Brokers Nicholas Brown and Jeffrey Ronald Butler, and underwriters John Hubert Whitcombe and Christopher Reginald Colin Henton, have all been banned for their part in funnelling 'very significant' losses into Sphere Drake Insurance Limited.
Working together in the 1990s they wrote reinsurance business under a binding authority granted by Sphere Drake.
They placed business for a premium that was far lower than the expected losses, sufficient to pay for the reinsurer's own reinsurance cover (retrocession), a small portion of each loss and make a small profit. Passing from reinsurer to reinsurer this created a spiral of losses.
The FSA said that these individuals deliberately did not disclose that the business being passed to Sphere Drake was 'gross loss making business'.
Sphere Drake received claims in excess of $250m as a result of 112 contracts passed to it via the firms for which the four men worked.
All four were defendants in a court case brought by Sphere Drake in 2003. Findings of dishonesty were made against the four and Mr Justice Thomas also found that they had given untruthful evidence during the course of the trial.
"Not only were the four men found to have engaged in dishonest business practices, they were also found to have been untruthful in court," said FSA director of enforcement, Margaret Cole. "Hiding the true nature of the business passed to Sphere Drake led to the firm suffering heavy losses on the business that it wrote.
"Their behaviour both in their work and the subsequent trial has fallen a long way short of the standards that we expect of FSA approved persons."
In court, Mr Justice Thomas said that the market trading in losses was one "in which no rational and honest person would participate".
The FSA launched this enforcement action after it took on the regulation of insurance brokers in January 2005
