Noonan begins legal proceedings against Allianz over bonds
FINANCE Minister Michael Noonan has begun legal proceedings against insurance giant Allianz to settle a claim against an Allianz-issued bond.
Court documents show Mr Noonan began a High Court action against Allianz on May 2. No further documents have been filed, and both the Department of Finance and Allianz declined to comment.
It is understood that the case relates to Allianz's activities in the 'bonding' market. Sources last night insisted the case was an "entirely routine" way of settling the case.
Under the contracts, Allianz charges a fee to 'bond' the business of a client, that bond can then be called upon by the clients' creditors if the client can't pay its way.
The Revenue Commissioners sometimes allow 'bonded' firms more flexibility in making their tax returns because if the taxes aren't paid, the bond can be enforced. Bonds can also be used by developers who rack up debts to local authorities in the course of construction projects.
The details of contracts vary from case to case, but sources said it would not be unusual for the courts to be called upon when a bond was being enforced.
Mr Noonan recently became a 30pc shareholder in Allianz Ireland through its buy out of Irish Life, which has traditionally held the Allianz stake. Allianz is understood to have the right of 'first refusal' should Irish Life decide to sell out its stake in the general insurance business.