Developments in Quinn Insurance and Financial Regulator 11 April 2010.

Since the financial regulator went to the High Court and successfully got two administrators appointed to take over control of Quinn insurance the saga has developed quite quickly. The administrators after an analysis of the business have ceased all insurance sales to the United Kingdom and Northern Ireland. Presumably this is on the basis that these markets were loss making for the company even though they represented 30% of it turnover. They also indicated the withdrawal from the Solicitor personal injury insurance market which again was showing losses.


The reason the Financial Regulator stepped in was because of a lack of solvency in the group. This refers to the amount of assets relative to liabilities in the company. The importance of this is that if an insurance company hasn’t enough assets to cover all of it liabilities then it won’t be able to pay for all the claims that may be made against it and the policyholders are compromised.

In the meantime these moves were meet with dismay and anger by the people of Cavan and Fermanagh where the Quinn group is a major employer with over 5000 employees. Demonstrations were held outside the Dail and in towns in the counties. The workforce was especially angry at been told not to sell any UK or Northern Ireland business as this was such a large part of the company. The administrators meet with representative of the workforce and management during the week to discuss the plans but with no really positive outcome.

Sean Quinn and the Quinn group are heavily indebted to various banks and bond holders and in particular it owes over 2.8 Billion to the troubled Anglo Irish Bank. Alot of this stems from a loss made on the purchase of Anglo Irish bank Shares by members of the Quinn Family. Apart from the huge loans given to Building Developers this represents the largest single amount owed to Anglo Irish Bank by any individual or group. From the Quinn groups point of view the insurance company is producing high profits which have been allowing it to meet its debt obligations through out the group.

There have been over 20 expressions of interest made to the administrators to purchase the company. Anglos Irish Bank and Quinn Insurance are trying to get the regulator to put a 30 day stay on the High court application to make the appointment of the administrators permanent in order to allow them to come to an agreement whereby the bank takes over the company for a period. Anglo hopes to stabilize the solvency of the business with injected funds and then proposes to sell it within three years. This would allow the bank to secure more of the debt that is owed to it. Presently it is third in line behind other secured banks and bond holders for payment if the group collapses.

The regulator has an obvious lack of confidence in the board of the company and is currently lack luster about the Anglo deal. As a newly appointed regulator who has taken hard stances Mr Elderfield does not want to be seen to back down so supporting the Anglo deal may allow him to save the jobs in the company while also given some political relief to the government. The Government doesn’t want to be seen to interfere with the running of the regulator however the potential loss of 5000 jobs is also unpalatable to any government especially one in the middle of a recession. They would presumably be very pleased if the problem could be solved in the quickest fashion possible with minimum job losses.