Quinn Group jobs safe as US insurance giant takes control
A multi-million pound buy-out of struggling Quinn Insurance has been confirmed.
Liberty Mutual Direct Insurance Company Ltd, a joint venture between US giant Liberty Mutual and new entity JVNewco, will take over of assets and liabilities with a €200m (£177m) investment.
The Quinn Insurance brand name will now disappear from the high street after 15 years trading.
The news came on the same day as it was announced that Quinn recorded a total loss of $706m (£628m) for 2009.
The administrators who put the complex deal together, Michael McAteer and Paul McCann of Grant Thornton, said yesterday that after two years of losses (2009 and 2010) the Quinn Insurance business should break even this year.
“Claims have been kind so far this year,'' said Mr McAteer.
The company has lost about 20% of its customers over the period of the administration, but McCann said Liberty had liked the “look'' of the Irish insurance book.
It was announced earlier this week that the company’s losses will mean the triggering of the Insurance Compensation Fund, meaning all insurance customers in the Republic of Ireland will have to pay a small percentage to cover a €600m (£533m) shortfall.
The new firm says it will plough 25% of future earnings into shoring up the losses.
Joint administrator Michael McAteer of KPMG said that the Liberty takeover — which it has been promised will preserve all jobs in Northern Ireland and the Republic — is the best decision for the company.
The new venture will be 51% owned by Liberty Mutual and 49% owned by JVNewco.
Quinn and Anglo Irish Bank will each have a 50% economic interest in JVNewco.
All 1,570 staff on both sides of the border — worth an estimated €100m (£88m) to the local economy annually — will transfer to Liberty and it will be business as usual for over 275,000 customers who have remained with Quinn.
Headquartered in Cavan, offices will also include Enniskillen and Blanchardstown. A new brand name will follow in due course.
Quinn Insurance Limited will remain under administration, will retain existing and future UK business, and will write profitable UK motor policies until December 31 2012.
Quinn will provide funding of €98m (£87m), while Anglo will lift guarantees over subsidiary firm Quinn Property Holdings’ (QPH) assets held by banks and bondholders.
The plunging value of QPH assets have been blamed for an operating loss of €559m (£496) and an investment loss of €147m (£130m). QPH has assets valued at €464m (£412m).
As part of the deal, banks and bondholders holding guarantees over QPH assets will release these in return for €200m (£177m).
The remaining QPH assets, valued at €264m (£234), will be transferred to Quinn Insurance to reduce a call on the Insurance Compensation Fund.
Protests set to continue
Protesters at the headquarters of the Quinn Group in Co Fermanagh say they will continue to take action “until good sense prevails”.
The Cavan, Fermanagh and Leitrim Community Action Group and up to 600 supporters descended on the Derrylin complex for a second time yesterday to demand the reinstatement of tycoon Sean Quinn after his family company was taken over by Anglo Irish Bank and administrators KPMG.
The businessman brought thousands of jobs to the rural border area and people in the area are worried that the takeover will lead to the firm being broken up and that more staff will be shed.
On Tuesday up to 1,000 people occupied the building and only agreed to leave when Mr Quinn himself sent thanks, but asked them to vacate the building and let staff get on with their work.
Yesterday’s gathering began at 7.30am and ended before midday.
Padraig Donohoe from the CFL Community Action Group said: “The protests will continue until good sense prevails.”
Administrators had to treble prices
By Emmet Oliver
The Quinn Insurance administrators were forced to put up prices by 300% on some UK insurance products to halt catastrophic losses when they took over the business last year, it has been revealed.
Average price increases of 40% were needed to bring the British arm of the business under control, the administrators, Grant Thornton revealed, as the true scale of the company’s troubles were laid bare for the first time.
The company lost €706m (£620m) overall in 2009, the largest loss ever reported by a domestically owned insurer.
This was followed by a loss of €160m (£140m) last year and the business will only break even this year in a “challenging market’’ said Grant Thornton representatives, speaking at a Press conference in Cavan yesterday.
Last night the Quinn family blamed the scale of the problems on the administrators. A statement said an inquiry was needed to see how the business deteriorated so badly after administrators took over in March 2010.
The Quinn family are understood to be putting together a legal case, in consultation with their legal advisers, Eversheds, over how they lost control of the firm. They demanded last night that documents concerning the administration of Quinn Insurance be published by a state-backed inquiry.