Latest News

The Central Bank of Ireland has fined Alico Life International Limited €3.2 million for breaches of insurance laws.

The breaches were discovered by the Central Bank’s Insurance Division and were investiagted jointly with Central Bank’s Enforcement Division.

The examinations found that from April 2007 Alico began selling securities through a an investment agent without seeking the approval of its investment committee. The agent on behalf of the firm, loaned securities representing approximately €500 million of the life assurance fund assets supporting unit linked policies. This represented approximately a quarter of those assets in each of the years 2007 and 2008.

Approximately €138 million of collateral provided by borrowers was invested by the firm’s agent in mortgage backed securities. This decision was made without having regard to certain aspects of the firm’s investment policies and firm sustained losses of approximately €42 million in respect of these investments.

As a result of these losses, Alico received non-refundable capital contributions from its then parent company AIG totalling approximately €50 million. Without the capital contributions from its parent, the firm would have been in breach of its solvency margin requirements in 2008.

In imposing the €3.2 million penalty the Central Bank said that the firm infringed a key regulatory requirement that receipts of the life assurance business must be entered into the life assurance fund.

The bank also said that it took into account that having realised significant losses, Alico obtained a capital injection from its parent which avoided policyholder loss and has implemented a variety of new internal controls in order to improve governance.

Alico is now owned by US insurance giant the MetLife group.