Court to hear from Compensation Fund representatives on €600m funding for Quinn
The President of the High Court said today that he wishes to hear from the representatives of State's Insurance Compensation Fund before considering any application to allow Quinn Insurance group draw any of the €600m it claims it requires from that fund.
In addition, Mr Justice Nicholas Kearns stated said that he wanted an independent review of the fees sought by sought by the firm of merchant bankers Macquarie Capital Europe for their handling of the proposed sale of Quinn Insurance to a joint venture involving Anglo Irish Bank and US insurance giant Liberty Mutual.
The Judge after the joint administrators, Michael McAteer and Paul McCann of Grant Thornton, of Quinn Insurance group presented what was their seventh interim report since the Financial Regulator put the insurer into administration.
Bernard Dunleavy Bl for the joint administrators report confirmed that the total estimated call by Quinn on the Insurance Compensation Fund will be €600m.
That fund was set up by the Government, in the wake of the PMPA collapse, to protect all policyholders in the event that an insurer cannot meet their liabilities.
Subject to approval from the High Court, Quinn will make its first call of €180m sometime in late 2011. Counsel stated the administrators wanted to make it clear that they "never told the court at any stage during the administration period" that they would "not call on the insurance compensation fund".
Counsel said that the proposed sale of Quinn to the Anglo Liberty Mutual venture represented "the best deal" as it was the "only deal where all the jobs would be saved" and it represented the least amount that would have to be drawn down from the Insurance Compensation Fund".
Counsel added that the involvement of Macquarie in the sales process was important in making sure the exposure of the Insurance Compensation Fund was minimised.
The court heard that Quinn Insurance lost €709m in the year 2009, composed of an operating loss of €559 and an investment loss of €147m. The draft financial reports for 2010 indicate a loss of €160m.
Counsel said that the administrators were confident that losses at the company had been stemmed and the new policies which were commenced following their appointment were profitable. Counsel said the company had made a pre-tax profit of €14m in the first three months of the year.
Counsel said that as part of the sale process the High Court would be asked to approve the draw down of funds from the Insurance Compensation Fund and to approve the insurance portfolio transfer from Quinn to the Anglo/Liberty Mutual.
However Mr Justice Kearns said that before he wanted to hear from representatives of the Insurance compensation Fund before approving any draw down.
He said that it may be the case that the representative of the fund may not wish to come before the court, however the Judge said it was important the they be given the opportunity to do so.
The Judge said he was seeking an independent review of the fees charged by Macquarie Capital Europe.
He said that court wanted to reassure the public and the courts that all costs associated with the administration of Quinn Insurance were properly incurred and were kept to a minimum and there was "a need for transparency" in the way fees were calculated.
The Judge had previously directed the joint administrators to provide affidavits to the court in relation to the fees being charged in relation to the administration of the group.
He adjourned the case for a week, to allow the administrators come up with a format as to how the review of the fees charged can be conducted.
