QIL breaches were reported, inquiry told
Auditors PwC did not flag that Quinn Insurance Limited (QIL) subsidiaries' assets had been pledged as security for Quinn Group loans despite it being in the accounts, a hearing into the insurer's collapse has heard.
However, Kevin Egan, a Partner at PwC Ireland, said breaches by QIL were reported at the time.
Yesterday, the inquiry heard that QIL assets that were supposed to be ringfenced to back up insurance policies had been pledged as collateral against loans.
PwC was auditor for Quinn Insurance between 2003 and 2009, covering the period in which the loans were made and signed off.
The public inquiry is looking into the 2010 collapse of QIL and the roles of former Quinn Group executives Liam McCaffrey and Kevin Lunney.
PwC's Mr Egan was questioned yesterday by Senior Counsel Eoin McCullough, a legal adviser to the inquiry and then by Mr McCaffrey and Mr Lunney.
Mr Egan said that on two occasions as auditor he'd flagged breaches by QIL.
"The first of them was in February 2008 and it related to the provision to a company called Barlow Financial Services in the Quinn Group and a further loan to Quinn Property Holdings to acquire property and the effect of those loans was to mean QIL (Quinn Insurance) did not have sufficient permissible assets to cover its technical reserves and that is a major requirement clearly in regulatory terms and that is why I made that report," Mr Egan said.
"I made a second report then in May 2008," he told the inquiry.
The inquiry is headed by Mr Justice Iarfhlaith O'Neill, a retired High Court judge, with barrister Ita Mangan and former Zurich Insurance lawyer John Cashin. It is scheduled to run for two weeks.