High-level Cologne executive quits IFSC operation

A high-level executive at Cologne Reinsurance has left the company operation in the IFSC, a week after it emerged that he had been barred last October from working as a director or senior manager in the insurance industry in Australia. Arthur Beesley, Senior Business Correspondent, reports.

The company's chief executive in Dublin, James Maher, told The Irish Times last night that "Tore Ellingsen no longer works with the company". He would not comment on the circumstances of the departure.

Mr Maher also declined to comment on the position of the company's chief property and casualty underwriter, John Houldsworth, who was also barred last October by Australian regulators.

Both men were at work last week in the company. Neither could be contacted last night. While their names were detailed last week on a Cologne Re website, neither name was on the same page of that site last night.

Both are appealing their disqualifications by the Australian Prudential Regulation Authority, which linked them to a reinsurance transaction in 1998 that disguised the weak financial position of a prominent Australian insurer known as FAI.

The transaction was instrumental in the collapse in 2001 of the major Australian insurer, HIH, which later acquired FAI on the strength of a due diligence report that failed to identify the weakness in its finances.

The Australian regulator found that the arrangement with FAI was disguised as a number of traditional reinsurance transactions with the risks to the reinsurer removed through "side letters" between the parties.

Mr Ellingsen was "a primary architect of a reinsurance transaction with FAI that he knew had the purpose of misleading", it said last October.

Mr Houldsworth was then chief executive officer of the firm in Dublin "and played a key role in negotiating a reinsurance transaction with FAI that he knew had the purpose of misleading".

Ifsra has said that Cologne Re had taken satisfactory "corrective action" in relation to Mr Ellingsen and Mr Houldsworth, although the specific nature of that action remains unclear.

News of Mr Ellingsen's departure came after Ifsra's chief executive, Liam O'Reilly, said he did not see why Cologne Re "shouldn't be able to say something" about action.

Dr O'Reilly declined yesterday to make any specific comment about Ifsra's involvement in the Australian investigation or on its role in a separate investigation by US regulators into some of its activities.

"We are only scrutinising one entity and just to say that from that point of view there is an inquiry going on and I don't want to prejudice that inquiry," he said, adding that Ifsra would not tolerate any transactions that negate the risk element of finite risk reinsurance deals.

"If we find that individuals are involved or if its proved that individuals are involved in that, they will find no place in Ireland to do business."

At the Finance Dublin conference, he said he wanted to scotch any idea that Ifsra was an "easy mark" in the international financial markets.

"What I would like to feel is that as a regulator we're considered. We find out the facts before we act. We're not a regulator that reaches for their gun and shoots people down before we know what the real situation is."