COMPANY RESPONSE:QUINN GROUP yesterday launched an attack on the Financial Regulator's decision to appoint provisional administrators to Quinn Insurance Limited (QIL) on Tuesday.
In a statement published on its website, Quinn Group said the decision was “pre-emptive, aggressive and unnecessary”.
It had used similar language in a letter to all Government Ministers just a day earlier.
On Tuesday, the regulator said it took the court action when it became aware that certain subsidiaries of Quinn Insurance had given guarantees which have the effect of reducing the insurer’s assets by about €448 million.
The regulator said it was concerned that QIL has significantly breached its solvency ratios.
The High Court appointed Paul McCann and Michael McAteer as joint provisional administrators to QIL on Tuesday
Quinn Group said yesterday that the regulator’s analysis that the guarantees involved give rise to a €448 million liability was “totally incorrect” and said the regulator had made the “wrong decision”.
“We understand that he [the regulator] is referring to guarantees provided by certain subsidiaries of QIL, some dating back to 2005, supporting the general indebtedness of the Quinn Group. These guarantees are entirely lawful, do not breach any insurance regulations, and were fully disclosed in the statutory accounts of the relevant companies.”
Quinn Group also questioned the timing of the move by the regulator. It said the guarantees were reviewed in the context of the company’s “current refinancing” and it had sought the opinion of the regulator last week.
“Since then we, our financiers and our respective advisers, have been working around the clock to respond to the regulator’s questions and to address his concerns,” Quinn Group said.
“Even if the regulator’s concerns in relation to QIL were well-founded (which we dispute), it is extraordinary that the regulator was unwilling to give the necessary time to work through those concerns, rather than taking precipitate action which damages the interests of all stakeholders, including the State.”
In a statement released to The Irish Timesyesterday, the regulator reiterated that it had taken its action in the "interests" of Quinn Insurance's policyholders in light of "grave concerns" over the financial position of the company.
“We also draw attention to the fact that we have already stated that we are also currently investigating certain matters within Quinn Insurance Limited that have very recently come to light and these investigations are ongoing.”
Minister for Finance Brian Lenihan also strongly backed the Financial Regulator’s decision to appoint administrators to Quinn Insurance. “I fully support the action of the regulator, and I commend him for the promptness with which he has dealt with this matter,’’ he said.
In its statement, Quinn Group also disputed the comment by the head of financial regulation Matthew Elderfield on Tuesday that its UK business is not profitable. “We entirely disagree with this statement and unless reversed, this direction will be immensely damaging to the future prospects of QIL,” it added.
The regulator responded, saying its “actions with regard to Quinn Insurance Ltd (UK) are to prevent Quinn Insurance Limited suffering further financial losses from its unprofitable business.” The regulator said it would be “setting out our concerns” at a full hearing of the High Court on April 12th. An affidavit supplied by the regulator to the High Court states that the company sustained net underwriting losses in the UK of €44.4 million in 2009.
