The administrators of Quinn Insurance paid out €175 million last year in claims against policies underwritten by the company formerly controlled by businessman Seán Quinn, accounts just filed show.
The High Court appointed Paul McCann and Michael McAteer of Grant Thornton as joint administrators of Quinn Insurance in 2010 when it emerged that the reserves it held to cover claims on its policies fell short of the figure required by law.
Accounts lodged by the administrators for 2014 show that they paid €174.9 million – net of reinsurance – on claims against the policies underwritten by the business when it was still trading. The figures show that at the same time, they provided €348.7 million to cover the cost of such claims.
The lower level of claims than anticipated contributed to the overall group generating a profit before tax for the year of €188 million – down from €208 million in 2013. The insurance business alone generated a profit of €184 million in 2014, compared with €195 million the previous year.
“The profit arose primarily from more favourable development in claim reserves, investment income and property-related income,” the administrators’ report states.
Expenses also fell by €21 million to €6 million, aided by the “substantial reduction in claims-related expenses” and general cost savings across the business, the report adds.
Consumers are picking up the tab for the failure of the Quinn business through the Insurance Compensation Fund, which is paid for through a levy on non-life insurance premiums which could run for up to 15 years.
At the end of last year, Mr McCann and Mr McAteer told the Department of Finance that the total drawdown from the fund would be between €1.1 billion and €1.3 billion, short of the €1.65 billion originally anticipated. The accounts confirm those figures.
Grant Thornton’s own fees for the work increased slightly in 2014 to €2.99 million from €2.85 million the year.
The Central Bank is investigating whether the company's former management, which ran the business before the court placed it in administration, to establish if they broke EU insurance regulations.
The administrators are suing Quinn Insurance’s former auditors, PricewaterhouseCoopers, for €800 million. They allege that if the accountancy firm had identified problems with the insurer’s reserves between 2005 and 2008, it would have been apparent its business was in a “more parlous state” than it believed and could have taken action.