The Australian Prudential Regulation Authority (APRA) has announced the disqualification of the following individuals from being or acting as a Director or senior manager of a general insurer or authorised non-operating holding company, or a senior manager or agent of a foreign general insurer:
- Mr Geoffrey Barnum
- Mr Christopher Byatt
- Mr Andrew John Smith
- Mr Tore Ellingsen
- Mr John Houldsworth
- Mr John Lindsay Self
All individuals were or are currently employed by the General Re (GR) group of reinsurers and were involved in a financial reinsurance transaction between the group’s Australian subsidiary, General & Cologne Reinsurance Australia (GCRA), and FAI Limited (FAI).
This arrangement improperly boosted FAI’s 1997/98 Profit and Loss by being disguised as a number of traditional reinsurance transactions with the risks for GCRA removed through side letters.
With the exception of Mr Ellingsen and Mr Houldsworth, who were employed within GR’s Alternative Solutions Group based in Ireland, all individuals were or are currently employed by GCRA. APRA has advised the Irish Financial Services Regulatory Authority of its decision with regard to Mr Ellingsen and Mr Houldsworth.
GCRA has informed APRA that it has suspended Messrs Barnum, Byatt and Smith and replaced them with three senior executives of the GR group. They no longer hold senior roles or act as Directors within the companies in Australia.
APRA’s Deputy Chairman, Mr Ross Jones, said the assessment of a number of individuals involved in the collapse of HIH is continuing.
“This is a large scale and complex exercise that still has some considerable way to run,” he said.
Details of the disqualifications and a summary of APRA’s findings are attached.
: Mr Barnum was Managing Director of GCRA at the relevant time and failed to stop a reinsurance transaction with FAI Limited (FAI) that he knew had an improper purpose. Prior to disqualification, Mr Barnum was employed at General Reinsurance Australia Limited (GRA), formerly known as General & Cologne Re Australia, as Managing Director.
: Mr Byatt was General Manager - Finance and Secretary of GCRA and helped to facilitate a reinsurance deal with FAI that he knew had an improper purpose. Prior to disqualification, Mr Byatt was employed at GRA as General Manager - Finance.
: Mr Smith was a treaty underwriter at GCRA and the Australian representative for Gen Re’s (GR) Alternative Solutions Group at the time and played a role in the negotiation and documentation of a reinsurance transaction with FAI. Prior to disqualification, Mr Smith was employed at GRA as Chief Treaty Underwriter.
: Mr Ellingsen was a member of the Executive Committee of GR’s Alternative Solutions Group based in Dublin and was a primary architect of a reinsurance transaction with FAI that he knew had the purpose of misleading. Mr Ellingsen is currently employed at Cologne Reinsurance Company (Dublin) Limited as Senior Marketer - International Finite.
: Mr Houldsworth was a member of GR’s Alternative Solutions Group, the Chief Executive Officer of Cologne Reinsurance Company (Dublin) Limited and played a key role in negotiating a reinsurance transaction with FAI that he knew had the purpose of misleading. Mr Houldsworth is currently employed at Cologne Reinsurance Company (Dublin) Limited as Chief Underwriter – P&C International Finite.
- : Mr Self was a General Manager at GCRA and played a role in the development and implementation of a reinsurance transaction between GCRA and FAI. It is understood that Mr Self is currently not employed in the general insurance industry.
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 $1.8 trillion in assets for 20 million Australian depositors, policyholders and superannuation fund members.