The Australian Prudential Regulation Authority (APRA) has announced the disqualification of Mr Roger Colomb and Mr Terence Kevin Cassidy from being or acting as a director or senior manager of a general insurer.

In his role as a reinsurance manager for FAI General Insurance Limited (FAI) in 1998, Mr Colomb was responsible for the preparation of the APRA reinsurance returns required under the Insurance Act 1973. APRA found that Mr Colomb was either incompetent or negligent in preparing the June 1998 reinsurance returns with the effect that there:

• were conflicting, and therefore misleading, representations of the starting date for FAI’s 1998 financial reinsurance contract with National Indemnity; and
• was a failure to make the required disclosure of material changes to FAI’s reinsurance program, including the commutation of an existing whole-of-account reinsurance contract with General Cologne Reinsurance Australia

Mr Cassidy held various senior positions within HIH Insurance Limited (HIH) from 1972 to 2001, holding the position of Managing Director of the Australian operations from 1986.

APRA found that Mr Cassidy had:

• acted dishonestly and without diligence in that he was aware HIH was significantly under provisioned in 1999 and 2000 but failed to alert the HIH Board to the fact that this was not adequately recorded in the financial accounts;
• falsely certified that the 1999 APRA returns were accurate while knowing the assets charged under a letter of credit were incorrectly counted for statutory solvency purposes with the effect that two HIH companies were incorrectly reported as solvent under the Insurance Act 1973; and
• acted dishonestly in backdating various documents relating to preference shares issued by FAI Insurance Limited to HIH Investments in 2000.

APRA’s Deputy Chairman, Mr Ross Jones, said that the effectiveness of the prudential regulator’s supervision of general insurers was critically dependent on the accuracy, reliability and completeness of the statutory financial reports required under the Insurance Act.

The Australian Prudential Regulation Authority (APRA) is the prudential regulator of the financial services industry. It oversees banks, credit unions, building societies, general insurance and reinsurance companies, life insurance, friendly societies, and most members of the superannuation industry.APRA is funded largely by the industries that it supervises. It was established on 1 July 1998.APRA currently supervises institutions holding approximately $2.0 trillion in assets for 20 million Australian depositors, policyholders and superannuation fund members.