Insurance broker Aon is withholding reinsurance payments totaling $600,000 on an aviation loss to two Iran insurance carriers due to U.S. sanctions.
In a filing with the Securities and Exchange Commission on Friday, Aon said in 2005 its reinsurance brokerage subsidiary in the United Kingdom placed two reinsurance policies on behalf of Asia Insurance Co. and Central Insurance Iran (Bineh Markazi), both of which are suspected of being directly affiliated with Iran's government.
The primary insurers provided coverage for Mahan Air, an Iranian airline that is on a watch list for the U.S. Treasury Department under what is now known as the Iranian Transactions and Sanctions Regulations.
A reported loss at Mahan Air in 2006 prompted the Iranian carriers to put in a claim for $600,000 under the reinsurance policy, and the reinsurers paid the claim to the Aon U.K. subsidiary. However, under company policy, because of the sanctions, the broker withheld forwarding the money to the insurers.
Aon said a representative for the carriers has contacted its subsidiary twice about the money, but the insurers have taken no additional action.
Responding to questions, a spokesman for Aon said that because of SEC regulations, all publicly held companies are required to divulge any transactions or dealings with Iranian affiliates. Under the government's regulations, the spokesman said, Aon determined this event needed reporting.
This is not the first time an Aon U.K. subsidiary has had issues dealing with foreign companies. In 2011, the firm paid more than $16 million for violating the Foreign Corrupt Practices Act over paying training and education funds to a reinsurance business owned by the government of Costa Rica. An internal investigation by Aon uncovered those recording violations and reported them to the U.S. government.
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