FSA fines insurance boss £20,000

THE Financial Services Authority has slapped a £20,000 fine on insurance entrepreneur Keith Rutter for breaking rules when in charge of liability specialist The Underwriter.

The watchdog today said Rutter got around limits placed on the amount of premium his company could write in any one year by splitting contracts and deferring income. It is now closed to new business.

Rutter left The Underwriter last year and is now an external consultant at Jardine Lloyd Thompson, the broker whose shares tumbled on Friday after a devastating profit warning.

He set up The Underwriter five years ago, after leaving Independent Insurance. Rutter told the Evening Standard: 'I did what I did and I thought it was the right decision. I was subsequently proved wrong. I'm not the only one ever to have done that.'

The FSA action relates to 2001 and 2002, when The Underwriter was set a premium income limit of £105m, effectively limiting the risk it could take on.

A spokesman for the FSA said that while the group would only have breached its limits by £2.9m if it had not deferred the income, the regulator expected companies to be 'open and co-operative'.

The rule-bending emerged after Rutter left. The Underwriter received a public censure - a wrap on the knuckles - today. The FSA pointed out Rutter made no money out of his actions.