Back

Civil Enforcement Information - Gen Re

Date issued: Jun. 29 2011

PRINT
ENFORCEMENT INFORMATION FOR June 29, 2011

Gen Re Settles Iranian Transactions Regulations Allegations: General Reinsurance Corporation ("Gen Re"), a Delaware corporation with principal offices located in Stamford, Connecticut, has remitted $59,130 to settle liability for apparent violations of the Iranian Transactions Regulations, 31 C.F.R. part 560, that occurred in July and August 2005. The apparent violations consist of two reinsurance claim payments to the Steamship Mutual Underwriting Association Limited ("Steamship Mutual") for losses arising from vessel operations of the National Iranian Tanker Company. Gen Re made the excess of loss claim payments pursuant to its facultative reinsurance obligation to Steamship Mutual for the coverage period June 16, 1998, to February 20, 2002. The combined amount of the two reinsurance claim payments was $309,740.65. The base penalty for the apparent violations was $131,424. Gen Re voluntarily disclosed this matter to OFAC and the transactions do not constitute an egregious case. The settlement amount reflects OFAC’s consideration of the following: Gen Re is the largest U.S. reinsurer and one of the largest reinsurers in the world; the apparent violations resulted from activities of certain claims personnel, including a Vice President for Claims, that were contrary to Gen Re sanctions compliance policies and procedures; Gen Re subsequently installed enhanced sanctions compliance software and implemented training programs for personnel who have a high probability of encountering sanctioned transactions; Gen Re substantially cooperated with OFAC by signing a tolling agreement and promptly responding to all requests for information; and Gen Re has not previously been the subject of OFAC penalties or other OFAC administrative actions.
External link location:
https://ofac.treasury.gov/media/13836/download?inline

TURBOFAC Commentary (195 words)

Notes:

1) The statute of limitations period had probably run on the actual placement of the coverage (ending 2002), which is why the extract only addresses the payment of the eventual claim.

2) While the placement of the insurance policy would have assuredly been considered facilitation of the underlying transactions involving the NITC (560.208 or 560.206, see HCC Insurance Holdings, Inc. (2011)), it is unclear whether OFAC would or could characterize the actual payment of the claims after-the-fact as such.

Nevertheless, the payments do clearly "relate to" services of Iranian origin (560.206). This enforcement action illustrates the broad scope of 560.206, in which actions not ostensibly involving Iran (payment of an insurance claim by a U.S. party to another non-Iranian party) can "relate to" underlying Iran-related transactions undertaken in the distant past. It is unlikely that this conduct would be deemed to violate the ordinary import/export ban provisions of the typical IEEPA-based embargo. But contrast Case No. IA-17831 (transactions are not subject to the ITSR merely because they "relate", in a strict sense, to past transactions that would have been prohibited for U.S. persons to engage in directly).