A Dublin insurance trade group is denying a report that itlobbied against regulatory standards for Irish reinsuranceoperations, which gained notoriety last year during a U.S. probe ofAmerican International Group securities fraud.

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

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

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

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

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

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

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

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

At the same time, she pointed out that regulatory authoritiesare enforcement agencies and cannot prevent every instance ofpotentially improper behaviour.

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

The existence of strong regulation, Ms. Goddard said, “does notautomatically prevent all problems. Conversely, less onerousregulatory regimes can encourage innovations which ultimatelybenefit the market as a whole.”

According to DIMA, the international reinsurance marketoperating in Ireland will be the first reinsurance sector in aEuropean member state to be fully regulated specifically under theReinsurance Directive.

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

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

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

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

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

“We live in a world of ever-increasingly stringent regulatoryand corporate governance requirements,” she said. “DIMA as anorganization has promoted transparency, integrity and ethicalbehaviour throughout its membership; these are the vital foundationstones upon which a successful reinsurance sector thrives.”