Quinn losses on Anglo should be revealed - VHI

THE CHIEF executive of State health insurer VHI has said the full extent of the losses incurred by Sean Quinn, owner of rival insurer Quinn Healthcare, on his failed investment in Anglo Irish Bank should be disclosed publicly as they were “relevant” for customers of that business.

In an interview with The Irish Times, VHI chief Jimmy Tolan said the scale of the losses was also relevant for suppliers of services to Mr Quinn's insurance business.

“Whatever the level of losses are, they should be in the public domain. I think they are relevant for people who buy their products. It is relevant for consumer-facing businesses,” he said.

Mr Quinn has not disclosed the exact amount lost in Anglo, conceding only in public that it was “more than a billion”. Quinn Group, his main trading company which owns Quinn Healthcare, wrote off €888 million over two years and said the investment would have no further impact on the business.

Mr Tolan said he was "surprised" at a report in the Sunday Timeslast weekend which said Mr Quinn had lost €2.5 billion on the investment in Anglo, citing an internal bank report compiled before it was nationalised last year. A Quinn spokesman dismissed the figure as "speculative".

Quinn Insurance was part of “a conglomerate” covering hotels and property, glass-bottling, plastics and cement, among other businesses, said Mr Tolan.

“For a conglomerate to succeed long-term you have got to have two capabilities – you have got to have superior strategic planning skills but more importantly you have got to have superior capital allocation skills,” he said. “History would say that the number of conglomerates in Ireland that have actually lasted a long period of time is very limited. I am just saying that it is very hard.”

The VHI has been criticised for failing to bring its capital reserves up to 40 per cent of premium income to fall within the remit of the Financial Regulator, as required under EU rules. The Government has missed a number of deadlines for the VHI to accrue sufficient capital reserves.

Mr Tolan said the VHI’s assets were “far more liquid than either Quinn or Hibernian ”, despite the fact that the State insurer had not met EU requirements.

He said new EU’s Solvency II rules governing how much capital insurers must set aside was “going to require those insurance organisations that have long assets – be they wind farms, pubs or hotels – or advances to related parties – to put aside far more capital”.

Mr Tolan said Aviva had been “shadow pricing” off the VHI and he was “disappointed about the maturity of the debate that they have engaged in around our efficiency versus their efficiency”. The VHI’s cost-income ratio was 8 per cent, while Aviva Healthcare’s was 28 per cent, he said.

“The reality with Aviva is that it is a pretty powerful multinational. It has an €11 billion market capitalisation, yet it goes around town as if it’s a small impoverished start-up,” he said.