Regulator in UK was concerned by Quinn

The financial regulator in Britain contacted the Central Bank over 2008 and 2009 because it was concerned about the way Quinn Insurance was underwriting business in the UK.

The Central Bank questioned Quinn Insurance about these concerns, but did not follow up with any further measures.

“We acted on the advice and concerns of the FSA (Financial Services Authority) but they did not provide us with any specific data. We asked Quinn insurance questions but we could not find any evidence to proceed,” the head of general insurance supervision at the Central Bank, Domhnall Cullinan, told the Oireachtas finance committee yesterday.

The committee heard that the administrators of Quinn Insurance, Grant Thornton, are reviewing the performance of Quinn auditors PwC and its actuaries Milliman for 2007 and 2008.

This review will be presented to the High Court and a recommendation will be made on whether further action should be taken against either firm.

Mr Cullinan told the committee the Central Bank sent a report to the Chartered Accountants Regulatory Board about PwC’s role auditing Quinn Insurance. That investigation is ongoing.

The committee was looking into the decision by the Central Bank to put Quinn Insurance into administration in Mar 2010 amid concerns the firm’s technical reserves were insufficient and that guarantees had been pledged against certain assets of the insurance business.

Grant Thornton’s Michael McAteer represented the administrators before the committee. There were also officials from the Department of Finance.

Mr Cullinan acknowledged there were systemic failures at the Central Bank before 2010, including a lack of resources and power. There were between zero and two actuaries at the Central Bank over that period. That figure is now 19.

There will be a 2% levy on every insurance policy written in Ireland over the next 15 years to cover the €1.6bn losses at Quinn Insurance, which had to be covered by the insurance compensation fund.

Mr Cullinan said losses could be higher than €1.6bn, but it was hoped the eventual figure would be between €1.1bn and €1.3bn.

Mr McAteer faced a barrage of criticism from TDs for the administrator’s initial loss estimate of €600m, which was revised upwards three times to €1.6bn. He rejected claims by Fianna Fáil’s Michael McGrath that the €14.2m in fees charged by administrators since 2010 were “exorbitant and not good value for money”.

Mr McAteer also revealed there was one Quinn Insurance asset that needed 24/7 security, although he declined to identify the asset.