ANGLO IRISH Bank and US insurer Liberty Mutual will be able to use cash and assets freed up by the lifting of the guarantees to Quinn Group lenders to help fund Quinn Insurance under their new ownership of the business.
Final arrangements were being made last night for the sale of the insurer to Anglo and Liberty, which were named joint preferred bidders earlier this month.
An announcement on the sale is expected to be made today.
Anglo and Liberty will take over the Irish business of Quinn Insurance but not the loss-making United Kingdom division, which is responsible for most of the company’s deficit of about €600 million for 2009.
Losses within Quinn Insurance, mostly from loss-making UK commercial and professional indemnity policies predating the company’s administration, are expected to lead to a call on the State’s Insurance Compensation Fund.
The joint administrators of Quinn Insurance, Michael McAteer and Paul McCann of Grant Thornton, are expected to outline their intention to make a claim against the fund to cover the losses. This is likely to lead to a industry-wide levy being applied to non-life insurance customers.
The restructuring of the Quinn Group earlier this month was an essential prerequisite to the sale of the insurer due to the existence of €464 million in guarantees within subsidiaries of the insurer to the group’s banks and bondholders.
The guarantees led the Financial Regulator to seek the appointment of administrators amid concerns over the insurer’s solvency.
The lenders, who are owed €1.28 billion, have dropped the guarantees over assets of Quinn Insurance including Slieve Rushen wind farm.
About €200 million of cash and assets in the insurer’s subsidiaries will go towards meeting €511 million of the banks’ and bondholders’ debts under the restructuring. This will free up the remaining €264 million in assets to be used to fund the new insurance company under the joint ownership.
:quality(70)/cloudfront-eu-central-1.images.arcpublishing.com/irishtimes/VR3765MFOBH2NMV2QNICYDF67M.png)