GENERAL RE RETURNS A$27M TO HIH LIQUIDATORS

Australia-based General Re, formerly General Cologne Re Australia, has returned A$27m to the liquidators of now-bankrupt Australian insurer HIH for its part in several sham reinsurance deals which helped to encourage HIH to acquire local competitor FAI Insurances shortly before HIH’s collapse. The sum returned is equivalent to the premiums charged plus accrued interest, but will make little impact on the estimated A$5.3bn owed to HIH creditors in the wake of the insurer’s collapse. The issue of the sham reinsurance contracts drawn up by General Re was first highlighted by the royal commission which sat in 2002 to investigate the failure of HIH. The commission found that FAI was heading for a A$57m loss in 1998 but the two reinsurance deals designed by General Re allowed FAI to book a A$6.8m profit ahead of its purchase by HIH.