Why the company is in this dire financial situation
Published 10/04/2010 | 05:00
QUINN Insurance is in serious financial difficulty, and internal controls at the company have been described as weak.
The Financial Regulator has "grave concerns" in respect of the financial position of Quinn Insurance and the way it has been and continues to be managed.
A major chunk of its problems stems from the fact that Quinn Insurance has given guarantees over loans provided to the wider Quinn Group.
This move reduced the assets of Quinn Insurance by €448m, rendering the entire balance sheet of Quinn Insurance insolvent.
As a result, Quinn Insurance is unable to comply with the solvency margins as set down by the regulator.
These requirements also apply to other companies in the sector.
Quinn Insurance has also been unable to meet the terms of a recovery plan agreed with the regulator in May 2008.
This plan was trying to deal with previous problems in the solvency area caused by Quinn Insurance giving loans to other Quinn companies to cover losses on shares, including Anglo Irish Bank.
In December 2009, Quinn Insurance admitted it could not meet the 150pc solvency margin (excess of assets over liabilities) that must be met by other companies in the industry.
Quinn Insurance has invested €661m of funds in various subsidiaries, via shares and loans, according to its last accounts.
Founder Sean Quinn has admitted that he and his family lost €3bn in share trading over recent years, mainly on Anglo Irish shares.
Quinn Insurance has shown scant regard for the insurance regulations.
In 2008, Quinn Insurance and Mr Quinn himself were fined after the Financial Regulator found insurance regulations were breached.
Quinn Insurance paid €3.2m in a fine, with Mr Quinn paying a much smaller amount. Mr Quinn took full responsibility for the fines.