Quinn Insurance faces court battle with Regulator

The beleaguered Quinn Insurance firm will take on the Financial Regulator today in a crucial High Court hearing.

The Quinn Group is expected to fight administration after intense negotiations which saw Anglo Irish Bank table a plan to the watchdog for a potential takeover of the company.

While the state-owned lender hoped to strike a deal before the court date, lawyers for the Financial Regulator are preparing for a full hearing in Dublin.

It is understood even if Quinn Insurance, owned by tycoon Sean Quinn, is placed into full administration talks could still continue between the parties involved.

Two of the insurance giant’s flagship divisions, Quinn Healthcare and Quinn Direct, were placed in the hands of provisional administrators a fortnight ago after regulator Matthew Elderfield raised concerns over its ability to pay an influx of claims.

The proposals from nationalised Anglo – which will ultimately be refinanced by the Irish taxpayer to the tune of €22bn – reflect the bank’s desire to secure debts of €2.8bn owed by the Quinn family after a complex share deal turned sour.

Two other key issues are the regulator’s aim to protect the insurer’s one million customers and the need to run the business as a going concern.

As well as Anglo’s bid, Mr Elderfield was also reviewing the administration move and a revised business plan from Quinn.

The group claims it can put the insurer on a solid financial footing by the end of the year.

It is understood Finance Minister Brian Lenihan will accept the regulator’s verdict on the proposed buy-out.

Agriculture Minister Brendan Smith, whose Fianna Fail constituency office is in Cavan – where the Quinn Group is the town’s largest employer – said there was a huge public interest in protecting the firm.

“The objective of the discussions is to meet everyone’s requirements – that’s the taxpayers and the employees, and to ensure that the requirements of the regulator are met as well,” he added.

Quinn Group chief executive Liam McCaffrey revealed the insurance wing needs up to €150m to meet the regulator’s requirements on insurance solvency.

But he denied suggestions it was facing a €700m black hole in its books.

The company detailed the state of its finances and insisted access to money was not an issue in the event of massive claims.

It said Quinn Insurance holds €800m cash and the Quinn Group, which generated cash profits of about €47m in the first three months of this year, holds €70m in reserve.

But Government officials suggested it could founder if Quinn does not agree to management changes at the very top.

One of the issues facing Quinn is guarantees.

Mr McCaffrey also said guarantees offered between various divisions of the Quinn Group were disclosed in annual reports of subsidiaries however the regulator claimed they were not included in quarterly solvency reports.