THE QUINN Group has written off €829 million it advanced to the Quinn family in 2007, which was used in stock market investments, it was disclosed yesterday. Further writedowns in 2008 "will not exceed" €130 million, the group said.
The group advanced funds to companies owned by members of the Quinn family, which in turn made investments on the stock exchange. The fall in equity prices, especially those of Anglo Irish Bank, led to the security on the loans being significantly reduced in value and the provisions in the Quinn Group accounts being adjusted accordingly. "They have strongly written down the value of those investments for 2007," a spokesman said.
Reduced gains in the investments made by a part of the Quinn Group, Quinn Insurance, contributed to its pretax profits, before exceptionals, being reduced to €403 million from €433 million in 2006. When the exceptional loss of $829 million is taken into account, the recorded pre-tax position for the overall group for 2007 is a loss of €425 million.
Quinn Insurance, which owns Quinn Direct and Quinn Healthcare (formerly Bupa Ireland), also advanced funds during 2008 to support Quinn family investments. As of May, these loans amounted to €288 million. Most of these loans have now been repaid.
The 2007 write-off "related primarily to a provision against amounts advanced to related party investment companies", the group said in a statement. "These advances were deemed not to be fully recoverable due to a fall in the value of the underlying investments as a result of exceptionally difficult market conditions. Whilst the turmoil in investment markets has continued any further writedowns necessary in its 2008 accounts will not exceed €130 million."
The group said Quinn Insurance had premium income of more than €1 billion in 2007 (€779 million in 2006) and pre-tax profits of €245 million (€323 million in 2006). The purchase of Bupa Ireland contributed 22 per cent to the growth in the turnover of Quinn Insurance.
"As outlined in the notes to its 2007 financial statements, Quinn Insurance advanced funds that supported investments made outside of the group during 2008 and, as at May 2008, these loans amounted to €288 million. Whilst at that time there was some uncertainty as to the valuation of these loans due to the volatility of the underlying assets, the security on them has been restructured and the majority of the loans have now been repaid. Consequently it is envisaged there will be no impact on the company's 2008 financial statements.
"Quinn Insurance is in a very strong financial position with €2 billion of assets (including over €800 million in cash), shareholders' funds in excess of €500 million, and it continues to be very profitable in 2008," the group statement said. "Quinn Insurance continues to play a key role in the performance of the Quinn Group. The business performed strongly in 2007 with gross written premium increasing by 40 per cent to just under €1.1 billion. The new health insurance business contributed 22 per cent of the growth. The company remained very profitable in 2007, generating earnings before tax of €245 million compared to €323 million in 2006. Underwriting profits remained strong but investment gains reduced, as the exceptional equity gains in 2006 were not repeated in 2007 due to weaker global equity markets."
