The UK Financial Services Authority (FSA) has fined Japan's Mitsui Sumitomo Insurance's European unit (MSIEu) and banned its former executive chairman, Yohichi Kumagai for serious corporate governance failings.
The UK watchdog has fined the company £3.3m and the executive £119,303 for breaching Principle Three of the FSA's Principles for Businesses and Statements of Principle Five and Seven respectively.
According to FSA, Kumagai as executive chairman, was the key decision maker at MSIEu and responsible to ensure that the management structure and composition of the board was effective.
Kumagai also did not ensure effective and timely new IT administration system implementation across the firm's branch offices, which led MSIEu being poorly organised and managed across its business as a whole.
Despite receiving guidance from the FSA, Kumagai failed to act resulting in significant failings of corporate governance and control arrangements.
FSA acting director of enforcement and financial crime Tracey McDermott said: "Kumagai failed to respond adequately to the changing risks facing his business even after they had been pointed out by the FSA."
"They must adapt these appropriately to reflect changes in their risk profile, especially growth into new areas," Tracey added.
MSIEu supplied wholesale insurance cover only to Japanese firms operating in Europe and the Middle East and from 2007 it expanded into non-Japanese business and by the end of 2010 half its premiums were coming from branches in France and Germany.
