HiH Australia?

Question

1, One of the HIH's bad mistakes was to acquire another insurance company for $300mil when it was worth much less than that. What was the name of the insurance company?

2. Who was the auditor of HIH (the name of the firm)?

3. What was the enquiry into HIH known as? And the finding of that enquiry was that the main reason that HIH collapsed was?

4. The enquiry found that the collapse was not caused by?

If you could post any good websites you are aware of that will help me.

Answer 1

HIH Insurance Limited (the holding company of the HIH group) was a publicly listed company in Australia. It acquired a large number of companies both in Australia and globally. Most notably however, HIH acquired the large Australian insurance company FAI Insurance, whose chief executive Rodney Adler became a director of HIH in 1999. Prior to its failure the HIH group was the second largest general insurer in Australia, and had operations in many other countries.

On 15 March 2001 the HIH group failed. A G McGrath and A R M Macintosh (then of KPMG Sydney) were appointed as provisional liquidators of HIH Insurance Limited and many of its subsidiaries. A J McMahon, T A Riddell, and J M Wardrop of KPMG London were appointed as provisional liquidators of some of the same companies in the United Kingdom, and also of other group companies incorporated in the UK. Other insolvency practitioners were appointed to various group companies incorporated in other parts of the world.

On 27 August 2001 the major Australian companies in the HIH group to which provisional liquidators had been appointed were placed into liquidation with the former provisional liquidators Messrs McGrath and Macintosh being appointed as Liquidators.

Rodney Adler was sentenced on 14 April 2005 to four and a half years jail, with a non-parole period of two and a half years. Adler's jail sentence comes after pleading guilty on 16 February 2005 to four criminal charges.

REPORT OF THE HIH ROYAL COMMISSION
The Commissioner concludes that the primary reason for the collapse of HIH was the failure to provide properly for future claims. This failure was essentially due to mismanagement and an inadequate response to pressures emerging in insurance markets internationally.
The Commissioner also concludes that the Australian Prudential Regulation Authority (APRA) did not cause the collapse of HIH. He notes at page 442 of the third volume of his report that "APRA's failure to act did not contribute to the collapse of HIH. However, the manner in which APRA exercised its powers and discharged its responsibilities under the Insurance Act fell short of that which the community was entitled to expect from the prudential regulator of the insurance industry".

APRA earlier admitted in the commission that it had failed to act on several warnings of HIH's impending financial failure.

In his closing submissions to the inquiry, Mr Martin said auditor Arthur Andersen failed to respond properly to what it knew were HIH's risky accounting practices.

You can find out all you want from the site provided at the 1st link. The report of the HIH Royal Commission by Justice Neville John Owen can be found at the 2nd link. The article "Arthur Andersen, APRA contributed to HIH failure" can be found at the 3rd link.

Answer 2

FYI

Heath International Holdings is still in court here in Australia. The case involving the FAI is still not due to be heard until 2009.