Anglo's takeover of Quinn faces 'more hurdles than others'
Anglo Irish Bank faces a series of tough regulatory obstacles to its new plan of joining up with a foreign insurer to take over embattled Quinn Insurance, the new financial watchdog Matthew Elderfield has revealed.
Appearing before the Dail Public Accounts Committee yesterday, Mr Elderfield also said the insurer's administrators provided a detailed proposal on Wednesday on re-opening some commercial lines of business in its loss-making UK arm.
Anglo is worried the sale of the insurance company to an outside party will hit the Quinn family's ability to repay €2.8bn owed to the lender. Quinn Insurance has been a major cash cow for the Quinn Group -- traditionally accounting for half of profits -- but has significant solvency problems.
Administrators to Quinn Insurance have received 40 expressions of interest for the business.
Mr Elderfield said any buyer would need to meet a number of requirements, which include injecting €700m of capital into the company, sorting out governance issues, and strengthening its management and controls.
"For the acquirer, there's also a fitness and probity test," he said. "For Anglo, you've got questions about Anglo's position because of its own challenged situation."
He stressed the bank faces more hurdles than others, but admitted that if the lender can tick all the boxes "it's possible that an Anglo transaction can be successful".
The regulator defended his move in late March to apply to have administrators appointed to Quinn, given that it was in breach of solvency rules. "Even if you take into account the most generous regime in the world, you'd still have a non-compliant company," he said.
He immediately banned Quinn Insurance from writing any new business in the UK at the time. "The decision to issue the directive was because it was loss-making and made a significant loss (of €44m) last year. Allowing it to keep writing business would have made the situation worse," he said.
The watchdog has since allowed the administrators to re-open UK private motor insurance in two stages, after they re-worked the pricing model. Mr Elderfield said that the administrators have also filed a detailed proposal to re-open the commercial insurance business in the UK.