The Australian Prudential Regulation Authority (APRA) today announced the disqualification of Mr Florian Salzgeber from being or acting as a director or senior manager of a general insurer, authorised non-operating holding company or agent of a foreign general insurer.
Mr Salzgeber was an executive of Zurich Australia Insurance Limited (ZAIL) and Zurich Financial Services Australia Limited (ZFSA) from January 1999 to May 2003 and a member of their financial team responsible for capital management and APRA reporting.
On 25 May 2005 APRA accepted an enforceable undertaking from ZAIL and ZFSA arising from two financial reinsurance transactions with General & Cologne Re Group Australia (GCRA) that were undertaken in 2000. The transactions resulted in ZAIL’s profits in 2000 being overstated by $61 million with the effect that ZAIL appeared to meet the regulatory solvency requirement when it did not. On 25 May 2005 APRA said:
“While the undertakings resolve APRA’s issues from the investigation in relation to ZAIL and ZFSA, APRA is still to consider what action, if any, it needs to take in relation to individuals who were involved in these transactions. APRA is satisfied that ZAIL more than adequately meets minimum regulatory capital requirements and that policyholders’ interests are adequately protected.”
Mr Salzgeber was the holder of a senior manager role at ZAIL/ZFSA within the meaning of the general insurance prudential standard GPS 220. APRA found that Mr Salzgeber knowingly acted on improper directions from others in ZAIL and ZFSA and in so doing caused the auditors of ZAIL and ZSFA to be misled as to the true nature of the GCRA financial reinsurance transactions. APRA concluded that Mr Salzgeber did not demonstrate the requisite “integrity in the conduct of business duties” as required in the prudential standard.
APRA Deputy Chairman, Mr Ross Jones, said that APRA relies on officers in responsible positions within regulated entities to act with integrity and honesty at all times and will take action to remove those who do not act in this way from APRA’s regulated industries.
APRA is continuing to consider the fitness and propriety of other individuals involved with these transactions. The disqualification of Mr Salzgeber is listed on APRA’s Disqualification Register at www.apra.gov.au/Disqualification-Register.cfm. A copy of the Enforceable Undertaking from Zurich can also be viewed on APRA’s website at www.apra.gov.au/Media-Releases/05_31.cfm.
APRA’s prudential standards can also be viewed at www.apra.gov.au/General/General-Insurance-Prudential-Standards-and-Guidance-Notes.cfm
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.
Media and industry inquiries only:
Andrew McCutcheon, Public Affairs Manager
Australian Prudential Regulation Authority
Telephone: 02 9210 3143
Mobile: 0417 528 660
All other inquiries:
APRA Contact Centre
1300 131 060
