Central Bank fines insurance firm €1.5m after breaches
The Central Bank has issued a fine of €1.5m on PartnerRe Ireland Insurance and Partner Reinsurance Europe in respect of breaches of Solvency II and corporate governance requirements for insurance companies.
In a statement the Central Bank said that it was fining PartnerRe Ireland for a total of six breaches of regulation, while it was fining Partner Reinsurance Europe in respect of three breaches.
The breaches involved weaknesses in the companies corporate governance relating to their internal reporting and internal controls in respect of Solvency II requirements.
The Central Bank found that the governance failings resulted in breaches relating to the calculation of the companies solvency capital requirement for 2016, and the submission of incorrect information to the Central Bank in respect of their solvency for 2016.
The breaches occurred from the inception of the Solvency II regime on 1 January 2016.
"This is the Central Bank’s first enforcement action in respect of Solvency II breaches," Seána Cunningham, of the CBI, said.
"The Central Bank’s investigations found that the companies submitted regulatory returns to the Central Bank, which overstated their solvency positions."
"This was due to both firms incorrectly calculating their Solvency Capital Requirement. As a result, both entities were required to re-submit their regulatory returns to the Central Bank. This revealed that they had, not only presented the Central Bank with an inaccurate picture of their respective solvency positions, but also in the case of PartnerRe Ireland, it resulted in a breach of its Solvency Capital Requirement," Ms Cunningham continued.
Both PartnerRe Ireland and Partner Reinsurance Europe said that they have taken "full responsibility" for errors made in their interpretation of the Solvency II capital requirements in 2016.
"While both companies were at all times solvent and policyholders were never at risk from an economic perspective, mistakes were made in the 2016 quarterly filings by each company," a spokesperson for the companies said.
"On discovering the discrepancies, the companies immediately reported the issue to the Central Bank and acted swiftly to remedy the situation. They also initiated an independent third party review and have since implemented recommendations for improving their internal controls and reporting processes for Solvency II."
The companies went on to say that, while they were "disappointed" to have fallen short of their own expectations, "we are pleased that the investigation has now concluded and the Central Bank has indicated its satisfaction with our remediation efforts and our improved governance and processes."
Solvency II harmonises European regulation for insurers. It mainly concerns the amount of capital that EU insurance companies must hold to reduce their risk of insolvency, as well as setting out the requirements for governance and risk management of insurers, and focusing on transparency requirements.