Fairfax Subpoenaed in General Re Probe
The Associated Press
June 24, 2005
Fairfax Financial Holdings Ltd. on Friday said a subsidiary received a subpoena from regulators over its dealings with General Re Corp., one of the targets in a widening probe over finite risk insurance products.
The Canadian insurer said its Fairmont Specialty Group received the subpoena from the Securities and Exchange Commission, and is cooperating with that request. Dozens of insurance and reinsurance companies have become involved in the probe of the industry.
The SEC and other government regulators are investigating the use of finite risk insurance in an investigation spurred by dealings between General Re and American International Group Inc. Finite risk products are used by insurers to share risk, and regulators and government officials claim it can also be used to artificially inflate earnings.
General Re, a unit of billionaire investor Warren Buffett's Berkshire Hathaway Inc., is accused of structuring a reinsurance transaction to allow AIG to add a total of $500 million in phony loss reserves to its balance sheet.