The Central Bank of Ireland has fined Dublin-based insurer PartnerRe Ireland and its sister company, PartnerRe Europe, €1.5 million for breaching their solvency obligations and corporate governance requirements.
The fine, one of the biggest on record, comes in respect of breaches of the EU-wide Solvency II regime, which came into force in January 2016.
The regulations require firms to maintain sufficient capital to ensure that they can meet their obligations to policyholders.
The Central Bank said the breaches, a total of six for PartnerRe Ireland and three for PartnerRe Europe, related to the calculation of their solvency capital requirements for 2016 and the submission of incorrect information to the Central Bank.
The breaches occurred from the inception of the Solvency II regime in January 2016 and remediation continued up to May of this year, the bank said.
The Central Bank’s director of enforcement and anti-money laundering, Seána Cunningham, said: “Solvency II is a harmonised insurance regulatory regime aimed at further protecting policyholders and creating a more resilient insurance sector.
“This is the Central Bank’s first enforcement action in respect of Solvency II breaches,” Ms Cunningham said. “The breaches in both of these investigations centre on one of the key requirements of the Solvency II regime, the solvency capital requirement,” she said.
Ms Cunningham said the Central Bank’s investigations found that both companies submitted regulatory returns to the Central Bank, which overstated their solvency positions.
Incorrect calculations
This was due to both firms incorrectly calculating their solvency capital requirement, she said, noting that both entities were required to re-submit their regulatory returns.
“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,” she added.
In a statement, PartnerRe said it had taken full responsibility for errors made in its interpretation of 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 spokesman said.
“On discovering the discrepancies, the companies immediately reported the issue to the Central Bank and acted swiftly to remedy the situation,” he said.
“They also initiated an independent third-party review and have since implemented recommendations for improving their internal controls and reporting processes for Solvency II,” he said.
“While disappointed to have fallen short of our own high 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,” he added.
*This article was amended on Wednesday, August 22nd
