The full hearing of the Financial Regulator's action to put Quinn Insurance into full administration has been postponed after the company filed a lengthy affidavit this morning.
Counsel for the regulator said the affidavit from Quinn Insurance did not appear to address the subject of the regulator's serious concerns. However, it merited consideration and a response, John Hennessy, senior counsel for the regulator said.
Mr Hennessy suggested a week's adjournment to allow the regulator to respond to Quinn Insurance by the close of business on Wednesday.
Lawyer for Quinn, Michael Cush SC, asked that the company be given until Monday to reply in turn to that submission.
But Mr Justice Nicholas Kearns said the firm must respond by Friday. The "importance and urgency" of the case meant it should go to a full hearing on Monday, he said.
Over the weekend, the regulator was preparing a more detailed case for the High Court today to confirm appointment of the joint administrators, stressing concerns about serious and persistent breaches of solvency rules by the firm.
The regulator was expected to provide some new evidence of the breaches today, and was also believed to be prepared to disclose details of a secretive settlement agreed with the firm in 2008 when the insurer previously broke solvency rules, leading to a record fine of €3.25 million against the company and €200,000 against Mr Quinn.
The Quinn Group said it was pleased to note the adjournment of the hearing and hoped “meaningful discussions” towards a resolution could be progressed in that time.
“The Quinn Group believes that it is in the best interests of all stakeholders, and primarily the policyholders and staff, that [Quinn Insurance’s operational] model is allowed to continue under whatever solution emerges,” it said in a statement today.
“In particular we would urge the reopening of business in the UK as a matter of urgency in order to ensure sustainable future employment and preserve value in QIL.”
Speaking in Roscrea, Co Tipperary this afternoon, Taoiseach Brian Cowen said the concerns of all the stakeholders involved have to be addressed in "as best we can" in this situation.
"We have policy holders themselves, we have taxpayers, we have people who are employed in the company and we have of course the regulatory requirements, and all of these issues have to be dealt with," he said. "If it's the case it's been adjourned this morning for a further week, then then it provides an opportunity for further discussions to take place.
"But at the end of the day, as I say, there are processes in place and we have to respect those processes."
Minister for Agriculture Brendan Smith said today he hoped a solution could be found which would safeguard the future employment of the 5,500 people working in the Quinn Group.
The Cavan-based TD said it would be inappropriate to comment on the adjournment of the High Court proceedings which would have a bearing on the future of the company and its many employees. He said virtually everyone working in north Cavan and south Fermangh was either employed directly or indirectly by the group.
Contacts continued over the weekend between the regulator and Anglo following their meeting last Friday on the bank’s rescue plan. Anglo, which is owed €2.8 billion by the Quinn family, also held discussions with the lenders to the group, US bondholders and a syndicate of banks owed a total of €1.2 billion.
The State-owned bank has proposed a major restructuring of the €4 billion in debts that would involve Anglo taking control of the group, strengthening the bank’s security on its loans and putting in an external team to manage the insurer.
The group, which is controlled by the Quinn family, supports Anglo’s plan, which involves a €700 million bailout comprising €150 million to boost the insurer’s solvency and €550 million of new Anglo bonds issued to Quinn’s bondholders, removing the guarantees that led to the regulator’s action last month.
The regulator is resisting Anglo’s plan, fearing the impact it would have on the bank and how the insurer would be managed and governed. It has also expressed concerns about the significant hurdles the plan faces to secure EU approval under state aid rules. Anglo is trying to circumvent this by structuring the deal in a way that keeps its interest in Quinn Group off its books.
The role of Mr Quinn and his family in the restructured group is another key issue to be resolved. The regulator wants the insurer taken out of the wider group and ownership of the Quinn family, following repeated solvency breaches which reduced the insurer’s reserves to meet potential liabilities on policies.
Under Anglo’s plan as it stands, Mr Quinn would remain chairman of the group in name only, but the family would retain shares in the group. However, this remains subject to further negotiations.
A formal administration of Quinn Insurance would not spell an end to Anglo’s plan, however, as the bank can still deal with the administrators – an option favoured by the regulator as the cleanest approach.
It is understood that the regulator believes Quinn Insurance needs about €700 million to boost its solvency reserves and to put the company on a sound commercial footing. Mr Quinn and Quinn Group have strongly disputed this figure, saying the insurer needs between €100 million and €150 million.
Minister for Finance Brian Lenihan is being briefed on the discussions between Quinn and Anglo, though his department is not directly involved.
Minister for Agriculture Brendan Smith, a Fianna Fáil TD for Cavan-Monaghan, where Quinn Group employs a large number of staff, said very intense discussions were ongoing “among interested parties” to find a commercial solution that best protected 5,500 jobs at the group and ensured regulatory requirements were met.
Additional reporting; PA