Quinn Insurance takeover to be completed in August

The buyers have been given the green light by Finance Minister Michael Noonan to tap a special reserve to write off €600m of Quinn's loss-making policies.

Premiums on home and car policies in particular are expected to bear the brunt of levies to plug a shortfall in the State-owned Insurance Compensation Fund (ICF).

Despite the financial pain for consumers, the takeover guarantees jobs for 1,570 Quinn Insurance workers in Dublin, Cavan and Enniskillen.

A spokesman for Mr Noonan said: "This sale process has secured virtually all of the jobs in the company and that is very good news for the staff."

The pressure on consumers may ease as Liberty-Anglo are committed to diverting 25% of profits to repay the fund.

Losses at Quinn Insurance, in administration since early last year, were blamed on unprofitable business in the UK worth €559m and sinking property investments which cost the business €147m.

Another €160m losses are expected for 2010.

The State-owned insurance compensation scheme is likely to be funded by levies on insurance policies, as was done twice in the past. The fund currently only holds €30m.

"The sales decision was a matter for the joint administrators - they judged the Liberty-Anglo deal as the best course of action after reviewing all of the offers," the minister's spokesman added.

Levies ranging from 2% of an annual insurance premium up to as high as 6% have been forecast - in the first year alone consumers face being billed for €180m.

Administrators Michael McAteer and Paul McCann said losses have stemmed since they took over the day-to-day running of the business 14 months ago.

"In accepting the proposal by Liberty Mutual Direct Insurance, as announced today, we have successfully mitigated against the worst case scenario - one in which a sale of Quinn Insurance Ltd (QIL) did not occur and where, as a consequence, the Insurance Compensation Fund was liable for the total liabilities of the company," they said.

"This scenario would have exposed the fund to a call significantly higher than is currently envisaged."

The Central Bank said tapping the fund had been expected.

"The need to access the ICF is not unexpected in light of the serious and persistent solvency problems at QIL which led to its administration," it said.

It added: "The Central Bank worked closely with the administrators to ensure that the funds required from the ICF were limited as much as possible."

Mr Quinn and his family were stripped of their entire business empire earlier this month.

It was the final act in a series of punishing initiatives by Anglo and the State to try to recoup about €3bn losses the entrepreneur built up buying a secret 25% share in the bank.

The Government was also under pressure to retain as many jobs in the group as possible as Quinn's heartland is the unemployment blackspot around the Irish border.

The Quinn jobs are estimated to be worth €100m to the local economy.

Mr Quinn has lost control of the insurance wing - in administration for 14 months since regulators identified a huge hole in its finances - his hotel, pub and property division, cement production and other manufacturing interests.

The tycoon had drawn up a plan to take the company back from administrators but the National Treasury Management Agency rejected it.

At the height of his wealth, Forbes listed Mr Quinn as the 164th richest in the world and valued his fortune at close to $6bn (€4.05bn).

The ICF covers customers of all insurance companies to make sure they get paid. It was used in the 1980s when Allied Irish Banks' insurance arm ICI hit the rocks and also when the PMPA company collapsed.

The Central Bank later confirmed that insurance firms have not been asked to pay into the compensation reserve on an ongoing basis since it was last used as it is not a "standing fund".