Cologne Reinsurance (Cologne Re) sacked the former chief executive of its Irish operation, John Houldsworth, on Monday after he signalled his intention to plead guilty to criminal charges against him over "sham" reinsurance deals booked in the company's IFSC office.
In addition to international and domestic regulatory investigations, the company now faces fresh scrutiny by the Irish corporate supervisor, Paul Appleby.
"We are aware of the situation from monitoring the coverage in the media and the matter is on our radar," said a spokesman for Mr Appleby's Office of the Director of Corporate Enforcement.
Mr Houldsworth - who was based in Dublin throughout the 1990s - faces charges by the US Department of Justice that he conspired with others to help the giant US insurer American International Group (AIG) to mistake its accounts and mislead its investors and auditors.
In meetings late last week with the US regulator, the Securities & Exchange Commission (SEC), Mr Houldsworth agreed a partial settlement of civil charges under which he is now barred from acting as a director, officer or accountant to any company regulated by the commission.
In transcripts of phone calls outlined in the SEC complaint, Mr Houldsworth was reported as saying "there is clearly no risk transfer" in the deals in question.
"As Houldsworth and others at GenRe [ General Reinsurance, Cologne Re's parent] knew, AIG accounted for the sham transactions as if they were real reinsurance contracts that transferred risk from GenRe to AIG, when all parties involved knew that was not true," said the SEC complaint.
Mr Houldsworth's US lawyer, Mr Larry Byrne, declined to comment yesterday when asked whether he had received a severance package from Cologne Re, whose parent GenRe is a subsidiary of the Berkshire Hathaway conglomerate controlled by Mr Warren Buffett.
"I was informed last night that GenRe was terminating him. They said it was effective immediately. They told me by email last night and told him this morning," said Mr Byrne, a partner at New York firm White & Case.
"He regrets what he was involved in and he takes full responsibility for his actions. He will co-operate with the US regulators and he hopes to put this matter behind him."
Cologne Re's current chief executive in Dublin, James Maher, did not respond to calls yesterday.
The company has never made any public comment on the substance of the claims made by regulators about some of its operations in the IFSC.
The actions against Mr Houldsworth centre on "reinsurance" transactions that had the effect of falsely inflating AIG's reserves at a time when its financial position was being criticised by market analysts.
"As a result of AIG's accounting treatment for these transactions, the company's financial results showed false increases in reserves that AIG touted in the company's quarterly earnings releases for the fourth quarter of 2000 and the first quarter of 2001," the SEC claims. The SEC alleged that Mr Houldsworth and others helped AIG to structure two "sham reinsurance transactions that had as their only purpose to allow AIG to add a total of $500 million (€407.13 million) in phoney loss reserves to its balance sheet".
In a claim that mirrored allegations made by New York attorney general Eliot Spitzer in his action against former AIG head Maurice "Hank" Greenberg, the SEC said that Mr Houldsworth and others at GenRe worked to fashion the contracts.
