APRA criticised over HIH collapse

The ‘surprise’ crash of Australia’s giant HIH Insurance, parent company of FAI and CIC, has led to criticism of the Australian Prudential Regulation Authority (APRA) for not giving the market sufficient and timely information on the situation, particularly HIH’s losses for the second half of 2000. Regulators in turn call for greater powers, claiming they experienced difficulty in establishing the true financial state of HIH and were ‘restricted by privacy provisions’ from voicing their doubts. However, HIH’s obituary was publicly and effectively written five months ago when Standard & Poor’s downgraded its credit rating from A to BBB.