Quinn Group rejects 'black hole' claims

The Quinn Group today rejected claims it was facing a €700m black hole and insisted its insurance wing needed only up to €150m to get back on a sure footing.

Amid reports of a potential takeover of Quinn Insurance Limited (QIL) by Ireland’s nationalised Anglo Irish Bank, the multi-national dismissed claims it bent the rules to suit its own interests.

The company is due before the High Court in Dublin on Monday to fight administration after the Financial Regulator dramatically moved to wrest control last week.

Liam McCaffrey, Quinn Group chief executive, said lifting administration was in everybody’s interest and that, if given the time, the solvency issues at QIL would be resolved by the end of the year.

“We will work very hard with anybody, Anglo Irish Bank or anybody else, to make sure that the future of Quinn Insurance is robust and protected,” he said.

Anglo, which will ultimately be refinanced by the Irish taxpayer to the tune of €22bn, is owed €2.8bn by the Quinn family after a complex share deal turned sour.

Quinn adamantly rejected claims the insurance division needed a €700m cash injection and insisted there was no basis for it.

“This is simply not the case,” the company said.

It said access to money should not be an issue, with Quinn Insurance holding €800m cash and the Quinn Group holding €70m in reserve while the Group generated cash profits of about €47m in the first three months of this year.

“Our manufacturing businesses continue to perform strongly but the knock-on impact of the QIL provisional administration continuing will impact on the group’s ability to invest and expand in the future,” Quinn said.

Mr McCaffrey rejected claims the insurance group had bent the rules when reporting solvency levels to the regulator.

“To say it is playing fast and loose I think is a little unfair, suffice to say we know that we are below the minimum solvency, we know that a plan was submitted to the regulator to have that restored by the year end, and that was being worked through,” he told RTE.

The company said a cash injection of €100-€150m would restore QIL’s solvency levels.

One of the issues facing Quinn is guarantees certain divisions of the company gave over debts dating back as far 2005 – Anglo is owed the family’s €2.8bn and another €1.2bn is owed by the business to US bondholders and Barclays.

Mr McCaffery said guarantees were disclosed in annual reports of subsidiaries however the regulator has claimed they were not included in quarterly reports on the solvency of the insurance wings. A High Court judge will address the dispute on Monday.

A planned demonstration by some of Quinn’s 5,000 workforce at the regulator’s headquarters in Dublin was postponed today.

It is understood employees decided to call the event off in a gesture of good faith and to give regulator Matthew Elderfield time to complete a review of the move to seek administration.

A business plan compiled by senior management including Sean Quinn junior was handed to the regulator earlier this week to help with his review and Anglo’s plan to move in on Quinn Insurance is also being assessed.

Joan Bruton, Labour’s finance spokeswoman, called on Finance Minister Brian Lenihan to explain why large scale investments by nationalised Anglo into such a big employer and the subsequent exposure were not made public.

“There needs to be full disclosure, in particular, of any potential losses or liabilities for the state arising from Anglo’s involvement with the Quinn Group,” she said.

“The board of Anglo should not have carte blanche to increase the state’s exposure without the specific approval of the Dail.”

She added: “This whole crisis is a vital test for the new regulatory regime. If the regulator is not allowed to do his job on this issue, then Ireland’s reputation will be further damaged.”

Taoiseach Brian Cowen became involved in the affair over the Easter break and spoke directly to Mr Quinn on the phone.

Green Party Senator Dan Boyle insisted the regulator must be seen to be independent.

“The Green Party argued for the appointment of a Financial Regulator from outside of Ireland to put maximum distance from the discredited system of financial regulation that had been in place and which helped cause so many of the difficulties that exist with Irish financial services,” the finance spokesman said.

“It is clear that the appointment of Matthew Elderfield has been an excellent appointment and that he has set about this job by making difficult decisions, that too often have been avoided in the past.

“I believe if we are to restore confidence in Irish financial services and avoid the crises that have bedevilled our economy in recent years there should be no compromising of the efforts of Mr Elderfield and the office of the Financial Regulator.”