The Quinn Group has criticised the Financial Regulator for applying to the High Court to have joint provisional administrators appointed to Quinn Insurance, the motor, health and general insurer within Seán Quinn’s group.
In a statement today, the group said it believed the “regulator made the wrong decision” by going to court and said it disagreed with his expressed view that Quinn Insurance’s business in the UK was currently unprofitable.
“We entirely disagree with this statement and unless reversed, this direction will be immensely damaging to the future prospects of Quinn Insurance Ltd”.
The High Court yesterday appointed joint provisional administrators to the insurer after the regulator expressed “very serious” concerns about the company’s ability to meet its liabilities to policyholders. It learned eight subsidiaries had guaranteed debts of €1.2 billion owed by the wider Quinn Group between 2005 and 2008 but these only came to light last week.
This had “wiped out” the company’s solvency cushion, the court was told, and “significantly breached” the solvency ratios laid down by the regulator to ensure the firm could meet its liabilities.
Counsel for the regulator told the court it had concerns about how the insurer conducted its business. It learned eight subsidiaries had guaranteed debts of €1.2 billion owed by the wider Quinn Group between 2005 and 2008 but these only came to light last week.
Matthew Elderfield, head of financial regulation at the Central Bank, said there was a “reasonable prospect that the administrator will look to put it [Quinn Insurance] up for sale”.
He also instructed Quinn Insurance to stop writing new business in the UK. “It was a loss-making business and unprofitable, and we didn’t want to cause any further haemorrhage or losses into Quinn Insurance,” Mr Elderfield said.
The Quinn Group said today that its guarantees “are entirely lawful, do not breach any insurance regulations and were fully disclosed in the statutory accounts of the relevant companies.” It said after the regulator expressed the view last week that the guarantees were inappropriate they had been seeking to address his concerns.
“Quinn Group is in the process of negotiating a refinancing which would have addressed the concerns of the Regulator, and we and our financiers remain confident that this will be achieved," it said.
“Therefore, the regulator’s analysis that these guarantees give rise to a €448 million liability is totally incorrect. The regulator's demand that the guarantees be released was therefore unnecessary, and not practical in the time which he allowed.”
The regulator has launched an investigation into Quinn Insurance after successfully applying to put the firm into provisional administration. A spokesman for the regulator said Mr Elderfield would not be immediately responding to the statement.
Policy-holders are unaffected by the appointment of administrators while Quinn’s life business is not affected.
Yesterday, Mr Quinn wrote to every member of the Cabinet and the leaders of Fine Gael and Labour, demanding that the action be “rescinded immediately”. He described the regulator’s action as “highly aggressive and unnecessary” and warned it would make repayment of the company’s outstanding debts “extremely difficult” and “endangers 5,500 jobs in Ireland unless immediately reversed”.