EC gives go-ahead for Quinn Insurance restructuring

THE go-ahead for the restructuring of Quinn Insurance (QIL) — including a change of ownership and a €700 million compensation injection — has been granted by the European Commission (EC).

Yesterday’s EC approval for a €738m pay-out to QIL’s new owners, from the Irish insurance compensation fund — the role of which is to cover losses of insurance companies — follows on from last week’s Irish High Court approval of the takeover of QIL by a consortium consisting of US insurance giant, Liberty Mutual and Quinn Group creditor, Anglo Irish Bank.

The consortium — 51% controlled by Liberty — initially agreed to buy QIL earlier this year.

The deal also passed EU merger control rules last month.

QIL went into administration early last year and has generated combined losses of over €860m for 2009 and 2010.

The new owners will take control of the general insurance arm in Ireland, while the company’s British operations — seen as non-viable — will be wound down; except the private motor insurance business, which will be sold.

The EC found Quinn Insurance’s Irish general insurance business to be viable, as it represents the historically profitable part of the firm and can benefit from Liberty’s expertise.

Some €320m of the total compensation fund pay-out will be paid immediately.

“The administrators of Quinn Insurance have worked out a plan that provides for a viable future for the healthy parts, ensures an adequate burden sharing by the shareholders and limits the distortions of competition,” said Joaquin Almunia, vice-president of the EC and head of its competition policy.

The commission also said that Anglo’s part ownership of QIL — which will be rebranded byits new owners — will improve the wind-down bank’s position as Quinn Group creditor.

Separately, a Quinn Group spokesperson yesterday accused Anglo — which is owed €2.8bn by the Quinn family — of making “spurious allegations” and trying to blacken the name of Sean Quinn and his family, by suggesting the family has been moving international property assets beyond the bank’s reach.