The Australian Prudential Regulation Authority (APRA) today announced an investigation into certain reinsurance practices involving General Reinsurance Australia Limited’s (General Re) general insurance business.

APRA Inspector, Ms Estelle Pearson of Finity Consulting Pty Ltd, has been appointed under section 52 of the Insurance Act 1973 to investigate General Re’s complex financial products in relation to financial and finite reinsurance and the marketing and promotion of those products.

The appointment of the Inspector follows APRA’s investigation in 2004 of certain financial reinsurance practices in Australia.

APRA Deputy Chairman, Mr Ross Jones, said that APRA’s primary goal is the protection of policyholder interests by ensuring that Australia’s general insurance industry develops and maintains a rigorous approach to risk management, liability valuation and reporting.

“This includes ensuring that any transactions entered into are properly recorded and are appropriately treated in regulatory and financial reporting,” he said.

“APRA is confident that the Australian insurance industry is in a strong position and that obligations to policyholders are adequately protected.”

APRA’s supervision confirms that General Re more than adequately meets minimum regulatory capital requirements.

APRA will not make any further comment during the investigation.

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.