US giant to take over insurer
Levy may be charged if firm's assets fail to meet cost of outstanding claims
ANGLO Irish Bank will take responsibility for the vast majority of Quinn Insurance's outstanding claims -- but will leave some of the most toxic areas in the hands of the insurer's administrators.
The news comes after Quinn Insurance's administrators yesterday announced that the Anglo/Liberty deal was the "preferred" bid for the insurer and would proceed subject to regulatory approval.
All but 30 of Quinn Insurance Limited's 1,600 jobs will be saved under the deal, with workers transferring to a new company led by executives from US insurance giants Liberty.
The details of the deal are still being hammered out, but the Irish Independent understands the new company wants to take over the "entire" core business of Quinn Insurance Limited (QIL).
This means that as well as taking on the existing book of policy-holders, the new company will also honour all outstanding and future claims in key areas like car insurance, commercial insurance and home insurance.
However, it is understood Anglo and Liberty want to limit their exposure to discontinued areas like solicitors' professional indemnity insurance and European liability.
The plan is to leave these outstanding claims under the care of Quinn Insurance's Grant Thornton administrators, who will also be left with a rump of assets to pay off the claims.
If the assets are insufficient, then a levy will be charged on all general insurance policies in the State to create an insurance compensation fund.
The administrators are likely to be left with a significant amount of claims, since solicitors' professional indemnity has been one of the most heavily-loss-making areas of the business with large claims.
Insurance sources said it was "impossible" at this stage to say whether or not the fund would be triggered. "It depends on the level of assets the insurance company is left with and the level of future claims," said one. "We just don't know that yet."
No announcement was made on Quinn Insurance's future management.
However, the Irish Independent understands a chief executive, chief financial officer and appointed actuary are likely to be sourced from within Liberty.
Finance Minister Michael Noonan said Liberty would be the "managing partner" of the new company and would "drive the insurance industry forward and be actively involved in the Irish market".
Liberty is also understood to be providing a "significant" amount of the €400m in new capital to be pumped into Quinn Insurance.
Anglo's role is as a "financial sponsor", so the bank can use the profits against the €2.88bn it is owed by Quinn Insurance founder Sean Quinn. The ultimate plan is to sell the insurance company over a five- to seven-year period and use the cash to repay the debt.
In a statement, the administrators stressed the deal was subject to regulatory approval. The Central Bank yesterday said it had been "kept appraised" throughout the sale process.
Significant hurdles are not anticipated since the deal meets the regulator's objective of ensuring that Anglo has a passive role in the insurer.
Liberty Mutual is a long-established insurance giant. The Boston-based firm is run by Armagh-born Ted Kelly and manages more than $100bn in assets and turned a profit of $1.7bn last year.