Australia Bans Cayman Insurer

Tuesday, June 22, 2004

A Cayman Islands-registered insurer has been banned from trading in Australia until it becomes properly licensed after a successful action brought by the Australian Securities and Investments Commission (ASIC) according to the Australian newspaper, The Age.

The Supreme Court of New South Wales found Triton Underwriting Insurance Agency Pty Ltd and Trans Pacific Insurance Corporation, an insurer registered in the Cayman Islands, had traded between August 2002 and March 2004 without holding an Australian Financial Services (AFS) licence.

The court ordered Triton and Trans Pacific to cease carrying on any business in contravention of the Corporations Act. However, it may deal in financial products, including insurance, through an AFS licensee in Australia.

“Triton and Trans Pacific consented to declarations that they had made misleading or deceptive statements including: that the Cayman Islands Monetary Authority had extended Trans Pacific’s licence so that it could trade as an insurer in Australia; and that the paid-up share capital of Trans Pacific was $40 million,” ASIC said in a statement.

The Cayman Islands Monetary Authority (CIMA) confirmed in an official statement that Triton’s and Trans Pacific’s declarations were inaccurate. “The Company admitted to making misleading or deceptive statements including the reference to CIMA extending its licence. The Cayman Islands Monetary Authority has no authority to extend licences to any jurisdiction other than the Cayman Islands.”

Triton and Trans Pacific must now place advertisements in daily newspapers correcting the misrepresentations made. They must also write to policyholders informing them of the orders and offering to cancel their policy and refund any unexpired premium and commission.

Copies of the court’s orders are also to be sent to all insurance brokers who arranged policies with Triton and Trans Pacific since August 2002.

Triton and Trans Pacific were ordered to pay ASIC’s costs.

Aradlay Insurance Brokers Pty Ltd, which placed a large amount of business with Trans Pacific, consented to the court orders, ASIC said.

Aradlay has agreed to write to clients currently holding policies with Trans Pacific, advising them that Aradlay shared a common director, Ian Douglas, with Trans Pacific between 1 August 2002 and 17 July 2003.

ASIC said it had no reason to suspect the court orders and declarations would affect the validity of insurance policies held with Trans Pacific, or Trans Pacific’s ability to meet claims made.

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