Dublin-based insurers PartnerRe Ireland Insurance dac (PRIID) and Partner Reinsurance Europe SE (PRESE) have been reprimanded and fined a combined €1.54 million by the Central Bank of Ireland.
PRIID was reprimanded for a total of six breaches and PRESE a total of three breaches of Solvency II and the Corporate Governance Requirements for Insurance Undertakings 2015.
The breaches were admitted by PRIID and PRESE, both of whom are Dublin-based entities of PartnerRe, and occurred from the inception of the Solvency II regime on 1 January 2016 and remediation continued up to 30 May 2018.
The breaches were related to PRIID and PRESE’s failings in corporate governance frameworks which resulted in breaches of the Solvency II regime relating to the calculation of their Solvency Capital Requirement for 2016, and the submission of incorrect information to the Central Bank in respect of their solvency for 2016.
A statement from a spokesperson for PartnerRe has said the company has taken full responsibility for the errors it made.
The spokesperson said: “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.”
“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.”
“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.”
Seána Cunningham, director of enforcement and anti-money laundering at Central Bank, said the actions taken demonstrated the importance that the Central Bank puts on firms meeting their regulatory obligations under Solvency II and the Corporate Governance Requirements.
Cunningham explained: “The Central Bank’s investigations found that PRIID and PRESE 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 PRIID, it resulted in a breach of its Solvency Capital Requirement.”
Cunningham continued: “The Central Bank believes that PRIID and PRESE failed to put in place sufficient processes to identify and report the risks to which the firms were exposed in respect of their Solvency Capital Requirements.”
“As a result, the boards of both firms were not provided with comprehensive and timely reports regarding the calculation and maintenance of their Solvency Capital Requirements.”
“Therefore, the Boards were unable to fulfill their responsibility take the necessary action to prevent the Solvency II breaches that occurred.”
According to Cunningham, the investigation also found that PRIID and PRESE “failed to design and operate appropriate internal controls to ensure the accuracy of their Solvency Capital Requirement calculations and the monitoring of the Solvency Capital Requirements in line with the stated risk appetite”.
“These failings resulted in inaccurate reporting of information to the Board and the submission of inaccurate information to the Central Bank in respect of their Solvency Capital Requirement and, ultimately, the firms’ failure to identify the decrease in their Solvency Capital Requirement.”
