insurance gen re

General Reinsurance Corporation’s history began in 1921 as the General Casualty and Surety Reinsurance Corporation, before it took over the U.S. business of the Norwegian Globe Insurance Company of Christiania, Norway In 1923, American investors acquired the company and changed the name to General Reinsurance Corporation. In 1928, the General Alliance Corporation was organized to acquire and hold the shares of General Reinsurance Corporation, as well as a half interest in the holdings of the Royal Exchange Assurance Group (London) in the United British Insurance Co., Ltd. In 1929, the General Alliance Corporation owned all the stock of General Reinsurance Corporation, and jointly with the Royal Exchange Group, a controlling interest in the United British. The United British Insurance Co., Ltd. established a U.S. branch that transacted casualty reinsurance as a "running mate for the General, and has the same management as the General. The two companies transact practically all forms of casualty and surety reinsurance and constitute the first example of a 'Group' in the history of American casualty reinsurance." Also in 1929, General Reinsurance affirmed that it would be only a direct reinsurer. In 1945, General Reinsurance merged with Mellon Indemnity Corporation. In 1954, the company created the first professional casualty facultative reinsurance department. Property facultative followed, beginning in 1956. North America branch offices were opened during this time. In the 1950s, General Reinsurance began writing reinsurance internationally, expanding in this area during the 1960s and 1970s. The company continued to grow through the next two decades, opening more U.S. and Canada branch offices and making various acquisitions. The company moved its headquarters from New York City to Greenwich, Connecticut in 1974, and then to Stamford, Connecticut in 1984. In 1980, General Re Corporation, the parent holding company, was listed on the New York Stock Exchange. In 1994, General Reinsurance Corporation formed an alliance with what was then Cologne Re (Kölnische Rückversicherungs-Gesellschaft, which was founded in 1846), now General Reinsurance AG. In 1998, General Re Corporation was acquired by Berkshire Hathaway Inc., and in 2003 General Reinsurance Corporation and Cologne Re began marketing under the brand name of Gen Re.[6] In 2009, General Reinsurance Corporation completed its purchase of Cologne Re,[7] whose name was changed to General Reinsurance AG in 2010.[8] The company continues to market globally as Gen Re. In October 2000, some Wall Street analysts questioned the decline in American International Group (AIG) loss reserves.[9] In an effort to quell these concerns, AIG entered into two sham reinsurance transactions with Cologne Re Dublin, a subsidiary of General Reinsurance, that had no economic substance but were designed to add $500 million in phony loss reserves to AIG’s balance sheet in the fourth quarter of 2000 and first quarter of 2001. [9] [10] In 2005, New York Attorney General Eliot Spitzer began an investigation into the two reinsurance transactions. Soon afterwards, AIG came under market pressure, and admitted it had undertaken what could be construed as securities fraud. The staff admitted that the two reinsurance transactions had inflated AIG’s balance sheet and propped up AIG’s stock price. In the resultant stock crash, investors lost $500 million in investments.[10] Cologne Re Dublin's CEO, John Houldsworth, agreed to turn state's witness for the Department of Justice and Securities and Exchange Commission, in agreement for a plea bargain. Houldsworth then pleaded guilty to conspiring to commit securities fraud, resultantly facing a sentence of up to five years in prison and $250,000 in fines. The final sentencing was placed on hold, subject to consequential SEC prosecutions.[10] The DOJ subsequently undertook successful prosecutions against four former Gen Re executives and one former AIG executive: CEO Ronald Ferguson was sentenced to two years in prison and fined $200,000; CFO Elizabeth Monrad was sentenced to 18 months in prison and fined $250,000; Senior Vice President Christopher Garand was sentenced to a year and a day in prison and fined $150,000; Senior Vice President and Assistant General Counsel Robert Graham was sentenced to a year and a day in prison and fined $100,000; AIG's Vice President Christian Milton was sentenced to four years in prison and fined $200,000.[10] In 2009, in front of U.S. District Judge Christopher Droney in Hartford, Houldsworth apologized. He was resultantly fined $5,000 and ordered to perform 400 hours of community service during a two-year probation period. On August 1, 2011, the United States Court of Appeals for the Second Circuit vacated the five Gen Re and AIG defendants’ convictions and remanded the defendants for a new trial, holding that the reported drop in share prices could not be attributed to the two reinsurance deals