Following an application by the Financial Regulator, the High Court has today appointed joint provisional administrators to Quinn Insurance Limited. The Financial Regulator says it has taken this action in the interests of the firm’s policyholders. Quinn Insurance is controlled by billionaire Seán Quinn.
Quinn Insurance acquired the business of UK health insurance company BUPA, in late 2007 and had built it business on a direct model, avoiding commissions paid by rivals to intermediaries. Today's development means the administrators will run the business as a going concern in the interests of policy holders under different management. The move affects Quinn businesses offering home, health, motor and public liability insurance. Michael McAteer and Paul McCann from Grant Thornton have been appointed by the High Court to act as the two joint provisional administrators.
Mr Justice John Cooke made the order following an application by the Financial Regulator and the application was made under the 1983 Insurance Act. The court was told that the Regulator took this action following serious concerns about the way the group was managing its affairs. It is understood the issues relate to solvency requirements. The administrators will have the option of seeking well capitalised new owners for the business.
The Quinn Group which encompasses a range of businesses from cement, energy, glass, and hotel and insurances, is the biggest debtor of the former builders' bank, Anglo Irish Bank, now owned by the State. It owes about €2.8 billion.
Quinn Group described today's action as "deeply disappointing," saying the whole group was currently making profits of €20m a month. "We feel that this issue could have been resolved to the benefit of all in a relatively short space of time and we will be working with the regulator and the provisional administrators to resolve all outstanding matters," it said.
In October 2008, the Financial Regulator announced that it had agreed a settlement with Quinn Insurances and Seán Quinn, chairman, who paid penalties of €3.4 million in respect of breaches of regulatory requirements.
The Financial Regulator said it had reasonable cause to suspect that breaches of regulatory requirements occurred in relation to QIL.
These breaches related to contraventions by QIL of obligations under the Insurance Acts and Regulations, including failure to notify the Financial Regulator prior to providing loans to related companies.
The Financial Regulator required QIL to pay a monetary penalty of €3,250,000. The Financial Regulator also required Seán Quinn to pay a monetary penalty of €200,000. Quinn agreed to resign as chairman and as a director.
Quinn Life Direct is not impacted by the announcement today that provisional administrators have been appointed to Quinn Insurance. The Financial Regulator has confirmed that Quinn Life Direct's business and policyholders are not affected.
Quinn Life Direct in a statement today, said it is a separate regulated company to Quinn Insurance. The company is subject to separate regulatory supervision. Policyholder funds are protected by regulation in that the company must hold sufficient assets to cover these liabilities plus an additional solvency cover. The company’s assets are ring fenced meaning that the company's assets cannot be drawn down or transferred to any other Quinn Group company without prior Regulator approval.
Siobhan Gannon, Managing Director of Quinn Life said: “The savings and investments of the policyholders of Quinn Life are backed by the Quinn Life unit-linked funds, and in addition, Quinn Life holds the additional solvency margin required by the Financial Regulator. The Financial Regulator has not expressed any concern over the solvency of Quinn Life.”
The Financial Regulator said today:
Quinn Insurance Limited: Irish policyholders of Quinn Insurance Limited can continue to renew policies, carry out new business and make claims in the normal way.
The appointment of joint provisional administrators will better protect policyholders. It will allow the firm to remain open for business, to continue to be run as a going concern under different management and to put the business on a sound commercial and financial footing.
The Financial Regulator has an onsite presence in the firm to oversee its actions and to work with the new management. At the same time the Financial Regulator has commenced an investigation into certain matters within Quinn Insurance Limited that have very recently come to light.
Quinn Insurance Limited (UK): In adition, the Financial Regulator has separately directed Quinn Insurance Limited to cease writing new business in the UK. Existing UK policyholders will not be affected by this decision as existing policies will remain valid. Customers can make claims in the normal way.
The effect of this action is to prevent Quinn Insurance Limited suffering further financial losses from its currently unprofitable UK business.
Quinn Life: These actions do not apply to the Quinn Life business, which is a separate entity. It is unaffected by these measures.