The Australian insurance regulator has given Zurich Australian Insurance its investigation report into improper financial reinsurance transactions...
The Australian Prudential Regulation Authority has given Zurich Australian Insurance (ZAIL) the report on its investigation into a set of improper financial reinsurance transactions undertaken in 2000 by ZAIL.
The reinsurance transactions resulted in ZAIL's profits in 2000 being overstated by A$61m, at a time when the company was at risk of regulatory insolvency.
The transactions, as booked by ZAIL, created the impression that the company had made a substantial profit in 2000, when in fact it had made a loss.
In May 2005, the regulator accepted enforceable undertakings from ZAIL and Zurich Financial Services Australia in relation to the transactions.
The regulator was satisfied that ZAIL had undertaken all necessary remedial actions in relation to the transactions and, as announced in May 2005, no further action would be taken with respect to ZAIL.
ZAIL restated its financial accounts for the relevant years and currently meets all prudential requirements, including those related to capital adequacy.
The regulator is still finalising action against individuals involved in the Zurich transactions with General & Cologne Re Group Australia, under the relevant provisions of the Insurance Act (1973). No criminal actions will be pursued.
Separately, the regulator is finalising work related to its investigation into General & Cologne.
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