6 Mar 2012

KPMG investigated over Equity Red Star accounts

The Accountancy and Actuarial Board (AADB) has announced that it is to investigate the role of KPMG and various accountants and actuaries in connection with Lloyd’s Syndicate 218, Equity Red Star

The AADB is examining the conduct of both KPMG and individual members of ICAEW and CIMA.

AADB said it would focus on "the preparation and audit" of insurer Equity Red Star's report and accounts for the years ended December 2007, 2008 and 2009.

Equity Red Star has been under investigation by Lloyd's and the Financial Services Authority since 2010. Earlier this year, Equity was ordered to pay £95,000 towards the costs of a separate Lloyd's investigation after admitting two charges of detrimental conduct. The AADB has also begun an investigation into the conduct of members of the Institute and Faculty of Actuaries, relating to actuarial advice provided to Equity Syndicate Management Limited - a managing agent and a corporate member of Lloyd’s, which trades as Equity Red Star.


In a statement on Monday, KPMG said it would co-operate fully with the probe but said it was confident that its work had "met the relevant professional standards".


Neil Utley, the former IAG UK chief executive; John Josiah, a former senior underwriter at Equity; and Douglas Morgan, its former UK commercial director, are all facing separate disciplinary action from Lloyd's.

Lloyd’s has the power to impose individual fines on the three men or prevent them from operating in the market if found guilty.


Helen Roxburgh