HIH Insurance inflates profits

HIH Insurance overstated its profits by A$930 million ($1.07 billion) in the years before it collapsed, the royal commission into the Australian insurer's demise has been told.

An internal HIH document revealed that HIH's British, American and FAI Insurance operations had hefty claims losses in the years leading up to June 30, 2000.

As a result, the document concluded that the HIH group had suffered "prior year deterioration of A$930 million", meaning it was under-reserved to meet claims payments by that amount.