Former Cologne Re Exec Testifies in Gen Re Trial, Understood No Risk Involved
John Houldsworth, the former chief executive officer of Cologne Re Dublin, in his testimony to a federal jury on Wednesday stated that understood from his first conversations with General Re Corp. officials about a proposed reinsurance deal with American International Group Inc. that the deal would include no risk transfer.
Mr. Houldsworth conveyed that, in a late evening phone call on Nov. 13, 2000 he received from former Gen Re CFO Elizabeth Monrad, she relayed former AIG CEO Maurice R. Greenberg’s request that Gen Re—Cologne Re Dublin’s parent company—cede up to $500 million in reserves to AIG.
Ms. Monrad told him that AIG wanted to appease stock analysts concerned about AIG’s reserve levels and made it clear that as part of any reinsurance deal, Gen Re would not send a cash premium to AIG, would insist on avoiding adverse tax consequences for Cologne Re Dublin and “would not be charging (AIG) with any losses, if we had any,” Mr. Houldsworth told jurors.
The testimony came in the third week of the trial of Ms. Monrad and four other Gen Re and AIG executives on charges that they engineered a fraudulent loss portfolio reinsurance deal that allowed AIG to inflate its loss reserves by $500 million in the last quarter of 2000 and the first quarter of 2001.
Source: Source: Business Insurance | Published on January 24, 2008
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