Company releases forceful statement as thousands of staff rally to group’s support before next week’s follow-up court hearing
Quinn Group has come out fighting after the Irish regulator placed it in provisional administration and banned it from writing new business in the UK.
Group chairman Sean Quinn wrote to every Irish cabinet minister, condemning the regulator’s action as “highly aggressive and unnecessary”.
The group also released a robust statement about the ban on new UK business.
“The financial regulator has directed QIL (Quinn Insurance Limited) to cease writing new business in the UK, and has commented that the UK business is currently unprofitable. We entirely disagree with this statement and, unless reversed, this direction will be immensely damaging to the future prospects of QIL,” the statement said.
Thousands of staff rallied to the group’s support, with protests planned in Dublin and Cavan as Insurance Times went to press. As many as 10,000 workers and family members were expected to turn up to the gatherings, organised by the Save Quinn Insurance Facebook site. Sean Quinn was not expected to attend.
The events leading to the regulator’s intervention have emerged over the past seven days. According to the Belfast Telegraph, QIL chairman Jim Quigley informed the regulator on 24 March that four QIL subsidiaries have entered into guarantees on wider Quinn Group debts, effectively reducing the value of QIL’s assets by €448m (£395.7m).
The news prompted the regulator’s immediate intervention. The office had been working with QIL on contingency plans in case of financial failure of the wider group since 2008.
The regulator initially offered a 30-day period of grace before the appointment of provisional administrators, during which the guarantees in question could be released – on condition that Quinn Group’s lenders allowed it to release €35m into the insurance business. However, the group’s lenders refused the temporary compromise, prompting the regulator to take the group to the High Court to place it in provisional administration. A follow-up hearing is scheduled for 12 April.
In its statement, Quinn said: “The guarantees have not been called upon, there was no reason to believe that they would be called upon, and the regulator was provided with comfort on this by our financiers, most recently in a meeting on 29 March. Quinn Group is in the process of negotiating a refinancing that would have addressed the concerns of the regulator, and we and our financiers remain confident that this will be achieved.
Therefore, the regulator’s analysis that these guarantees give rise to a €448m liability is totally incorrect. The regulator's demand that the guarantees be released was therefore unnecessary, and not practical in the time which he allowed.
“In the light of all these facts, of which the regulator was well aware, we believe the regulator made the wrong decision. We do not believe that his decision was in the interests of any of the relevant stakeholders – Quinn Group, its staff, its customers or indeed the Irish Exchequer, which has received well in excess of €1bn in tax from Quinn Group since it was established in 1973.”
The court-appointed administrators, Paul McCann and Michael McAteer of Grant Thornton, said that they aimed to manage the business as a going concern “with a view to placing it on a sound financial and commercial footing”. They added that the company would meet all valid claims.
A man of simple tastes
Sean Quinn started out by selling stone from a quarry on his family farm after leaving school at 15. Now, the 62-year-old father of five is the richest man in Ireland and the 12th richest in the British Isles, with a personal fortune of £3.73bn, according to the 2008 Sunday Times Rich List.
He seldom appears in public and is known for his simple tastes; his main indulgence being a Tuesday night poker game with a maximum win of £10.
Although Quinn started in construction, it was in financial products that he really made his money. He now controls a sprawling empire under the umbrella of Quinn Group, which in 2007 posted operating profit before exceptional items of €315m (£278m).
As well as Quinn Insurance, the group includes Quinn Healthcare, building products firms around Europe, landfill sites, glassmaking operations and a Dublin pub.
It also has interests in shopping centres, offices and warehouses in India, DIY supermarkets in Russia and property in eastern Europe.