Financial Regulator fines Quinn Insurance €3m
Quinn Insurance has been fined €3.25 million by the Financial Regulator after it found “reasonable cause to suspect” that regulatory requirements had been breached.
Sean Quinn was also fined €200,000 and is to step down as chairman and director of Quinn Insurance.
In a statement this afternoon, the Regulator said “breaches related to contraventions by Quinn Insurance Ltd of obligations under the Insurance Acts and Regulations, including failure to notify the Financial Regulator prior to providing loans to related companies.”
The statement added that no consequences had arisen for any of Quinn’s policyholders as a result of the suspected breaches.
In a separate statement, Mr Quinn said: “Quinn Insurance made loans to a related company which amounted to €288 million in May 2008 when the accounts were finalised.”
“These loans breached insurance regulations and as a result of this the Financial Regulator has sanctioned Quinn Insurance and myself."
“I accept complete responsibility for this breach of regulation. While I accept that I made mistakes, I feel that the levels of fines ... do not reflect the fact that there was no risk to policyholders or the taxpayer but are a result of the pressures existing in the current environment. However we will pay the fines and move on.
“Because of the above issues I informed the board on June 27th this year of my intention to retire from the board of Quinn Insurance,” he said, adding that he will continue as chairman of Quinn Group. James Quigley will replace him as the chairman of Quinn Insurance.
Mr Quinn revealed that he has made large investments in foreign and domestic stock markets over the last few years, targeting Eastern Europe, Russia and India. He said significant share deals were signed using complicated Contracts For Differences which allow investors to buy into a company without owning shares or declaring the stake.
In these deals buyers and sellers open a contract at a certain price and when it closes the difference is paid, with either side settling the bill depending on whether the value rises or falls.
It is understood that Mr Quinn used this system to invest heavily in Anglo-Irish Bank, which has seen its share price fall from a high of €12.20 to around €1.80 in the last year.
Mr Quinn is believed to have bought into the bank at the €6 mark, spending more than €500 million before moving to convert them to ordinary shares.
Meanwhile, pre-tax profits at Quinn Insurance fell from €323 million to €245 million in 2007 despite a 40 per cent increase in premium income to €1.09 billion, according to figures released today by the company. Operating profit was €161 million, down €7 million on the same period in 2006.
The insurer said today underwriting profits remained strong but investment gains were lower as exceptional equity gains in 2006 were not repeated last year. The investment gains of €84 million were almost half the €155 million reported in 2006.
The wider Quinn Group today also reported results today which included an €829 million exceptional charge for 2007 due to provisions against funds advanced to “related party investment companies”.
The charge means a €403 million pretax profit before exceptional items has resulted in a loss of loss of €425 million for the year, the company said.
The company said gross sales increased by increased by 29 per cent to €2.115 billion with operating profit before exceptional items rising 22 per cent to €315 million.
Additional reporting: PA