Financial Uncertainty in Early 2010
On 30 March 2010, following an application by Ireland's Financial Regulator, the High Court appointed joint provisional administrators to Quinn Insurance Limited. According to the Irish Independent, eight subsidiaries of Quinn Insurance provided guarantees of €1.2bn to cover Quinn Group’s debts, prompting the regulator to seek the appointment of provisional administrators in the High Court. In total, the Quinn family is estimated to have taken out €2.8 billion worth of loans from the Anglo Irish Bank and the Quinn Group is responsible for an additional €1.2 billion in loaned money—as of July 2012, the due dates for these loans is unknown.
According to the Financial Times, a number of UK based Insurance companies had warned regulators over a number of years that they believed Quinn Insurance's property and casualty business was unsustainable. The FT stated that a number of London-based firms had written to the UK Financial Regulator, the FSA, stating that "no insurer could systematically charge premium rates that were often significantly lower than all its rivals over an extended period and remain viable". Both the UK and Irish regulators refused to comment on the story. However, the Irish Regulator, has directed the provisional administrators to ensure that Quinn Insurance ceases writing new business in the UK to prevent the company "suffering further financial losses from its currently unprofitable UK business".
Given the magnitude of the loans to Anglo Irish Bank the company was reported to be considering a €700 million financial rescue of the Quinn Group. The plan, would see €150m injected into Quinn Insurance and €550m would be used to pay off bondholders. Anglo Irish Bank would become majority shareholder in the Quinn Group.
The Quinn Group took action to counter the moves by the Financial Regulator including the mobilisation of its employees into street protests., The Group furthermore rejected press speculation that the Group needs €700m of financing. Instead the Group estimates that a cash injection of between €100m and €150m is required. refusing to speculate on the need for a €550 million payment to bondholders, it noted that a re-financing, if it occurred, would not necessarily increase the overall debts of the Group.
On 15 April 2010, the Irish Times reported that Quinn Insurance decided not to fight the appointment of a permanent administrator. According to RTÉ, Quinn Insurance believed it may have a better chance if it were dealing with a full-time administrator, and has increasingly been concerned about the damage it is suffering as a result of the ban on it doing business in the UK.
Read more about this topic: QUINN Group
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