Investigation into PWC auditing of Quinn insurance suspended

An investigation into PricewaterhouseCoopers (PwC) auditing of Quinn Insurance has been suspended pending the outcome of a separate legal challenge.

The Chartered Accountants Regulatory Board (Carb) had been examining PwC's auditing of the insurance group over several years on foot of a complaint by the Central Bank.

However, the board decided to suspend its investigation until after the outcome of a case taken by the joint administrators of Quinn Insurance, Grant Thornton.

Vigorously defend

Grant Thornton is suing PwC in the Commercial Court for around €1 billion over its alleged negligent auditing of the insurer’s accounts, a claim which PwC insists is unjustified and has vowed to vigorously defend.

Carb told The Irish Times that its investigation of PwC was still ongoing and its policy was not to comment on open cases.

However, it is understood the board took the decision to suspend its probe on the grounds its findings may prejudice the Grant Thornton case.

Carb may also be waiting to see if information relevant to its own investigation emerges in the other case.

Quinn Insurance, established by former billionaire businessman Sean Quinn, was put into administration in 2011 following an application by the financial regulator.

This was after the then financial regulator Matthew Elderfield expressed serious concerns about how the group, once the country’s largest insurer, was being run.

Guarantees

Central to his concerns were the existence of inter-company guarantees relating to assets included in the insurance group’s reserves.

These were estimated to be worth €448 million over a three-year period just prior to the insurer’s collapse.

When the guarantees were removed the insurance arm of the Quinn empire was found to have insufficient reserves.

Administration

When Quinn Insurance was placed into administration it was estimated that it would cost the taxpayer €738 million, but that figure has since mushroomed to €1.65 billion after the administrators discovered significant under-provisioning for claims.

To fund the administration of the insurer the State’s Insurance Compensation Fund has been forced to impose a 2 per cent levy on all home, motor and commercial insurance policies.