The U.S. Securities and Exchange Commission has subpoenaed the chief executive officer of Toronto-based Fairfax Financial Holdings Ltd. in an investigation of finite reinsurance accounting, the company said today.
CEO Prem Watsa was targeted in connection with an answer to a question about a review of the company's finite reinsurance contracts.
As part of the 2005 year-end reporting and closing process, Fairfax and its subsidiaries internally reviewed all contracts on a list provided to the SEC and some additional contracts.
For over a year federal regulators have been investigating the use of finite contracts to ensure there is enough risk transfer to warrant the accounting benefits.
The company said it could not at this time predict the outcome of the SEC probe and its effect on its financials.
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