Cease and Desist Order Against Stuart Kistruck ("Kistruck")

REGARDING the Insurance Act, R.S.O. 1990, c. I. 8, as amended, (the “Act”) in particular sections 441 and 447


AND REGARDING Stuart Kistruck ("Kistruck")



The Superintendent of Financial Services ("Superintendent") is of the opinion that Kistruck committed an unfair or deceptive act or practice by furnishing misleading or incomplete information to the Financial Services Commission of Ontario. The particulars are set out in Schedule "A" attached to, and forming part of, this Order.


Kistruck chooses not to contest the proposed order and waives the procedural requirement under section 441(2) of the Act for a Notice of Intention to make an order and his right under section 441(3) to request a hearing.


TAKE NOTICE THAT pursuant to section 441(7) of the Act, AND WITH THE CONSENT OF KISTRUCK, the Superintendent hereby orders that Stuart Kistruck cease and desist from, directly or indirectly, engaging in the business of insurance or carrying on the business of insurance, or otherwise undertaking insurance on behalf of another person or as an insurer, an agent or an adjuster or an employee or representative of an insurer or an agent or an adjuster, for a period of two (2) years from the date of the Cease and Desist Order.


AND TAKE NOTICE THAT section 447(2)(b) of the Act provides that any person who fails to comply with any order made under the Act is guilty of an offence and liable on a first conviction to a fine of not more than $100,000 and on each subsequent conviction to a fine of not more than $200,000.


AND FURTHER TAKE NOTICE THAT section 447(4) of the Act provides

that every director, officer and chief agent of a corporation who caused, authorized, permitted or participated in a corporation committing an offence, or who fails to take reasonable care to prevent a corporation from committing an offence, is also guilty of an offence and is liable on a first conviction to a fine of not more than $100,000 and on each subsequent conviction to a fine of not more than $200,000.


ISSUED AT the City of Toronto this 31st day of January, 2007




Robert Christie
Chief Executive Officer and
Superintendent of Financial Services





REGARDING the Insurance Act, R.S.O. 1990, c. I. 8, as amended, (the “Act”) in particular section 441

AND REGARDING Stuart Kistruck ("Kistruck")



  1. For the purposes of these proceedings, Kistruck and the Superintendent of Financial Services agree to the following facts.
  2. At the relevant time, Stuart Kistruck was President of Pilot Insurance, a position he had held since 1995, a period of eight years.  Kistruck had been employed by Pilot since 1981.
  3. Pilot had for some years had a reserving practice which Kistruck supported and in which he participated, which differed significantly from standard industry practice in that, among other things, it included a system of loss reserve banking.  In late 2002 and early 2003, concerns about this practice, including a potential material shortfall in reserves for the year 2002 and prior, had been raised with Kistruck and within Pilot.  Kistruck did not provide information about this practice and the concerns that had been raised, and did not personally ensure such information was provided, to the company’s actuary or external auditors. 
  4. On February 28, 2003, Kistruck signed an affidavit verifying Pilot’s Annual Return for the year ending December 31, 2002 (the “Original 2002 Return”), which was filed with the Superintendent on March 3, 2003.  The affidavit certified that, in summary:
  • the annual return was a full and correct report of all assets, liabilities, income expenditure and of the conditions and affairs of the insurer;
  • the signatories were satisfied that the provision for unpaid claims and adjustment expenses was adequate to cover all costs of ultimate settlement of the claims.
  1. The Original 2002 Return did not incorporate information concerning Pilot’s reserving practices and/or reflect the concerns regarding unreserved losses that had been identified.  Kistruck did not adequately investigate the concerns that had been raised prior to signing the Original 2002 Return, and did not ensure that the above information was incorporated in the Original 2002 Return.  In signing and filing the Original 2002 Return, Kistruck furnished misleading or incomplete information to the Superintendent.
  2. In early April 2003, Pilot informed the Superintendent that it had identified a material shortfall in claims reserving in respect of 2002 and prior year periods.  Pilot subsequently filed a restated Annual Return for the year ending December 31, 2002, in which Pilot’s reserves for the years 2002 and prior were materially increased.
  3. Kistruck acknowledges that an insurance company’s loss experience is a relevant factor in determining premiums charged to consumers and if losses are not fully recorded the company could be at financial risk.