Seán Quinn and his family have blamed the accountants who have run Quinn Insurance for the last year for the €706 million in losses uncovered at the company. US insurance giant Liberty Mutual and State-owned Anglo Irish Bank formally agreed to take over most of the business yesterday.
Announcing the deal Michael McAteer and Paul McCann of accountants Grant Thornton said the losses – mostly on insurance policies written when the company was controlled by Seán Quinn in the run-up to their appointment – would lead to a call of up to €600 million on the State’s Insurance Compensation Fund. This year it will have to provide €180 million.
The claim is expected to result in a levy on all motor and household insurance policies in Ireland following a review of the fund by the Central Bank. The fund currently has €30 million in it and is financed by means of a levy on insurance companies.
In October last year the administrators' lawyers told the High Court they had kept "a tight eye" on the company and Quinn Insurance would not have to avail of the Insurance Compensation Fund.
The Quinn family claimed the company had €1.1 billion in assets and €464 million in property when the administrators were appointed.
They said it was inevitable the reported losses would be "substantial" because the administrators were putting aside far greater amounts of money to meet claims than was the norm in the industry. They also pointed out that €200 million of the insurance company's assets was being used to repay the debts of the Quinn Group to international banks and bondholders.
The family called for the publication of all documents relating to the involvement of the insurer's new owners, Liberty Mutual and Anglo Irish Bank. "If this does not happen, then the cover-up of the erosion of value at the expense of the Irish taxpayer at Quinn Insurance will never be revealed," they said.
"The repeated statements of the joint administrators to the High Court and to the media that the company was profitable and there would be no call on the Insurance Compensation Fund now need to be reconciled with the results announced today," the family statement added.
"We don't want to get involved in a slanging match with the Quinn family," said Mr McAteer in response to the family's earlier criticism of their management of the insurer.
Four independent firms of actuaries confirmed the losses in a review last July and August, said Mr McAteer. Some €333 million of losses in 2009 arose in the insurer's UK business when the wider UK market was "suffering significant losses".
The administrators said that the cost to the compensation fund would be "well in excess of €1 billion" if parts of Quinn Insurance were not being sold to Liberty-Anglo.
The administrators said the sale of the insurer's Republic of Ireland business would lead to all 1,570 Irish jobs being saved. A quarter of the future profits made by Liberty-Anglo will go towards reducing the call on the State compensation fund. Another quarter will be used to pay down part of the €2.88 billion owing by the Quinn family to the bank.
The administrators said the sale to Liberty-Anglo was "the best outcome" for the Irish economy.
Liberty, a Fortune 100 company with 45,000 staff worldwide, takes over troubled companies. This was positive for the jobs, said Mr McCann. "Staff were very happy in all locations. It has been a long road. It has been 13 months. It is a good day."
The Central Bank said the need to access the fund was not unexpected "in light of the serious and persistent solvency problems" at the firm.
"The Central Bank will carry out a review of the financial position of the fund in the coming weeks and will make a recommendation to the Minister for Finance regarding the funding that the Minister may provide to the fund based on the outcome of this review. Any levy imposed will apply to non-life insurance companies," it said.
