QUINN HEALTHCARE, the State’s second largest private health insurer, has changed hands for the second time in four years after senior management successfully completed a buyout backed by international reinsurance giant Swiss Re.
For more than a year, the company has been under the control of the State-owned Irish Bank Resolution Corporation, formerly Anglo Irish Bank, following the collapse of the business empire of Northern Ireland businessman Seán Quinn.
Yesterday’s announcement brings to an end speculation that the State would move to take ownership of the company.
Mr Quinn had acquired the company from British insurer Bupa in 2007 for more than €100 million.
No financial details were provided in the announcement but with a significant recapitalisation of the company now required, it is not thought that anything close to that amount will have been paid for the company.
Confirming the takeover, the new management team assured existing customers that they would be unaffected by the changes.
The statement said “a natural transition” to a new brand would take place over the coming months.
The company said the transition would be “seamless” and it stressed that there would be no changes to the terms and conditions of policyholders’ cover.
Managing director Dónal Clancy said the deal would ensure that competition remained in the market and secure more than 330 jobs in Fermoy, Co Cork.
He said the experience of the management team and the financial clout of underwriter Elips Life, part of the highly capitalised global reinsurer Swiss Re, meant the company would be “well positioned to drive even further competition in the market and bring increased innovation and value”.
Bruce Hodkinson, a spokesman for Swiss Re, described Quinn Healthcare “as an excellent fit with our business”.
He said that with its backing, the company would be able to “provide long-term security to the policyholders and employees of the company”.
The news brings the curtain down on proposals that the State purchase the company as part of an ambitious plan to merge it with the VHI and reform the health insurance market.
Minister for Health James Reilly had suggested the State purchase Quinn Healthcare in a memo sent to Cabinet colleagues earlier this month, although it is not thought his proposals had gained much traction around the Cabinet table.
Dr Reilly said yesterday that he welcomed the sale and claimed it would bring a degree of certainty to the health insurance market and to the insurer’s customers.
He insisted, however that it remained his intention to reform the private health insurance market.
Dermott Jewell of the Consumers Association of Ireland welcomed the announcement and expressed the hope that the sale would lead to a more competitive pricing structure.
“It remains to be seen what will happen but anything that enhances competition is good news. And I think for the new entity to be successful, they will have to start offering consumers better value for money.”
Late last month, Quinn Healthcare announced it intended to increase the cost of its premiums by an average of 12 per cent from next year. While the average was put at 12 per cent, some popular policies will increase by more than 20 per cent.
The price increases, which could add more than €300 annually to the cost of an average premium for a family of four, was the second price increase announced by Quinn this year.
QUINN HEALTHCARE SALE: INSURER ACQUIRED IN MANAGEMENT BUYOUT
Quinn Healthcare has been sold?
Yes. The company has been in administration for more than a year and yesterday the Irish Bank Resolution Corporation agreed to its sale.
For how much?
The financial details were not disclosed although the sale price is unlikely to have have been anything close to the €130 million it was valued at four years ago.
Who bought it?
The senior management have orchestrated a takeover of the company and confirmed they had acquired it from the Government. While the existing management may be the new owners, they are not the people with the money and without the backing of Swiss Re the takeover would not have been possible.
Who?
Swiss Re may not be a household name in this State but it is a global giant, being the worlds second-largest reinsurer. It employs nearly 11,000 people in more than 25 countries and has its headquarters in Zurich where it was established more than 150 years ago. Last year it had revenues in excess of $28 billion (€21 billion) and declared profits of $863 million. And with assets of more than $228 billion and total equity of $26.91 billion it packs significant financial clout.
What does the takeover mean for the health insurance market as a whole?
Probably not a lot in the short term. The market is still in disarray and the cost of premiums is likely to continue climbing. It appears to have stymied proposals put forward by the Department of Health for the State to buy Quinn Healthcare and merge it with the VHI as part of an overall reform of the private health insurance market. The proposals would have cost about €500 million, the Department of Public Expenditure and Reform has estimated. This meant they were never likely to have won the Government approval in any event.
What will it mean for consumers?
Not a lot. The company was quick to reassure existing customers that their policies would be unaffected and there would be no changes to premiums or the levels of cover offered.
Will the company still be called Quinn Healthcare?
No, the company will now embark upon a rebranding exercise and in the new year the old name will be discarded. It is not the first time this has happened.
In 2007 Bupa became Quinn Healthcare after the company owned by Seán Quinn stepped in to buy Bupa which had announced its intention to exit the Irish market following a long row over risk equalisation, a system which mandated that all health insurance policies had to be made available to potential customers regardless of age or risk profile.
Is the company making money?
Yes although not as much as it used to. When Bupa Ireland became Quinn Healthcare, the company was generating profits of about €20 million a year.
It is not thought that profits in recent years are anything approaching that but it is not losing money.
So, does that mean the Government will get some cash from the sale?
That remains to be seen although it seems unlikely.