Anglo Irish Bank’s plan to join up with a foreign insurer to take over embattled Quinn Insurance suffered a blow yesterday when the Republic’s financial watchdog said the lender faces tough regulatory obstacles before any deal can get the go-ahead.
Appearing before the Dail Public Accounts Committee (PAC) in Dublin yesterday, Matthew Elderfield said the insurer’s administrators provided a detailed proposal on Wednesday on re-opening some commercial lines of business in its loss-making UK arm.
Mr Elderfield also told the PAC that the pricing level of Quinn Insurance for its UK business was too low to meet potential claims.
It was only following adjustments made by the administrators to pricing levels that he was able to authorise the reopening of its motor insurance business in the UK market.
Administrators to Quinn Insurance have received 40 expressions of interest for the business but Mr Elderfield said any buyer would need to meet tough criteria, including injecting €700m of capital into the firm and sorting out governance issues.
He stressed that Anglo faces more hurdles than others, but admitted that if the lender can tick all the boxes “it’s possible an Anglo transaction can be successful”.
Anglo is worried the sale of the insurance company to an outside party will hit the Quinn family’s ability to repay €2.8bn owed to the lender. Quinn Insurance has been a major cash cow for the Quinn Group — traditionally accounting for half of its profits — but has significant solvency problems.
The regulator defended his move in late March to apply to have administrators appointed to Quinn and to ban it writing new business in the UK, given that it was in breach of solvency rules.
“Even if you take into account the most generous regime in the world, you’d still have a non-|compliant company,” he said.
“Allowing it to keep writing business would have made the situation worse,” he said.
Mr Elderfield said that the administrators have filed a detailed proposal to re-open Quinn’s UK commercial insurance business.
However, he said the decision was unlikely to lead to a reversal of the 900 job cuts announced two weeks ago.