He has also agreed to a contribution of £400,000 towards the cost of the FRC’s executive counsel’s costs.
Rakow admitted misconduct in relation to the 2008 and 2009 years, and accepted that his conduct fell short of the standards reasonably to be expected of a member of the Institute and Faculty of Actuaries.
He had been investigated over the advice he gave ESML on its reserving for Syndicate 218.
According to the FRC’s findings, as a result of his failings, he was not in a position to sign – and so should not have signed – the 2008 and 2009 statements of actuarial opinion in relation to Syndicate 218, a Lloyd’s motor insurance underwriter.
The FRC investigation did not find any issues relating to the 2007 year.
The FRC is continuing its parallel probe into KPMG’s audit of Syndicate 218. In its announcement about the launch of the investigation in September last year, it named KPMG partner Mark Taylor, the audit partner for Syndicate 218, and former partner Anthony Hulse, the audit partner for IAG holdings – then the UK parent of Syndicate 218. Both are ICAEW members.
The complaints against KPMG and Taylor concern the audits of financial years ending 2008 and 2009, and Hulse, the financial year ending 2009.
The regulator is also investigating a complaint against Douglas Morgan, a former director of ESML and a CIMA member, which alleges a “failure to act with professional competence and due care” in relation to the reserving practices carried out by his company and overseen by him, in the period of 2007-2009.