QBE’s chief executive Frank O’Halloran was right. Last month after the QBE annual meeting he said the jailing of Rodney Adler wasn’t a problem for the insurance industry, but what was going on in the US was.

“I think more worrying for us are some of the things that are happening around the world in terms of investigations by Spitzer and others and the apparent findings on reinsurance transactions with AIG and others,” he said after the meeting.

Since then, life has become very much more interesting for insurers the world over. The world’s second richest man, Warren Buffett and his General Re-re-insurance arm have been embroiled in the wide-ranging investigation now being conducted by the US Securities and Exchange Commission, Australia’s APRA and similar regulators in Britain and Ireland.

And the SEC, in a development that will interest APRA, has said it will charge a senior General Re executive with fraud. According to US media reports, including one in the New York Times, the legal action comes on top of investigations by the Financial Services Authority of the UK and its Irish equivalent.

These probes are in addition to the APRA official investigation into General Re’s financial re-insurance contracts with FAI and Zurich Financial Services’ Australian arm. Officers at Faraday Group, a Lloyd’s of London insurer owned by General Re, and Cologne Reinsurance Company (Dublin) Ltd., an Irish unit of General Re, are being investigated by the Financial Services Authority as part of a probe by the UK market watchdog into finite reinsurance, according to Berkshire.

These inquiries are likely to touch on what has happened in Australia given that at least two of the executives involved were banned by APRA last year from operating here. General Re simply moved them overseas. The Irish Financial Services Regulatory Authority also has requested information about finite reinsurance from Cologne Reinsurance Company (Dublin), Berkshire’s filing disclosed.

General Re’s controversial transaction with AIG was routed via subsidiaries in Ireland, according to US media reports over the past few weeks. That’s significant because several important General Re executives are based in Dublin, including one banned from Australia by APRA. Australian regulators barred several current and former General Re executives based in Dublin late last year. One of them, John Houldsworth, continues to work for Cologne Re, and, according to insurance industry executives and others briefed on the matter, oversaw the doctoring of paperwork relating to the questionable transaction between General Re and AIG.

Another General Re executive barred from Australia, Tore Ellingsen, recently resigned from Cologne Re. In December, Australian regulators barred another General Re executive, Milan Vukelic, who is now chief executive of Faraday. The identity of the General Re executive could not be determined, although it’s a person still working for the company, according to US reports who added that the SEC action involved the continuing investigation of the insurance giant American International Group. US investigators have been focusing on a 2000 reinsurance transaction between AIG and General Re that allowed AIG to increase its reserves artificially by $500 million over two quarters. In March, AIG acknowledged that the deal was improper.

Peter Fray

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