General Re's operation in the IFSC is facing yet more scrutiny after the financial regulator in Australia initiated another formal inquiry into its Australian affiliate.
The development follows the regulator's consideration of a submission from General Re, which had been asked to "show cause" as to why the company should not be the subject of a full inquiry into its reinsurance activities in Australia.
According to senior Australian sources, the General Re submission two weeks ago covered the activities in its IFSC unit, trading under the name Cologne Re, which has had close business links with the Australian operation.
A separate US investigation into accounting practices at the world's biggest insurer, AIG, has found that questionable finite risk reinsurance transactions it made with General Re were booked in the Dublin office.
General Re is part of the Berkshire Hathaway group, whose chairman Warren Buffett is helping US regulators with their inquiries.
Two Dublin-based executives in Cologne Re were among more than 20 figures barred by Australian regulators from working at the most senior levels of the insurance industry there after an investigation into the collapse in 2001 of the major Australian insurer, HIH.
The Australian Prudential Regulation Authority made it clear yesterday that the same sort of transactions that featured in the inquiry last year into the HIH collapse would be examined by its inspector.
The regulator said its inspector will investigate "General Re's complex financial products in relation to financial and finite reinsurance and the marketing and promotion of those products".
The inspector will examine whether transactions were properly recorded and appropriately treated in regulatory and financial reporting. Such issues came to light in the HIH inquiry, the regulator said.
Australian sources have said the General Re submission made reference to the IFSC operation's links to the HIH collapse and other matters not directly linked to that affair.
The original inquiry was highly critical of finite risk reinsurance transactions connected with General Re's "Alternative Solutions Group", which is based in the Dublin office of Cologne Re.
The two Dublin-based executives barred by Australian regulators last October are appealing their disqualifications, although one of them left the company last week.
