General Re Australia (GRA) yesterday paid $27.2 million to the FAI liquidator as part of an enforceable undertaking provided to the Australian Securities and Investments Commission (ASIC).

GRA was formerly known as General & Cologne Re Australia. The undertaking also involves CEO Geoffrey Barnum and senior managers Christopher Byatt and Andrew Smith, as well as former company officer Lindsay Self.

ASIC Acting Chairman Jeffrey Lucy said the undertaking follows ASIC’s investigation into 1998 reinsurance arrangements between FAI and General & Cologne Re. It is alleged that the “true substance” of the arrangements was concealed from FAI’s auditors by senior FAI executives.

Under the enforceable undertaking GRA has refunded to FAI liquidator Tony McGrath premiums and interest worth $27.2 million.

The executives subject to the undertaking will not be allowed to apply for an Australian financial services (AFS) licence, work as an authorised representative of an Australian financial services licenceholder or be involved in the management of any listed Australian corporation for 12 months.

GRA has agreed to develop an agreed compliance program in conjunction with ASIC and the St James Ethics Centre for all of its resident senior executive officers and departmental managers, and has also agreed to monitor the performance of the named executives for three years.