The Australian Prudential Regulation Authority (APRA) has announced the disqualification of Mr Frederick Lo from being or acting as a director or senior manager of a general insurer under the Insurance Act 1973.
Mr Lo was Company Secretary of HIH Insurance Limited (HIH) between November 1991 and March 2001 and HIH Underwriting and Agency Services Pty Limited (HUAS) between November 1998 and March 2001.
APRA found that Mr Lo did not exercise due care and diligence in his role at HIH by:
- signing documentation in relation to a 1999 reinsurance transaction with Hannover Re which represented aspects of the transaction as having been approved at a meeting of the HUAS Board that had never taken place;
- failing to alert the HIH Board or its committees that Chief Financial Officer, Mr Dominic Fodera, had obtained an unconditional line of credit from Hannover Re in 1999 for an HIH subsidiary without approval;
- executing a number of documents in 2000 relating to the issue of preference shares in HIH to FAI Insurance Limited (FAI) to support FAI’s loan arrangements, while knowing those documents to be false and backdated; and
- failing in 1998 and 1999 to account to APRA for charges given by HIH to support its Lloyd’s operations in the United Kingdom, thereby allowing ineligible assets to be incorrectly counted for statutory solvency purposes
APRA’s Deputy Chairman, Mr Ross Jones, said that senior insurance executives had to be scrupulous in their stewardship of policyholder interests.
“APRA will not tolerate senior executives in the general insurance industry who fail to meet its fitness and propriety tests” he said.
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.