Insurance Times has uncovered a series of covert and incestuous reinsurance deals by Independent Insurance that took £100m off the company's stated reinsurance cover.
Independent's reinsurance contracts have been hugely controversial and liquidators Pricewaterhousecoopers (PWC) described them as the failed company's biggest assets. They have refused to discuss the contracts, for fear of jeopardising their relationship with the reinsurers.
Formerly, all that was known was that Independent took out £278m cover for its London Market general and regional liability accounts, at a cost of £110m in late December.
In early June, Independent directors said they had discovered an unknown number of previously undisclosed reinsurance contracts, allegedly signed by former chief executive Michael Bright without their knowledge.
Documents acquired by Insurance Times show that Independent bought substantial cover for its property account the day before auditors KPMG signed off its 2000 accounts.
The cover was bought from Dublin-based reinsurer Ireco.
But only days later, Independent's wholly-owned subsidiary Novi Re, also based in Dublin, reinsured part of Ireco's book, which brought at least £15m of Independent's risk back onto Independent's accounts. In effect, Independent was reinsuring itself.
The main reinsurance contract seen by Insurance Times is signed by Ireco chairman Walter Copping and Ireco director Volker Handrich.
