Equity Red Star avoids ?1m fine from Lloyd's of London

The home and motor insurer has been ordered to pay ?95,000 towards the costs of the investigation after admitting two charges of "detrimental conduct". The charges relate to losses incurred by the underwriting syndicate, which has been hit heavily by a rise in personal injury claims in recent years.

In a statement, Equity Red Star, which is majority-owned by Insurance Australia Group (IAG), said it "acknowledged the previous process and management issues within its business". The company said it had strengthened its management team over the past few months, exited unprofitable business and increased the price of premiums across its motor insurance business.

Equity has been under investigation by Lloyd's and the Financial Services Authority since 2010. The City regulator imposed a Section 166 investigation into the company at the time following significant underwriting losses, which resulted in its parent company injecting millions into the unit to keep it afloat.

Neil Utley, the former IAG UK chief executive, John Josiah, a former senior underwriter at Equity Red Star, and Douglas Morgan, its former UK commercial director, will appear before a Lloyd's disciplinary panel later this month. Lloyd's has the power to impose individual fines on the three men or even prevent them from working in the market if they are found guilty of misconduct .

Mr Utley, who is now chairman of Hastings Direct, broke his silence yesterday. The entrepreneur, who left IAG by "mutual consent" in 2010 , said: "Equity's results over the last few years are not out of line with the rest of the motor insurance market which, as everyone is aware, has been severely impacted by the changing pattern of claims. During my time at Equity, the business was run in a highly professional and transparent manner by a team of accomplished and experienced executives in a way that was well regarded by its stakeholders."

Source: http://telegraph.feedsportal.com/c/32726/f/568699/s/1b7e0d8d/l/0L0Stelegraph0O0Cfinance0Cnewsbysector0Cbanksandfinance0Cinsurance0C8990A4250CEquity0ERed0EStar0Eavoids0E1m0Efine0Efrom0ELloyds0Eof0ELondon0Bhtml/story01.htm

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