Emmet Oliver: Quinn Insurance was indulged for far too long
Many consequences flow from Tuesday's decision to appoint joint administrators to Quinn Insurance, but what is clear is that the Quinn name is destroyed forever in the insurance industry.
Even if Quinn Insurance is purchased, it is unthinkable that any acquirer would retain the brand considering the bad odour which now surrounds the company. Quinn Insurance was yesterday displaying characteristics that led to its downfall in the first place -- denial, obfuscation and self righteousness.
Instead of explaining to the public and its customers why it found itself in a situation where the courts had to appoint joint administrators to run the firm, it went on the attack via a letter sent to government ministers, presumably in an attempt to outflank the regulator.
Instead of answering questions about their own management of Quinn Insurance, its executives sought to muddy the waters by posing questions back at the regulator. As is the company's stock in trade when things get difficult, it fell back on its employment contribution to Ireland, in effect using these big numbers as a way to prevent its own demise at the hand of the regulator.
Reading the company's letter, an outsider might form the view that Quinn Insurance can meet all its obligations from a "cash perspective'' so why is the regulator being so vindictive against a company which has sought to shake up the insurance industry and provide employment to thousands?
In fact the regulator, if anything, has not been vindictive enough and has indulged Quinn Insurance for far too long. Reading over court papers filed this week by the Financial Regulator, there is plenty of evidence to suggest the regulator has been far too accommodating of Quinn and has not done enough to protect policy holders.
The regulator said in October 2008 it had "reasonable cause'' to suspect that Quinn Insurance had engaged in "breaches of regulatory requirements''. Among the breaches was that Quinn did not even bother to notify the regulator when it provided loans to related companies. The company was hit with a fine of €3.2m and Sean Quinn himself had to pay a small, but symbolic, penalty of €200,000.
At this point the regulator did not even comprehend having Quinn stripped of its insurance authorisation and the fine, in the context of the giant turnover of Quinn Insurance, was miniscule. Quinn was publicly embarrassed by this episode, but in terms of public disclosure again the regulator was letting the company off rather lightly.
We now know that in May 2008 Quinn Insurance had agreed a major recovery plan for the entire company as it was buffeted by the downturn. Its financial condition at this stage was not known publicly or disclosed to policy holders.
In early December Quinn was considering a €50m injection to bring its solvency levels up to the standards required of all insurers in Ireland. Throughout 2009 its problems continued, again out of sight of its policy holders and the regulator gave the company the benefit of the doubt.
Even on Christmas Eve last year the company sent an email to the regulator saying it was in danger of breaching its loan covenants with its lenders, and even then the regulator did not take any public action.
For the last three months the regulator and Quinn have been engaging over a recovery plan for the company, which the regulator admitted on several occasions was totally inadequate. Still the regulator opted not to make any public intervention.
According to the regulator it was only on March 24 it finally learnt about guarantees given by Quinn Insurance subsidiaries for loans provided to "the Quinn Group generally''. It is from this disclosure that the regulator's current actions flow.
This sequence of events hardly suggests a regulator bent on destroying Quinn Insurance for the sake of it. It hardly suggests a regulator that is being too inflexible in dealing with Quinn Insurance's obvious commercial difficulties. In fact if anything it suggests a regulator that has taken far too long to bring Quinn Insurance to its senses.