LOSSES IN the UK business of Quinn Insurance are expected to result in a claim against the State’s Insurance Compensation Fund and an industry-wide levy being imposed on non-life insurance policyholders.
Anglo and Liberty, which have been named preferred bidders for Quinn Insurance, plan to cover losses from existing policyholders in the company’s Irish business but not on the UK business, which is loss-making.
Sources stressed yesterday that there would be a claim on the fund even if there wasn’t a deal to sell the insurer, given the loss-making levels in the UK over recent years.
Irish insurance customers are expected to be asked to pay a levy of between 1 per cent and 2 per cent on motor and household insurance bills to make up a potential shortfall of €620 million at Quinn Insurance.
Sources said the loss was based on a worst-case estimate of potential claims at Quinn Insurance, primarily in the UK business where premiums have risen sharply from the loss-making levels they were at before administrators were appointed to the company in March 2010.
Seán Quinn’s family responded to reports that there would be a claim on the compensation fund, saying it was “a truly appalling admission by the administrators of [the] enormous damage they have caused to one of Ireland’s most successful companies in just 13 months”.
In a statement, the family said the company increased its cash balance by €20 million in the first three months of 2010 before the appointment of the administrators and had reduced open claims by more than 2,500.
The family said it had maintained over the past 13 months that the appointment of administrators to Quinn Insurance “did not have a legal basis and was a major commercial mistake, considering that the company had €1.1 billion of cash and property assets valued at €400 million at the time”.
“We have voiced our concerns repeatedly that it would eventually have huge negative knock-on implications for jobs, competition and the State,” said the family. “This now unfortunately appears to be coming to pass.”
The family claimed the administrators had repeatedly confirmed that they had returned the company to profitability and that there would be no call on the compensation fund.
They said had the company been allowed to trade normally and not been put into administration, there would not have been a claim on the compensation fund.
A spokesman for the administrators, Michael McAteer and Paul McCann of accountants Grant Thornton, declined to respond, saying they did not want to compromise the deal, which is still being finalised.
Sources said most of the insurer’s losses were on policies written before the end of 2009 and over the first three months of 2010 before the administration. The administrators have recently been able to assess potential on UK policies written up to and including 2009, given that most claim costs emerge within the first year.
The administrators have ceased writing new commercial business in the UK business and have adjusted insurance premiums upwards by between 40 per cent and, in some cases, 100 per cent to take account of the higher risks since they took control of the business at the end of March 2010.
The sale of the insurance company is expected to be announced shortly, possibly as early as tomorrow.
Seán Quinn is considering a number of claims on which he might take an action over the appointment of administrators to the insurer.
A spokeswoman for the Department of Finance declined to comment on the possibility of an industry-wide levy arising from Quinn Insurance.
She said the department had received no application from the administrators, the High Court or from the Central Bank to make a claim against the compensation fund.
The fund, which was used to cover losses at failed insurers PMPA and ICI in the 1980s, is worth some €30 million but the Government can impose a levy of up to 2 per cent on all general insurance policies, including motor and household, to cover losses at any company.
Support group: more than 1,000 attend protest to call for quinn’s return
MORE THAN 1,000 supporters rallied at the headquarters of the Quinn Group at Derrylin, Co Fermanagh, in a demonstration of support for both the group and the Quinn family.
The gathering began at 6.30am yesterday with demonstrators remaining at the site until after noon.
The demonstrators included farmers, members of the local GAA club and Quinn employees.
They had hoped to deliver a letter of protest to the new executives and directors of the group appointed by the Anglo Irish bank.
However, despite the length of the protest, no one from the company’s current management made themselves available to accept the letter.
Seán Quinn appealed to the protesters after noon to end the demonstration.
A spokesperson for the protesters read out a statement in which he said Mr Quinn “would like to thank his workers and fellow neighbours for the support that they have given him, that was shown him today”.
The spokesman added: "We will be back again, this letter will be delivered the next time. We will be back, bigger and stronger until we have a satisfactory solution. Seán Quinn ran this group for 38 years and we want him back." PATRICK TIERNEY
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