Quinn Insurance significantly breached solvency ratios, court hears

The High Court has appointed two joint provisional administrators to the Quinn Insurance Ltd.

The appointment were made after the court heard that the Financial Regulator had "very serious" concerns about the Sean Quinn-founded company's ability to meet its liabilities.

Counsel for the Regulator said that in recent months the company had "significantly breached" its solvency ratios.

This morning, Mr Justice John Cooke said he was satisfied to appoint Paul McCann and Michael Ateer of Grant Thornton as joint provision liquidators to Quinn Insurance Ltd following an ex parte application by the Financial Regulator.

Mr John Hennessy SC for the Financial Regulator told the court that his client was making an urgent application to have the provisional administrators appointed because of concerns the regulator had about the manner the company was conducting its affairs.

The regulator, counsel said had concerns about the companies ability to meet its liabilities to policy holders.

Counsel said that the regulator was further concerned when it was discovered that subsidiaries of the Quinn Insurance Ltd had made guarantees in relation to the group's assets.

This counsel had had the effect of reducing the insurer's assets by some €448m and had "wiped out" the company's solvency cushion. The company counsel said had on the figures gone from a position of having assets over liabilities of some €200m to now have an excess of liabilities of more than €200m.

Counsel added that these guarantees had been in place since 2005 but were only coming to light now. Counsel added that a number of Quinn Insurance's directors were not aware of the guarantees made by the subsidiaries.

Counsel said that the Regulator also had concerns regarding Quinn Insurance's internal financial control mechanisms and accounting. This information counsel said had been given to the regulator by the company itself.

Counsel said that the role of the provisional administrators over the company would be to carry on its affairs as a going concerns and to conduct business with a view to putting it on a sound commercial footing.

Mr Justice Cooke, who said he was satisfied to appoint Mr McCann and Mr McAteer as provisional administrators.

The regulators application he added had complied with section 2 of the 1983 insurance No 2. Act.

The Judge made the matter returnable to April 12 next.