Regulator to push on even if Quinn Group fills €448m black hole
Published 01/04/2010 | 05:00
THE Financial Regulator is very likely to plough ahead with its actions against Quinn Insurance even if the insurer finds a way to plug its €448m black hole, the Irish Independent has learned.
The news comes as the Quinn Group and its lenders are locked in intensive talks aimed at releasing Quinn Insurance from hundreds of millions of euro of guarantees in favour of the wider group.
It was the existence of those guarantees that prompted the regulator to ask the High Court to place Quinn Insurance into administration earlier in the weeks, but it is understood that action is very unlikely to be dropped even if the guarantees are removed.
A separate investigation into the circumstances surrounding the guarantees will also continue, regardless of the outcome of the debt talks.
The regulator's position is understood to be informed by the fact that his concerns about Quinn are not limited to the guarantees.
Court documents show the regulator has been concerned about the wider Quinn Group since December, when Quinn Insurance said the group was seeking a waiver from commitments to pay back certain debts by the end of last year.
The affidavits also show that a business plan presented by Quinn Insurance in early March was dismissed by the regulator as "exceptionally disappointing" and unrealistically optimistic.
The regulator's intention to proceed is also understood to be based on his view that the guarantees were "improperly created" and concealed, a situation that would not be altered by plugging the €448m hole.
The regulator's investigation into Quinn Insurance is understood to span the "non-disclosure" of those guarantees, the "incorrect calculation of solvency and reserves" and the "systems and controls" that allowed the guarantees to go unreported.
A spokeswoman for the regulator declined to comment on the potential impact of Quinn's debt talks, but a statement confirmed the regulator would push for Quinn Insurance's administration to become indefinite at a hearing on April 12.
At that hearing, the regulator is expected to detail the full circumstances of the guarantees, piecing together "who knew what when" from documents gathered over the past two days.
The Quinn Group yesterday issued a statement slamming the administration process as "pre-emptive, aggressive and unnecessary" and accusing the regulator of being "totally incorrect" in his understanding of the guarantees.
A spokesman for the group said it was "considering its options" in relation to opposing the full-administration application on April 12. The group's founder, Cavan tycoon Sean Quinn, has also written to every government minister appealing for intervention.
It is understood, however, that Finance Minister Brian Lenihan and other senior government figures were aware of the regulator's intention before he moved against Quinn. Taoiseach Brian Cowen has publicly supported the move.
Separately, UK banking giant Barclays has emerged as the leader of the lending syndicate that holds the controversial guarantees. The administration move was triggered after a group of bondholders including Barclays refused to drop guarantees of €448m made to them by the Quinn Group.
The Irish Independent has also learned that Barclays hired crisis management firm FTI Consulting to review its vulnerability to the Quinn businesses after it became concerned about its exposure to the Group.