Warren Buffett's Cologne Re group has received $100 million (€73.53 million) in dividends and capital repayments from its Dublin subsidiary, the firm which played a key part in a big accounting scandal at insurance giant AIG.
The IFSC-based firm is ultimately controlled by General Reinsurance (GenRe), a division of Mr Buffett's Berkshire Hathaway conglomerate.According to newly-filed accounts, its directors arranged a dividend payment of $28 million on March 26th and made a repayment to its parent that day of $72 million in shareholders' funds.
Cologne Re's Dublin office stopped writing new reinsurance business in 2005 after it became embroiled in a US investigation into malpractice at AIG, which ultimately led to the departure of that group's long-time chief, Maurice "Hank" Greenberg.
The inquiries mainly centred on insurance deals in 2000 and 2001 between Cologne Re and AIG, which enabled AIG to falsely inflate its reserves by some $500 million because there was no transfer of risk. This case and others resulted in stringent enforcement action by international regulators against former Cologne Re Dublin chief executives John Houldsworth and John Byrne, former director Christopher Garand and former senior marketer Tore Ellingsen. The firm was the subject of investigations by the Irish Financial Services Regulatory Authority and an ongoing preliminary evaluation by the Office of the Director of Corporate Enforcement in Dublin. "The company is co-operating fully with the preliminary evaluation and other regulatory inquiries," according to its 2006 accounts. Cologne Re's Dublin unit continues to manage the run-off of its existing contracts.
With an investment portfolio worth $930 million, its pretax profits rose last year to $23.64 million from $5.85 million in 2005.
Mr Houldsworth pleaded guilty to a federal charge in the US to conspiring to misstate certain AIG financial statements.
Mr Garand, who awaits trial in the US, has pleaded not guilty.
In July last year, the British financial regulator banned Mr Byrne for five years from performing any regulated function on foot of transactions he undertook in the firm. In 2004, Mr Ellingsen and Mr Houldsworth were banned from the Australian insurance industry.
