Money lent to other Quinn companies put insurer in the red
The Irish Financial Regulator Matthew Elderfield said Quinn Insurance has extended guarantees of €448m to other companies in the Quinn Group and alleged that not all members of the Quinn board knew about them, The Irish Independent reports.
These turned a surplus of assets over liabilities of more than €200m into a deficit of more than €200m.
In October 2008, the Financial Regulator fined Quinn Insurance €3.4m when it discovered that it had lent other Quinn Group companies €288m without its knowledge.
Sean Quinn, the founder and owner of Quinn Insurance, was fined an additional €200,000 and stepped down from the board of Quinn Insurance.
Quinn owes Anglo Irish Bank at least €2bn and it must refinance €780m of borrowings this year. Sean Quinn's losses in the UK are estimated at up to €2.5bn.
Forced to act swiftly
The Irish Times quoted Elderfield as saying: “Last Wednesday, we received significant news that showed that the financial position of the company was overstated by about €450 million.”
“In light of this information, we acted swiftly and asked that the company be put into administration. We believe that is in the best interests of policyholders to do that.”
Elderfield said the regulator had, for months, “been having increasingly serious concerns about the financial position of Quinn Insurance, and we’ve been pressing very hard for a capital injection into the company”.
He said he was hopeful a solution could be found for the company “going forward”.
Ciarán Phelan, chief executive of the Irish Brokers’ Association (IBA), said: “Our brokers have been inundated with inquiries from clients. Some are worried about claim payments, while others are concerned about whether or not to renew with Quinn.”
IBA president Paul Carty said: “We welcome the action of the Financial Regulator to deal decisively with any problems that they have unearthed, and we welcome the reassurance given by the administrator that all valid claims will be paid. This is an important comfort for customers.”
Stronger powers needed
Elderfield said stronger powers were needed for the regulator, “in particular fitness and probity standards to allow the ability to bar individuals from taking part in the financial services industry and an increase in our fines”.