The Dublin units of a second international reinsurer have been drawn into a major examination of practices in the sector by regulators in the US.
The group in question is Hannover Re, one of the top five reinsurers in the global market, which received dividends last year of almost €95 million from its three companies in the International Financial Services Centre (IFSC).
News that some of its Irish activities have come under scrutiny by the US regulators comes in the wake of extensive investigations into "sham" deals done between another IFSC-based company, Cologne Re, and AIG, the world's biggest insurer.
Such investigations have already led to the prosecution by US regulators of the former head of the IFSC unit of Cologne Re, which is owned by GenRe, a unit of Warren Buffett's Berkshire Hathaway empire.
The chief spokesman at Hannover Re's headquarters in Hannover, Eric Schuh, said that contracts written by some of its Dublin operations came within the scope of subpoenas the group received in April from the US Securities & Exchange Commission (SEC) and the insurance regulator in Florida, which sought information from 18 reinsurers.
While the group also received an "informal" letter of inquiry in April from the Irish Financial Services Regulatory Authority (Ifsra) in Dublin, that process was now "settled". It is believed that the letter from Ifsra was received when it wrote to each of the 190 companies that write reinsurance in the IFSC.
Each of US subpoenas and the letter from Ifsra concerned contracts for finite risk reinsurance. Reinsurers insure the risk taken on by insurers. Such contracts are for a complex form of reinsurance cover that enables insurers to spread the risk from large claims over a long period.
Similar contracts, but illegally arranged so that there was no actual transfer of risk, were at issue in the investigation into Cologne Re and AIG.
"From a content point of view, all of those requests relate to finite reinsurance. They relate to the Irish operation since they are a big writer of finite reinsurance within the Hannover Re group," said Mr Schuh.
However, he said no specific transactions written by the Irish units were under particular scrutiny. "Basically they want to know whatever we have done in those areas, not like particular contract transactions, but general activities in that area."
There were no issues around the finite contracts written by Hannover Re, he said. "I would certainly think we believe we did legitimate transactions always."
The group, controlled by the Talanx financial services mutual, employs 20 staff at the IFSC.
Hannover Reinsurance (Ireland) Ltd made a pretax profit in 2004 of €62.96 million and paid a €60 million dividend. Hannover Reinsurance (Dublin) Ltd made a pretax profit of €39.29 million and paid a €28 million dividend.
The group's 55.6 per cent-owned subsidiary, E&S Reinsurance (Ireland) Ltd, made a pretax profit of €13.17 million and paid a €12 million dividend.
