THE president of the High Court said he wishes to hear from representatives of the state’s Insurance Compensation Fund before considering any application to allow Quinn Insurance group draw on that fund.
In addition, Mr Justice Nicholas Kearns yesterday said he wanted an independent review of the fees sought by the merchant bankers, Macquarie Capital Europe, for their handling of the proposed sale of Quinn Insurance to a joint venture involving Anglo Irish Bank and US insurance giant, Liberty Mutual.
The joint administrators of Quinn Insurance, Michael McAteer and Paul McCann of Grant Thornton, presented their seventh interim report since the Financial Regulator put the insurer into administration.
Bernard Dunleavy, counsel for the joint administrators, confirmed that the total estimated call by Quinn on the Insurance Compensation Fund will be €600 million. That fund was set up by the Government in the wake of the PMPA collapse to protect all policyholders in the event that an insurer cannot meet their liabilities.
Subject to approval from the High Court, Quinn will make its first call of €180m sometime in late 2011. Counsel said the administrators wanted to make it clear they “never told the court at any stage during the administration period” they would “not call on the insurance compensation fund.”
Mr Dunleavy said that the proposed sale of Quinn to the Anglo/Liberty Mutual venture represented “the best deal” as it was the “only deal where all the jobs would be saved” and it represented the least amount that would have to be drawn down from the Insurance Compensation Fund.
He added that the involvement of Macquarie in the sales process was important in making sure the exposure of the compensation fund was minimised.
The court heard that Quinn Insurance lost €709m in 2009, composed of an operating loss of €559m and an investment loss of €147m. The draft financial reports for 2010 indicate a loss of €160m.
Counsel said the company had made a pre-tax profit of €14m in the first three months of the year.
He said that as part of the sale process, the High Court would be asked to approve the draw down of funds from the Insurance Compensation Fund and approve the insurance portfolio transfer from Quinn to Anglo/Liberty Mutual.
However, Mr Justice Kearns said before that he wanted to hear from representatives of the compensation fund before approving any draw down. He said that it may be the case that the representative of the fund may not wish to come before the court, however, the judge said it was important that they be given the opportunity to do so.
The judge said he was seeking an independent review concerning the fees charged by Macquarie Capital Europe.
He said the court wanted to reassure the public and the courts that all costs associated with the administration of Quinn Insurance were properly incurred and were kept to a minimum and there was “a need for transparency” in the way fees were calculated.
Mr Justice Kearns adjourned the case for a week, to allow the administrators come up with a format as to how the review of the fees charged can be conducted.