Insurance was founded in 1968 by Ray Williams and Michael Payne, which was known as “M W Payne Underwriting Agency Pty Ltd”. However, their company was acquired in 1971 by a British company called CE Heath PLC and appointed Ray Williams to be the board of CE Heath PLC in 1980. In 1989, the business operations of CE Heath PLC were transferred to CE Heath International Holdings Ltd. And the company floated on the Australian Stock Exchange in 1992.
After 3 years, CE health international holdings became a subsidiary of Winterthur Swiss and was changed the name to HIH Winterthur. In 1999, HIH Winterthur acquired a large number of companies both in Australia and globally. The chief executive of FAI Insurance, Rodney Adler became a director of HIH and HIH changed its name to HIH Insurance Ltd. The reckless management by Rodney Adler, finally HIH collapsed in 2001 with debts of about $5. 3billion; ASIC placed investigation into this case due to an intentional failure disclosure of financial statement by hih insurance company.
The former HIH director Mr. Adler breached his duties under the sections 180, 181, 182 and 183 of Corporations Act. The criminal charges included the disclosure of misleading statement, conflict of interests and breach of director duty in good faith of the company. Mr. Adler was sentenced on 14 April 2005 to four and a half years jail, with a non-parole period of two and a half years. HIH insurance is currently in run–off, which means it is managing its outstanding claims and not writing any new business.
The demise of HIH is considered to be the largest corporate collapse in Australia’s history, with liquidators estimating that HIH’s losses totaled up to $5. 3 billion. The intervention of ASIC found out the cause of the collapse related to fraud. A handful of members of HIH management were charged and received jail sentence. I can identify the failures of HIH company are based on rapid expansion with reckless and incompetence management, unsupervised delegation of authority and the disclosure of false statements.