Former London-based Gen Re executive Milan Vukelic has been barred by the Australian Prudential Regulation Authority (APRA) from directing or managing an insurance company in Australia following a three-year investigation.

APRA previously disqualified Mr Vukelic from running an insurance company in 2004 for his part in sham reinsurance contracts, but that ruling was overturned on insufficient evidence.

Now APRA has found Mr Vukelic authorised at least three transactions during his time as CEO of Gen Re subsidiary Alternative Solutions that misled shareholders, auditors and the regulator.

An APRA investigation launched in 2005 found that between 1997 and 2002 Gen Re assisted FAI Insurance, New Cap Re and Zurich Australia to alter their financial results through the use of complex reinsurance deals.

For example, Gen Re sold a financial reinsurance policy in 1998 but disguised it as a normal reinsurance contract, enabling FAI to turn a $50 million loss into an $8.6 million pre-tax profit.

APRA found Gen Re knew the intended purpose of the transactions was improper and did nothing to prevent or discourage their use. In fact it structured the transactions in a way that aided improper use.

Gen Re’s Alternative Solutions unit was established by Cologne Re and expanded under Gen Re in 1997 to sell financial reinsurance globally. The unit has since been disbanded, and Gen Re has not sold reinsurance in Australia since 2002.

However, the subsequent investigation into Gen Re uncovered sufficient evidence that Mr Vukelic was not a fit and proper person to hold a senior position in the Australian insurance industry.

All of the Alternative Solutions officers involved in the transactions have left the organisation or have been fired.