Former Pilot Execs Face FSCO Charges

In an unprecedented move, the Financial Services Commission of Ontario (FSCO) has filed charges against two former Pilot Insurance Co. executives for “directly or indirectly furnishing false, misleading or incomplete information” to the insurance regulator.

Former Pilot CEO Stu Kistruck and CFO Colin Simpson each face the same charge, along with another charge relating to the responsibility of directors and officers to take reasonable steps to prevent the furnishing of false or incomplete information. Each charge carries a maximum $100,000 fine.

Kistruck says he is “surprised and disappointed” by the charges, which relate to a FSCO audit of Pilot’s 2002 yearend results wherein the regulator declared a $195 million reserve shortfall. Both men left Pilot shortly thereafter and joined Kingsway Financial’s York Fire & Casualty subsidiary. Kistruck has since resigned his post at York Fire.

Kingsway CEO Bill Star says he supports both men, and notes that Kistruck’s decision to leave York Fire came as a result of the restrictions placed on him by FSCO as a result of the charges, as well as the time necessary to work on his defense. “They [Kistruck and Simpson] are both capable people and both honest people,” Star says. “Considering the number of companies under-reserving in the last few years, I’m surprised the charges were laid.”

No basis for the charges was given by FSCO in the “short letter” Kistruck says he received from the regulator. He expects he will not know the details for some months, but adds, “I hope it [the case] is resolved over the next few months, not years.”