The Australian Prudential Regulation Authority (APRA) has announced the disqualification of Mr George Osvald Sturesteps from being or acting as a director or senior manager of a general insurer under the Insurance Act 1973.
Mr Sturesteps, over a long period, held various senior positions in HIH Insurance Ltd (HIH) and its predecessor companies, including Managing Director International from the end of 1988, Executive Director from June 1992, Deputy Chief Executive Officer from 1995. He was also a member of HIH’s reinsurance committee.
APRA found that Mr Sturesteps demonstrated a lack of knowledge, competence or diligence in carrying out his duties by
- in 1997 and 1998, arranging for HIH to enter into ‘fronting’ transactions where cover written for film finance for a total of 29 films was 100 per cent reinsured with Re AC and its subsidiary Monde Re without adequate due diligence or risk assessment. This resulted in HIH being exposed to significant liability risk and ultimately incurring substantial losses;
- in 2000, failing to take steps to ensure that the HIH board and its external auditors were informed of the contents of a March 2000 report from US consulting actuaries Milliman and Robertson that concluded that HIH America – which conducted workers compensation business in California - was under-provisioned by around US$53 million.
APRA’s Deputy Chairman, Mr Ross Jones, said that the regulator expects the senior management of authorised insurers to ensure that underwriting processes are rigorous and prudent, and that boards and auditors are kept fully informed about matters likely to affect the insurer’s financial position.
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.