Some comments by the Australian Prudential Regulation Authority's Chief Executive Officer, Graeme Thompson, about the HIH situation were misreported in the Australian Financial Review on 23 March (p.46) and again in the Sydney Morning Herald on 24 March (p.26 ).

Mr Thompson has never said that APRA "did not take steps to launch a formal investigation into HIH because of concerns such a move could alarm the market and damage the company".

Mr Thompson has said that it is a big step for a prudential supervisor like APRA to appoint an inspector to a public company - and it needs to have solid grounds to take such a step. In APRA's judgment, it did not have those grounds until very recently.

Apart from needing to observe legal requirements, premature action by a prudential supervisor can make things worse, rather than better. The vast majority of the HIH Group's policyholders are in a better position now, as a result of arrangements made with other insurers, than they would have been if APRA had moved to appoint an inspector three months ago.

APRA staff have worked very hard in recent weeks and months to facilitate those arrangements that now protect most of HIH's policyholders. For further information contact:

Gloria Peterson
Public Affairs Manager
02 9210 3385