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APRA announces further disqualification in connection with Gen Re investigation

25 Jul 2007

The Australian Prudential Regulation Authority (APRA) today announced it has disqualified Mr Milan Vukelic from being or acting as a director or senior manager of a general insurer, authorised nonoperating holding company or agent of a foreign general insurer.

From 1997 to 2002, Mr Vukelic was the London-based Chief Executive Officer (CEO) of the Alternative Solutions division, General Reinsurance Corporation. Alternative Solutions was a virtual business unit that was set up to develop and market financial reinsurance products.

When Mr Vukelic was CEO, the Alternative Solutions division negotiated financial reinsurance transactions with FAI Insurance Group, New Cap Reinsurance Corporation and Zurich Australian Insurance Limited. Mr Vukelic played a significant role in the negotiations for each of the transactions and also gave approval for Gen Re to execute each of the transactions.

The APRA delegate found that, in relation to each transaction, Mr Vukelic gave approval for Alternative Solutions to enter into the transactions despite being aware that they would be used to present false or misleading information in published financial statements and mislead auditors and APRA.

APRA had previously disqualified Mr Vukelic in 2004 in relation to financial reinsurance matters. However, this decision was overturned on review on the grounds that there was insufficient evidence of his involvement in the transactions to support a disqualification decision. However, during its investigation into General Reinsurance Australia which commenced in April 2005, APRA obtained additional information regarding Mr Vukelic’s conduct in relation to FAI Insurance Group, as well as new information about his conduct in relation to New Cap Reinsurance Corporation and Zurich Australian Insurance Limited, that demonstrated that he was not a fit and proper person to hold a senior position within the insurance industry in Australia.

APRA has advised the Financial Services Authority (FSA) in the United Kingdom of its decision.

A copy of the Inspector’s Report for General Reinsurance Australia is available on APRA’s website.  Click here for more information.

APRA’s disqualification register can be viewed on APRA's website.  Click here for more information.

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 $2.5 trillion in assets for 20 million Australian depositors, policyholders and superannuation fund members.