BusinessInsurance.com reported on June 30 that General Re had been fined for violating trade sanctions against Iran as a result of its participation in Steamship Mutual's excess coverage from 1998-2001. In 2005, General Re paid its share of two claims incurred by National Iranian Tanker Co. totalling $310,000. The fine was said to be $59,130, and OFAC announced that "the transactions do not constitute an egregious case." You can read the press release at http://www.treasury.gov/resource-center/sanctions/CivPen/Documents/06292011.pdf.
General Re reportedly turned itself in to the Office of Foreign Assets Control ("OFAC"), blamed the violations on "certain claims personnel", installed "enhanced sanctions compliance software", and implemented training programs for their claims people. Blaming the claims people seems unfair. Cliff Burns, who writes Export law Blog, points out that "OFAC guidance to the insurance industry makes clear that the issuance of the reinsurance to Steamship for its NITC policy would itself have violated OFAC rules without regard to whether any claims were actually made or paid to Steamship." However, the statute of limitations had run on the issuance of the policy itself.
I was working in P&I when that contract was written in 1998, and I remember how hard it was to get people to take sanctions seriously back then. The world has certainly changed. Steamship Mutual declined to renew the Iranian fleet this year, and no other Group Club would pick them up.
