Insurer can once again be fully operational in the UK but never as a loss leader, administrator says
Quinn chief executive Colin Morgan is expected to step down shortly in a management overhaul, as 50 potential buyers circled the insurer this week.
The insurer’s administrators Grant Thornton will hold redundancy talks with senior management before the end of next week, where many are expected to take voluntary redundancy.
A source close to the administrators confirmed that it was unlikely Morgan would continue to head the company as it continued in its bid to resume writing commercial lines in the UK.
Morgan had been the public face of the company over the past 12 months, speaking up for the insurer after it lost its credit rating last year.
“The deadline for the acceptance of voluntary redundancy is next Monday,” an administrators’ spokesman said, “so after that, the administrators plan to sit down with senior management and evaluate senior management needs.”
Redundancies are unlikely to exceed, and may fall short of, the 900 previously announced, he added.
The administrators argue that the insurer still has a good case for becoming fully operational in the UK. They declined to respond to Irish regulator Matthew Elderfield’s comments that Quinn was writing business too cheaply to meet future claims prior to going into administration.
But the administrator ruled out the insurer writing any future UK business as a loss leader, something which it had previously done to attact new business.
“The case for writing business is very simple: they will open up profitable lines. Once the regulator is happy those lines are profitable, he will approve those lines,” the spokesman said.
He confirmed that Grant Thornton had so far seen “four dozen” expressions of interest in buying Quinn Group’s insurance arm, from national and non-national banks, insurers and private equity firms.
The administrators are currently preparing an information memorandum on the company to send to all interested parties by early June.
Elsewhere, Aviva’s intermediary and partnerships director, Janice Deakin, revealed the insurer, along with other competitors, had approached the FSA with concerns that Quinn and other non-UK companies was not sufficiently regulated.
“We have certainly questioned the way in which the passporting system works in allowing such companies to come into the UK, which then don’t have the same level of regulatory attention that UK-based insurers would have.
“The fact that they don’t get the same sort of attention means there is a risk associated with them and we, and other insurers, have expressed that concern," she said.
The administrators told Insurance Times that they had no direct dealings with the FSA as it prepared the company to resume business in the UK.
Deakin also revealed that Aviva had wrested £10m worth of business from Quinn, but had to turn away some business because it was too under-priced.
She added it was unlikely that Quinn could regain a foothold in the UK after the damage done to broker and customer relationships.
“I wouldn’t rule it out, but I do think it is quite a difficult sell from a customer’s perspective. It is very difficult for brokers because many have been left with difficult conversations with their customers and, at the end of the day, a broker advises a customer and they have to advise them on the right thing to do for their business.”