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The Prudential Regulation Authority (PRA) has fined Barents Reinsurance’s London branch £1.78m for audit failings, marking the first time the regulator has fined a reinsurer.
The Luxembourg-based company operated in the UK from 2017 under European passporting rules, and later through the temporary permissions regime following Brexit. The PRA found that between July 2021 and October 2023 the firm failed to organise and control its affairs responsibly, and breached several requirements of the PRA rulebook.
The regulator said Barents had not adequately prepared for the regulatory impact of Brexit, delayed implementation of internal audit recommendations, lacked a proportionate governance system and business continuity plan, and submitted some regulatory reports late.
As a result, the firm was found to have breached fundamental rule six – requiring firms to organise and control their affairs responsibly – as well as rules in the PRA’s conditions governing business and reporting sections.
Shoib Khan, director of insurance supervision at the PRA, said: “The PRA welcomes international participation in the UK insurance (including reinsurance) market, subject to safeguards to ensure that this is accompanied by financial and operational resilience. The PRA terms this ‘responsible openness’.
“Barents fell materially short of its obligations to comply with the PRA rules applicable to third country branches once subject to the UK regulatory framework. As a result it failed to organise and control its affairs responsibly and effectively, and to have appropriate governance and reporting arrangements in place.”
The PRA said Barents had taken steps to address the failings and had incurred significant remediation costs. The company’s cooperation, including early admission of breaches, resulted in a 15% reduction in the fine. Its decision to settle led to a further 30% discount, lowering the total from £2.55m to £1.78m.
