Quinn prices upped 300pc to halt losses
The administrators to Quinn Insurance were forced to put up prices by 300pc on some UK insurance products to halt catastrophic losses when they took over the business last year, it was revealed yesterday.
Average price increases of 40pc were needed to bring the British business under control, the administrators, Grant Thornton, revealed as the true scale of the company's troubles were laid bare for the first time.
The company lost €706m overall in 2009, the largest loss ever reported by a domestically owned insurer. This was followed by a loss of €160m last year and the business will only break even this year in a "challenging market'', the administrators said at a press conference in Cavan.
Last night the Quinn family once again blamed the scale of the problems on the administrators. A statement from the family said an inquiry was needed to see how the business deteriorated so badly after March 2010 when the administrators moved in. Sean Quinn was not available for comment, nor was his son Sean Quinn Jr who was once a director of Quinn Insurance.
Sean Quinn and family are understood to be putting together a legal case over how they lost control of the firm. They demanded last night that documents concerning the administration of Quinn Insurance be published by a state-backed inquiry.
However, the administrators, two accountants from Grant Thornton, said they were not in place in 2009 when the majority of the losses were incurred.
The two men, Michael McAteer and Paul McCann, made it clear the reserving policy of Quinn Insurance in 2009 (and before) was not strong enough.
Reserving refers to the amount of money an insurer puts aside each year to meet future claims.
"The reserving needed to be stronger,'' said Mr McAteer, an experienced insolvency expert.
The accounts for Quinn Insurance 2009 reveal that of the €706m loss, some €559m of it was connected with ordinary losses arising due to claims and costs. Mr McAteer for the first time gave a breakdown of these losses: €128m on Ireland motor; €89m on Ireland non-motor; €195m on UK non-motor; €143m on UK motor; with the remainder related to the closure of a small European office.
One of the biggest factors is these figures arose in relation to UK non-motor, where a tide of claims came from policies written by Quinn Insurance indemnifying solicitors in England and Wales.
Insurance sources said last night these policies rarely produce losses, but when they do, often during a recession, the losses can be quite steep.
It was also confirmed yesterday that Anglo Irish Bank and Liberty Mutual will not take over any of the remaining UK Quinn claims and other liabilities which amount to €800m. Offsetting against this amount are assets of about €200m, leaving a €600m gap, which will be filled by funds from the Insurance Compensation Fund, drawn from a levy on other insurers.
The only asset to offset against the liabilities is a windfarm worth about €150m, said Mr McAteer last night.
The Ireland assets and liabilities will be taken on by Liberty Mutual and Anglo, with Liberty pumping €102m into the new business. Anglo for its part has managed to get bondholders and bank lenders in the Quinn Group to remove guarantees given by Quinn Insurance subsidiaries, helping to shore up the assets of the Irish business.
Mr McAteer revealed that some of the legacy claims in the UK book could take up to 15 years to disappear. He said while Liberty would not be taking these liabilities, it would manage them for the administrators for a fee.
Grant Thornton denied Liberty was getting a "sweetheart'' deal in buying just the Irish assets and liabilities.