The Quinn Group


SEIZING CONTROL of a business that insures in the region of one million people is not something to be done lightly. The consequences are unlikely to be beneficial for the business and employees involved, not to mention the potential disruption to the smooth working of the insurance market. Such a draconian approach can only be justified if the authorities can demonstrate that the alternative course of action - leaving the company in the control of its owners - involves a significant risk that policy holders and others will be exposed to losses.

The successful appointment of provisional administrators by the courts suggests that the Financial Regulator has passed the initial test in this regard in relation to Quinn Insurance, the motor, health and general insurer within the Seán Quinn group. All the indications are that the group will contest the appointment by any means at its disposal, including exercising its political muscle. That is the Quinn Group’s right and it intensified its fight back yesterday with a strongly worded statement. As things stand, however, it would appear to have a difficult battle ahead.

The group has a history of falling foul of the regulatory authorities when it comes to the all-important issue of the financial reserves that underpin the insurance policies that it has written for Irish families and businesses.

The repeated blurring of the lines between what is Quinn Insurance’s money; the Quinn Group’s money and on occasion the Quinn family’s money is simply unacceptable for an enterprise that enjoys the public trust.

The latest revelation, that insurance company assets were being used to guarantee Quinn Group debts, comes in addition to ongoing difficulties being experienced by the insurance company in maintaining sufficient reserves to cover the policies it has written. Those who seriously question whether this was sufficient cause for the regulator to move to take control of the business need look no further than the banking industry for their answer. On the day the High Court appointed provisional administrators, the Government revealed that the cost to the taxpayer of ineffective supervision of the banking industry over the last decade was going to be somewhere in the region of €70 billion - €80 billion.

If the current regulator’s predecessor had been prepared to act on the facts before him rather than accepting assurances that have proven to be false, the taxpayer would now have cause to be grateful.