Irish European Reinsurance Company (Ireco), the reinsurance company that wrote contracts for the failed Independent Insurance and for Equitable Life, may face legal action from investors, according to a report in The Times.
The newspaper said lawyers for creditors of Independent Insurance and for policyholders of Equitable Life were considering whether to sue the company.
Ireco, which is owned by America's GE Capital, is already under investigation by the Financial Services Authority (FSA) for its dealings with Equitable Life. Now Class Law, which represents a group of Independent creditors and Equitable's overseas policyholders, has been investigating whether GE Capital could be sued for compensation.
Class Law expected to file suit against the FSA on behalf of Independent Insurance creditors this month and was also pursuing KPMG, Independent's auditors, the newspaper said.
Ireco made a profit of €30.3m (£19.4m) in 2000, up from €16.2m in 1999.
Accounts filed with the Irish Companies Registration Office also show that the amount the group paid in claims fell from €101m in 1999 to just €50m in 2000. After the share taken by Ireco's reinsurers, the cost to Ireco of claims in 2000 amounted to just €7m, against €97m in 1999. Ireco's figures show that it wrote €244.4m of premiums in 2000, against €262.6 in 1999.
Aon, one of the world's top four insurance brokers, which is believed to have brokered the Independent contracts, also acted as broker for the Equitable deal.
During the collapse of Independent Insurance last July it emerged that Ireco had underwritten contracts designed to cap the company's losses from its London market business, which had subsequently been altered by Michael Bright, Independent's now bankrupt former chief executive.
Ireco drew further controversy in November after Equitable Life's board unearthed a secret letter sent by Chris Headdon, the former appointed actuary, to Ireco in 1999.
The FSA believes the letter undermined an insurance deal between the two designed to ensure that Equitable met solvency rules. Reinsurance companies registered in the Irish Republic are not subject to regulation and enjoy a 10% tax rate.
