Thousands more Quinn workers left fearing for the future
Shocked workers told ailing firm is to be sold as 900 let go
Published 01/05/2010 | 05:00
FRESH doubts were last night cast over thousands of jobs at the wider Quinn Group -- even after 900 staff were let go at Quinn Insurance.
In a devastating announcement for several communities, 900 employees were asked to take voluntary redundancy at Quinn Insurance by administrators appointed in March.
This huge blow was then followed by further bad news for Quinn staff when Sean Quinn said it was time to sell the insurance company, placing a major question mark over the future of the Quinn Group itself, which owes banks and bondholders €1.2bn.
Quinn Insurance is to be sold debt-free, leaving the €1.2bn of debts behind for the remainder of the company to deal with.
In addition, the insurance company provides half the sales of the Quinn Group and a significant share of its operating profit.
Without the insurance company the value of the Quinn Group will fall sharply, leaving the firm vulnerable to significant cost cutting.
The wider Quinn Group employs about 5,221 people and a break-up of this company would bring even further devastation to Cavan and surrounding areas.
The Quinn cement business may also be vulnerable with its main rival, Irish Cement, announcing yesterday that it had begun talking to unions about potential job losses. The construction downturn has hit cement companies hard.
Yesterday's job losses -- which account for more than a third of Quinn Insurance's 2,500 staff -- were announced to devastated workers at a series of staff meetings from 3pm.
As the first meeting began, the Quinn Group announced that it was giving up the battle to keep the insurance company under the Quinn umbrella.
"The group board has been considering a number of options but has now reluctantly concluded that in view of the funding required to meet the solvency requirements laid down by the Financial Regulator, the future of Quinn Insurance is probably best protected under new ownership," said Quinn Group chief executive Liam McCaffrey.
Derek Smith, the newly elected chairman of Quinn Insurance's Employee Representation Committee, said staff were taken aback by the news and confused about its implications.
"There's great loyalty for Sean Quinn in here; people want him to stay involved," said Mr Smith. "Staff were just getting their heads around the job losses and then we got this news and people don't know what to think."
Administrators Michael McAteer and Paul McCann were also taken off balance by the Quinn Group announcement.
"We'll certainly work with them but we only got the news an hour ago," Mr McAteer told journalists.
Yesterday's jobs announcement means staff across Quinn Insurance's nine bases in the UK and Ireland now have two weeks to decide whether they will opt for a voluntary redundancy package.
The package on offer includes four weeks' pay over and above statutory redundancy and the administrators are hoping to phase the layoffs over a 12-month period.
Mr Smith said while staff were "very disappointed" the initial feedback was there would be a "good level of uptake" for the voluntary package, though the level of uptake in Cavan is likely to be smaller given limited employment prospects locally.
The administrators yesterday said the job cuts were necessary "to safeguard the company and the future of 1,500 jobs" and bring the company's cost base in line with its greatly reduced revenue. This reduction in revenue largely stems from a collapse in UK business, which had been making up about 40pc of Quinn Insurance's total income until the company went into administration at the end of March and was banned from writing new business in the UK.
That ban has now been partially eased with Quinn allowed to write personal motor business in the UK. The administrators stressed that they would be re-entering the motor market with premiums that were up to 50pc higher.
"(With the higher prices) the amount of business we do through those channels will be substantially less," Mr McAteer stressed.
Personal lines made up about 70pc of the UK business -- Mr McAteer said he was continuing to push for Quinn Insurance to be allowed to issue commercial policies in the UK. The administrators expect news on that "next week".
Mr McAteer and Mr McCann stressed that they had "no material plans" to change Quinn Insurance's Irish pricing since the Irish business was profitable whereas the UK business lost €52m last year.
The duo said that while there had been some fall off in new business at the Irish division in recent weeks, 90pc of personal customers up for renewal were taking new policies, while 70pc of commercial renewals were being successfully completed.
The administrators said it was too early to say how long a sale of Quinn Insurance would take.
The administrators had planned to issue a prospectus on the business in four to six weeks, but the Quinn Group's plan to sell Quinn Insurance gives rise to a separate process.
Some 40 parties have so far expressed an interest in buying some or all of Quinn Insurance.