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President Barack Obama and Taoiseach Enda Kenny at Farmleigh House, Dublin, MAy 23, 2011.
The Financial Regulator Matthew Elderfield said
today that the Central Bank planned changes to Ireland's corporate governance
standards are designed to "fill a gaping hole in the Irish regulatory
In an address to the European Insurance Forum, Elderfield said various reports
into Ireland's financial crisis had identified a number "fundamental gaps"' in
the basic regulatory infrastructure across all sectors.
These included an absence of effective standards for corporate governance and
also weaknesses in how the Central Bank is resourced and organised for front
Elderfield said insurance is an important and thriving
part of the international financial services sector in Ireland and has been one
of the clear financial success stories here in spite of the crisis. There were
308 licensed insurance and reinsurance companies in Ireland writing some €58bn
gross written premium in 2009. The overall number of companies has stayed stable
since 2007, as has the volume of gross written premium in the direct life and
reinsurance sectors, while gross written premium in direct non-life has grown
He said the overall size of the regulatory staff at the
Central Bank will approximately double by the end of next year. The number of
insurance staff will increase from 42 at the end of 2009 to a target of 113
staff at the end of 2011. "We are also expanding our actuarial capacity - - from
4 qualified actuaries and three trainees at the end of 2009, we now have 7
qualified actuaries and 4 trainees, and by the end of the year we plan to have 8
qualified actuaries and 7 trainees. We have set up a specialist team for
supervision of variable annuity firms, created a dedicated team for supervising
a large 'hub and spokes' group (of which more in a moment) and also now have a
dedicated insurance prudential policy team to lead our implementation work on
Solvency II," the regulator said.
Elderfield said it is also clear that providers of
products such as annuities face significant risks, which must be managed
carefully. The Geneva Association acknowledges that "VA providers saw their
capital positions erode rapidly when markets came under substantial pressure in
2008 and early 2009. This reflected inadequate hedging strategies and
substantial tail risk."
He said: "My staff has provided me with a list of twelve
insurance companies worldwide that have suffered significant VA losses over the
past few years, which have required collectively many billions of Euros of
recapitalization. A sense of tact inhibits me from reading out the list of
companies, but they are very prominent ones and are firms which on the face of
it would for the most part otherwise be considered well managed."
Europe Rattles Global Markets: Europe rattles investors across the planet on concerns the debt crisis is worsening. Fernando Teixeira Dos Santos, Portugal minister of state/finance discusses Portugal's recently approved bailout:
In New York Monday, the Dow fell
166 points or 1.33% to 12,346.
The S&P 500 slid 1.41% and the
Nasdaq slipped 1.76%.