A Dublin insurance trade group is denying a report that it lobbied against regulatory standards for Irish reinsurance operations, which gained notoriety last year during a U.S. probe of American International Group securities fraud.

The Dublin International Insurance & Management Association (DIMA) made the denial after a newspaper article reporting the group had lobbied the Irish Government not to accede to European Commission Directorate proposals to introduce mandatory regulatory standards for country's the reinsurance industry.

Last June, the former chief executive of Cologne Re Dublin, John Houldworth, agreed to plead guilty to federal criminal conspiracy charges in the U.S. and to testify against management at AIG.

According to SEC filings, Mr. Houldsworth was part of a 2000 scheme involving then AIG Chief Executive Officer Maurice Greenberg to falsely make it appear that a reinsurance transaction had taken place that bolstered AIG's loss reserves.

The issue concerning lobbying over reinsurance standards surfaced after a recent newspaper article by Queen's University, Belfast Academic Justin O'Brien.

But DIMA Chief Executive Officer Sarah Goddard emphatically rejected Mr O'Brien's claims and stated: “DIMA and its members have fully supported the move to full reinsurance regulation in Europe and have worked closely with the relevant Irish authorities to promote the directive. It is absolutely not the case that we have somehow lobbied against the directive.”

DIMA represents the majority of non-life insurers, non-life and life reinsurers, and captive managers located in Ireland, undertaking international business.

The group said international reinsurance sector has been an integral part of the IFSC [International Financial Services Centre] for more than 16 years, and has contributed substantially to the success of Dublin's international financial services sector

Ms Goddard also rejected the suggestion that there is “light touch” regulation in Ireland, saying: “Through my many dealings with the Financial Regulator, I would characterise it as 'firm but fair'. To suggest that there is somehow “light touch” regulation is simply not the case.”

At the same time, she pointed out that regulatory authorities are enforcement agencies and cannot prevent every instance of potentially improper behaviour.

“There have been well-documented examples ranging from inappropriate to outright fraudulent practices in the most tightly regulated jurisdictions over many decades,” said Ms. Goddard.

The existence of strong regulation, Ms. Goddard said, “does not automatically prevent all problems. Conversely, less onerous regulatory regimes can encourage innovations which ultimately benefit the market as a whole.”

According to DIMA, the international reinsurance market operating in Ireland will be the first reinsurance sector in a European member state to be fully regulated specifically under the Reinsurance Directive.

The Reinsurance Directive was published in the Official Journal of the European Union on Dec. 9, 2005, and is the first European-wide regulatory regime for the reinsurance industry.

DIMA said that historically, reinsurance has been viewed as a business-to-business industry with highly informed professionals, and as a consequence most jurisdictions currently do not regulate the sector.

Ms. Goddard noted that although Reinsurance Directive allows for a two-year transposition period from the date it was published in the Official Journal, “Ireland took the position early last year that it would aim for an accelerated adoption of the Directive into Irish legislation.

“DIMA has actively supported that decision, and has been working closely with Government and the Irish Financial Regulator over the course of 2005 to ensure that a comprehensive regulatory regime will be implemented in 2006,” she said.

DIMA said it cannot comment upon the circumstances of individual member companies, however, Ms Goddard expressed her concern that “the historic circumstances surrounding one organisation” which she did not name and described as no longer actively trading in Ireland, “have been used by Mr. O'Brien to censure the marketplace and authorities.

“We live in a world of ever-increasingly stringent regulatory and corporate governance requirements,” she said. “DIMA as an organization has promoted transparency, integrity and ethical behaviour throughout its membership; these are the vital foundation stones upon which a successful reinsurance sector thrives.”

Special Reports /

Dublin Reinsurers Deny Effort To Duck Regulation

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