Will the Irish regulator allow Quinn to make a much-promised return to the UK market?
The saga of Quinn keeps on rolling. In the latest development, the Irish High Court has given the go-ahead for Macquarie Capital Europe to oversee its sale.
No timeframe has been given for the controversial insurer’s return to the UK, as the business plan for writing commercial lines is with Irish regulator Matthew Elderfield. Administrator Grant Thornton says the ball is now “firmly in the regulator’s court”.
However, Quinn’s bid to return was bruised when it emerged that the insurer would have to increase prices in some commercial lines by as much as 3,000% to become profitable in the UK. Meanwhile, the administrators have ruled out renewing its old strategy of writing business as a loss leader, leaving many asking how the insurer could hope to better its sole niche – selling at a bargain price.
The big question is whether it can regain a foothold in the UK. The administrators are trying to strike an optimistic chord. “Obviously, the insurer has had good relationships with UK brokers previously, but it will depend on which lines of business they open up. If it is an incremental process, it will be easier to rebuild those relationships because it will be an incremental expanding of certain lines,” says a spokesman.
But the market remains sceptical. While Aviva’s intermediary and partnerships director Janice Deakin does not rule out a Lazarus-like comeback on these shores, she says that it is unlikely that the insurer could win back old customers and clients. “It is very difficult for brokers because many have been left with difficult conversations with their customers.”
She believes that Quinn could grab market share again only by reverting to cut-throat pricing. “The price differentials would have to be so big that it would be worth the risk.” This leaves the insurers with a Catch 22 situation: increase prices and lose any chance of building back UK business, or push down prices and face the wrath of the Irish regulator.
Old guard falls by the wayside
If Elderfield gets his way, the company will be sold and given a facelift. And the old guard of the company is falling by the wayside. Chief executive Colin Morgan announced his departure as Grant Thornton launched an overhaul of senior management. Meanwhile, founder Sean Quinn’s share in the company has dwindled to 5%. Stakeholders undoubtedly hope the promise of a new brand and owner will help to restore the faith of UK brokers.
Workers hope for a takeover by the now nationalised Anglo Irish Bank, which is still owed £2.8bn by the Quinn family. It hopes to partner with a foreign insurer to overcome the financial regulator’s concerns about its ability to run the company. The administrators say that up to 50 potential buyers have been circling including, it is believed, AXA, Allianz, RSA, Liberty Mutual and Sampo. Most recently it emerged that Germany’s third-largest insurer, Talanx, could be set to bid for Quinn Insurance in a move to enter the Irish general insurance market under the HDI-Gerling brand.
But Sean Quinn has come out fighting. He recently indicated that Quinn may reverse its decision to sell its insurance arm, telling Irish TV station RTE that he could repay his family's €2.8bn (£2.3bn) debt to Anglo Irish Bank from profits from the insurance business.
First he would have to convince the Irish High Court and administrators of the plan’s viability and, more importantly, bypass Elderfield’s opposition to his regaining executive control of the business. No mean feat.
But as the story of Quinn rumbles on, only one thing is certain. Expect the unexpected.
• Quinn would have to lift prices by up to 3,000% to become profitable in the UK
• Other insurers say that it could only regain market share by reverting to cut-throat pricing
• Company workers are hoping for a takeover by the Anglo Irish Bank