint investigation by the FCA and the PRA.

FCA director of enforcements and market oversight Mark Steward said: “This was a hugely complex case with the FCA liaising with over 20 regulators and agencies around the world.

“Reches’ misconduct led to many solicitors and others being left without adequate insurance. He treated policyholders’ funds and their interests with reckless indifference and his misconduct was facilitated by an absence of proper controls by key persons at important stages of the insurance process.

“This case also demonstrates what can happen when the distribution chain becomes overly complex, participants fail to ask obvious questions or take rudimentary precautions, including those insurance intermediaries and brokers checking whether Reches was approved to carry out the functions he was performing.”

Read the Insurance Times investigation of the collapse of Millburn here.