Role for local management likely when Swiss giant takes over Quinn
Published 03/12/2011 | 05:00
A PROPOSED deal to sell Quinn Healthcare to Swiss Re -- one of the biggest insurers in the world -- is expected to involve local management taking a stake in the new business.
A deal is likely to be concluded within a fortnight, the Irish Independent understands.
The company is based in Little Island in Cork.
Quinn Healthcare, which is ultimately owned by the Quinn Group, writes about €255m of premiums every year and has attracted bids from several interested parties, including Irish Life & Permanent (IL&P).
The structure being considered will involve Quinn Healthcare getting about €120m of fresh reserves injected into the business.
It was suggested this week that the Minister for Health James Reilly would seek to merge Quinn Healthcare into the VHI, but no such proposal has been put to Quinn Group, which owns the health insurer.
A transaction with Swiss Re could be concluded within a forthnight with Australian bank Macquarie advising the parties. Swiss Re would act as the underwriters to Quinn Healthcare, with local management responsible for selling the policies in the local market.
Swiss Re has one of the largest balance sheets in global re-insurance, with €170bn of assets and more than 10,000 employees.
While 75pc of the Quinn Group is now owned by Irish Banking Resolution Corporation (IBRC), previously Anglo Irish, other lenders and bondholders retain the other part of the business.
Any government proposal would have to be put to the board of directors of this company and would most likely go first to Murdoch McKillop, which is responsible for restructuring the Quinn Group. It is understood no such proposal has gone to either party.
The VHI faces a major capital need because of EU rules and its older customer base is causing a major headache. While Quinn Healthcare has a younger customer base, mixing the two businesses would be a long and complicated transaction. Under state aid rules it would have to be proved that any merger would involve proper pricing that any other rational investor would engage in.
Yesterday it was announced that the main restructuring of the Quinn Group was now complete.
CEO Paul O'Brien said: "The conclusion of the restructuring represents the culmination of nearly two years' complex negotiation and uncertainty for the Quinn Group.
"By permanently removing over €800m of debt burden and placing the manufacturing businesses on a sound financial footing, we can focus all our efforts on implementing our plans for the business."