GenRe fined £1.225 million by Financial Services Authority
LOSSES & LAWSUITS
The first transaction, signed in 1999 and renewed three times, allowed a German insurer to gain tax benefits after transferring money between Ireland and Germany. A second transaction, signed in 2004, was used to compensate for a premium reduction on a reinsurance programme agreed with a client insurer.
The FSA ruled that in both cases, GenRe did not have controls in place to stop the deals.
Commenting on the case, FSA director of enforcement Margaret Cole said: "Both conventional and finite reinsurance transactions should only be used where there is a legitimate commercial purpose and sufficient risk transfer. The FSA will take robust action against reinsurance firms and their staff who act in contravention of these basic principles."
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