Quinn lost €706m before administrators took over
Quinn Insurance lost €706m in 2009, the year before administrators were appointed to it, and will lose a further €160m in 2010, it was revealed today.
A decision has been made by the joint administrators, Michael McAteer and Paul McCann to sell the company to US insurance giant Liberty Mutual and Anglo Irish Bank, saving all 1,570 jobs.
The new company will be called Liberty Mutual Direct Insurance.
The 2009 losses were comprised of €559m in operating losses and €147m in writedowns of assets. The UK insurance business was responsible for €333m of the loss with the bulk of it relating to the non-motor insurance.
The administrators said today that they had stemmed the company’s losses since their appointment in March last year, but the company’s performance in 2009 and 2010 would require a call on the Insurance Compensation Fund totalling €600m.
The Central Bank said tapping the fund had been expected.
"The need to access the ICF is not unexpected in light of the serious and persistent solvency problems at QIL which led to its administration," it said.
"The Central Bank will carry out a review of the financial position of the fund in the coming weeks and will make a recommendation to the Minister for Finance (Michael Noonan) regarding the funding that the minister may provide to the fund based on the outcome of this review."
It added: "The Central Bank worked closely with the administrators to ensure that the funds required from the ICF were limited as much as possible.
"The Central Bank's main concern is to ensure that policyholders' claims are paid as they fall due."
The penalties on consumers to cover the use of the fund could range from 2pc up as high as 6pc on an insurance premium for one year. The levies could also be in place for a decade, reducing year on year.
The first amount taken from the fund will be €180m.
The administrators also said that buyers Liberty Mutual and Anglo will divert 25pc of profits to cover some of the cost of tapping the state compensation fund.
Earlier this week Sean Quinn accused the administrators of doing enormous damage to the company after it emerged that the burden of Quinn Insurance’s €620m shortfall will be borne by insurance customers with a levy of up to 2pc.
“It is a truly appalling admission by the administrators of enormous damage they have caused to one of Ireland’s most successful companies in just 13 months,” he said in a statement.
“This is totally unnecessary and counterproductive. We have maintained throughout the past 13 months that the appointment of administrators to Quinn Insurance did not have a legal basis and was a major commercial mistake considering that the company had €1.1bn of cash and property assets valued at €400m at the time of appointment.
“We voiced our concerns repeatedly that it would eventually have huge negative knock-on implications for jobs, competition and the State. This now unfortunately appears to be coming to pass.”