Regulator says “problematic business” had to take high risks

Jonathan McMahon, head of financial institutions at the Irish Financial Regulator, has described Quinn Insurance's business model as "deeply troubled", the Irish Independent reports.

He said the "worst cases" being dealt with by the regulator involved "underlying issues [that] emerged from deeply problematic business models".

"Quinn Insurance had a deeply troubled business model. Anglo Irish Bank, again, had a deeply troubled business model," he said. "To sustain high returns they had to take high risks."

The regulator is setting up a "red flag" system to draw attention to flaws in banks' and insurers' models, and will offer firms advice through external risk advisers.