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Australia Defends Decisions on HIH.

Australian regulators defended their actions in the months leading up to the failure of HIH Insurance Ltd., saying they didn't have legal grounds to intervene sooner and that most policyholders were better off because of transactions the company entered before putting itself into liquidation March 15.

The Australian Prudential Regulation Authority was responding to press reports that its chairman had said the regulator had held back for fear of spooking markets and harming the insurer. The authority said comments by its chief executive officer, Graeme Thompson, were "misreported."

"Mr. Thompson has said that it is a big step for a prudential supervisor like APRA to appoint an inspector to a public company--and it needs to have solid grounds to take such a step' the authority said in a statement.

"Apart from needing to observe legal requirements, premature action by a prudential supervisor can make things worse, rather than better," the statement continued.

"The vast majority of the HIH Group's policyholders are in a better position now, as a result of an arrangement made with other insurers, than they would have been if APRA had moved to appoint an inspector three months ago."
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Title Annotation:HIH Insurance Ltd.
Comment:Australia Defends Decisions on HIH.(HIH Insurance Ltd.)
Publication:Best's Review
Article Type:Brief Article
Geographic Code:8AUST
Date:May 1, 2001
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