Remember financial reinsurance, that innocuous-sounding instrument which landed former FAI MD and HIH director Rodney Adler, a swag of local reinsurers and even Zurich Australia in trouble? 

The controversial measure – also known as “finite risk” – has now become the focus of a new US investigation. Spearheaded by New York Attorney-General Eliot Spitzer and the Securities and Exchange Commission (SEC), there is suspicion that financial reinsurance may have been used in the US as a form of corporate loan.

The SEC is conducting an industry-wide investigation into whether the products provided by a variety of insurance companies allow customers to manipulate their financial statements.

Industry executives say companies can reap distinct accounting benefits from having loans dressed up as insurance products.