Quinn's coming out fighting but, whatever the outcome, it will be some time before the insurer gets back to business as usual
Quinn Insurance is on the ropes. The drama continued this week as the High Court in Dublin gave the company seven days’ grace to further evaluate its status against a new business plan. In a statement on Tuesday, the group thanked brokers for their messages of support and insisted it had a plan to re-enter “profitable segments” of the UK market.
Sean Quinn came out fighting to the Irish media, too, but accepted that the insurance group was facing severe financial damage. Meanwhile, his chief executive, Colin Morgan, has been noticeable by his absence, and hundreds of workers in Ireland have staged protests against the regulator’s aggressive stance against the company.
The story behind the regulator’s intervention suggests that there is no standard set of considerations to assess. Broadly speaking, however, the Quinn Group is high profile for a variety of compelling reasons: chiefly its diverse portfolio, which includes property, construction and hotels, and its links and investments with the troubled Anglo Irish Bank. Of special interest to the insurance market is the way Quinn prices business and settles claims, and whether they are unprofitable in the long term. Quinn’s reserving capability and solvency equations clearly link the two.
On this basis, the new business plan that Quinn is preparing for the regulator should make gripping reading. It is likely that a new management team will be installed with new investors and, perhaps, further state guarantees against the insurance division. Quinn has highlighted the fact that the Irish system of provisional administration is different to the UK system, and that no business in administration has been placed into liquidation since the system began in 1983.
However, it is within the UK that Quinn wants the ban lifted on writing business, and it will be in the UK that clients and brokers will need reassurance. The entire issue should be seen against a backdrop of Quinn’s competitors trying to capitalise on its demise, investment banks attempting to flog off its renewals business, and many brokers wondering what the route back to their clients may be.
The picture is hazy and the outcome uncertain. But whatever your view, whatever the result of the High Court hearing next Monday, the one thing that is certain is that this is not business as usual. IT