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Central Bank/ Financial Regulator report shows Quinn Insurance posted a loss of €788.4m in 2009
By Michael Hennigan, Founder and Editor of Finfacts
Sep 10, 2010 - 5:21:39 AM
The Central Bank and Financial Regulator today
published the Insurance Statistical Review for 2009. The report shows
that
Quinn Insurance posted a loss of €788.4m in
unaudited accounts for 2009, which had been provided to the
Financial Regulator.
The loss comprised a trading loss of €127.5m on its underwriting activities and exceptional costs of
€677.6m resulting from the writedown of certain non-core assets
held by subsidiaries, understood to be a wind farm in Derrylin, Co. Fermanagh
and a number of hotel
properties. The losses on underwriting activities was made up of €41m related to its business in the Republic and €86m
to the UK.
The Quinn Group owes the insolvent nationalised
Anglo Irish Bank about €3bn and last March when the Financial Regulator Matthew
Elderfield applied to the High Court to put Quinn Insurance in administration,
Seán Quinn, who was until recent times Ireland's richest man, claimed that the
insurance unit which acquired the Irish health insurance operations of BUPA in
2007, was making a profit of about €20m per month.
Seán Quinn had built up a stake in Anglo Irish
Bank through a financial betting product called Contracts for Difference (CFD).
The CFD's allowed him to acquire a right to buy shares by providing 10% of the
value and the tax regime was also favourable compared with an outright purchase.
He was expecting the price of Anglo's shares to continue rising.
Anglo Irish Bank closed at 22 euro cent on the Irish Stock Exchange, on
its last day of trading before becoming a State-owned bank.
On February 21, 2007, the ISEQ index rose to an-all time high of 10,041
and the Financial sub-index rose to 18,098. Bank of Ireland closed at
€18.65; Anglo Irish closed at €16.64 and AIB closed unchanged at €23.95.
A year later, on February 21, 2008, AIB closed at €13.80, Anglo Irish
Bank finished at €8.84, while Irish Life & Permanent closed at €10.20
and Bank of Ireland traded at €9.50.
By 2008 Quinn had used CFDs to build a potential;
stake of 25% in Anglo but the Anglo price was sliding and in July 2008 to cut
his potential future losses, he converted the CFDs into an ordinary 15%
shareholding. It cost him around €2.5bn and some of the shares were bought with
borrowings from Anglo. Besides, the remainder of his position was bought out by
10 major customers of Anglo and the bank lent them the money for the deal.
In October 2008,
the Financial Regulator fined Quinn Insurance a record €3.25m for breach of
insurance regulations and Seán Quinn was fined €200,000.
In 2010, Quinn Insurance was still acting as a
funder/guarantor of other units of the Quinn Group and the business was put
under official administration.
The Insurance Statistical Review will be available for
download from
www.centralbank.ie on Friday.
The Insurance Statistical Review 2009 includes the
following key data:
Overview of the Volume of Business Written
Total Gross Premium income received by Head Offices and Branches in Ireland
amounted to €40.19bn compared to €38.39bn in 2008. In 2009, €28.23bn of the
total was generated by Life companies and €11.96bn by Non-Life companies.
Life Assurance
Gross Premium written in Ireland by Life Assurance
companies decreased by 0.9% to €28.23bn from €28.50bn in 2008. It comprised
€10.67bn in Irish Risk business (€12.46bn in 2008) and €17.56bn in Foreign Risk
business (€16.04
billion in 2008). The breakdown shows that Irish Risk
business decreased by 14.4% and Foreign Risk business increased by 9.5%.
Total Net Premium Income in respect of Irish Risk business
amounted to €9.77bn compared with €11.32bn in 2008, a decrease of 13.7%. Total
Foreign Risk Net Premium Income amounted to €16.76bn compared with €14.95bn in
2008, an increase of 12.1%.
Non-Life Insurance
Gross Premium written in 2009 amounted to €11.96bn
(€9.89bn in 2008). This comprises €3.77bn Irish Risk business (€3.86bn in 2008),
€2.87bn in Foreign Risk business written from Ireland on a Freedom of Service
basis (€3.09bn in 2008) and €5.32bn in Foreign Risk business written by branches
located abroad of Irish authorised insurers (€2.94bn in 2008). Therefore, Irish
Risk premium written decreased by 2.3% on 2008; Foreign Risk business written
from Ireland on a Freedom of Service basis decreased by 7.1%; and Foreign Risk
business written by branches located abroad of Irish authorised insurers
increased by 80.9%.
Net Premium Income in 2009 was €7.04bn (€6.18bn in 2008);
comprising €3.23bn (€3.33bn in 2008) for Irish Risk; €1.72bn (€1.86bn in 2008)
for Foreign Risk business written from Ireland on a Freedom of Service basis and
€2.09bn in Foreign Risk business written by branches of Irish authorised
insurers located abroad (€0.99bn in 2008). Overall the total increased by 14%
from 2008, whilst the breakdown shows that Irish Risk business decreased by 3%;
Foreign Risk business written from Ireland on a Freedom of Service basis
decreased by 7.5%; and Foreign Risk business written by branches located abroad
of Irish authorised insurers increased by 111%.
Underwriting Result - Irish Market
In respect of Irish Risk business, the 2009 result showed
a Net Underwriting Loss of €124.5 million compared to a profit of €121.9
million, in 2008. Of this, Irish authorised companies incurred an underwriting
loss of €21.7 million while branches of companies authorised in other
jurisdictions made a loss of €102.8 million. In 2009,
the total income from investments attributable to the
Underwriting Revenue Account was €317 million compared to €95.5 million in 2008.
Underwriting Result – Foreign Risk Market written from Ireland
There was a Net Underwriting Profit recorded in respect of
Foreign Risk business written from Ireland on a Freedom of Service basis of
€179.8 million compared to a profit of €109 million in 2008. Of this, Irish
authorised companies achieved an underwriting profit of €191.3 million while
branches of companies authorised in other jurisdictions made a loss of €11.5
million. In 2009, the total income from investments attributable to the
Underwriting Revenue Account was €58 million compared to €117.9 million in 2008.
In addition, Foreign Risk business written outside of
Ireland by branches located abroad of Irish authorised insurers showed a Net
Underwriting Profit of €5.8 million compared to €34 million in 2008. In 2009,
the total income from investments attributable to the Underwriting Revenue
Account was €184.1 million compared to €6 million in 2008.
Breakdown by Class of Insurance
The breakdown of the Gross Written Premium related to
Irish Risk written in Ireland between the various classes of insurance reveals
that in 2009 Motor Insurance represented 36.36% of the market compared to 37.62%
in 2008; Fire and Other Damage to Property represented 25.98% compared to 25.2%
in 2008; Accident & Health business represented 17.51% compared to 15.2% in
2008; whilst Liability represented 16.7% compared to 18.38% in 2008.
The breakdown of the Gross Written Premium related to
Foreign Risk business written from Ireland on a Freedom of Service basis between
the various classes of insurance shows that in 2009 Fire and Other Damage to
Property insurance represented 25.14% compared to 25.59% in 2008; Accident and
Health insurance represented 22.57% compared to 22.55% in 2008; Liability
insurance represented 18.41% from 17.55% in 2008; and Motor insurance
represented 11.71% of the market compared to 9.40% in 2008.
The breakdown of the Gross Written Premium related to
Foreign Risk business written outside of Ireland by branches located abroad of
Irish authorised insurers between the various classes of insurance shows that in
2009 Fire and Other Damage to Property insurance represented 30.84% compared to
25.05% in 2008; Liability insurance represented 30.39% compared to 41.45% in
2008; and Motor insurance represented 27.96% of the market compared to 17.84% in
2008.
