# Is the Regulator right in its dealings with Quinn Insurance?



## papervalue (4 Apr 2010)

on the rte website their is a 30 min interview with sean quinn. it is well worth a look. He came across quite well in it. Keep an eye on body lanuage at certain parts.

Personally I would support Sean quinn. Only connection I have to him is my car insurance.

The part I found strange was away from the financial detail is he contacted a number of gov ministers by phone and not one has returned his call- Out of good manners, he being a large employer, no excuse for not returning the mans call. They should be bending over backwards to protect jobs now.


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## markpb (4 Apr 2010)

papervalue said:


> The part I found strange was away from the financial detail is he contacted a number of gov ministers by phone and not one has returned his call- Out of good manners, he being a large employer, no excuse for not returning the mans call. They should be bending over backwards to protect jobs now.



I thought that was odd too. I understand they don't want to appear to be interfering with an independent regulator but there are other issues at stake here. On the opposite side, all the MLAs for Fermanagh showed up at the Group building within two days to show their support.


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## Brendan Burgess (4 Apr 2010)

What I find extraordinary about Quinn's arguments and those of his Chief Executive is that he is saying that the Administration of the insurance company might bring down the entire group. Also, the FR was worried that the insurance company was dependent on the health of the entire group.

Insurance companies should have adequate reserves to stand independently. 

Brendan


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## markpb (4 Apr 2010)

Brendan said:


> Insurance companies should have adequate reserves to stand independently.



You've hit the nail on the head but missed the wider picture. Of course QI should always have remained separate to the rest of the Quinn Group and the regulator should have insisted on it all the time. No-one is arguing with that (expect perhaps members of the Quinn company).

However, that's not the case and now the continued operation of the Quinn Group is threatened if Quinn Insurance is seized. Is it good for the country and economy if 5,500 people are put on the dole, several thousand more lose their jobs because of it and a large number of pubs, hotels and construction businesses are firesold? Does anyone seriously think that's a good outcome? It's not long since there was uproar over Dells decision to make 1,900 people redundant. Ministers flew to Texas,  and the government went into overdrive in an effort to save the jobs. Now we're about to throw away more than twice that.

Surely a better situation is to force QG or their bankers to restore the solvency ratios and sit on the management of QI and QG for the next few years to ensure the situation doesn't reoccur. This means all the people hired by QG remain employed and there should be no cost to the exchequer.


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## Brendan Burgess (4 Apr 2010)

Hi Mark

A Provisional Administrator has been appointed - there is no winding up order for the Quinn Group.

A "too big to fail" situation has been allowed to develop. It appears that QIL could be brought down by the other operations of the Quinn Group. Anglo could be severely damaged as well. 

The right strategy is for the Regulator and government to take control wherever possible to protect the interests of the insured, the claimants and the taxpayer who is funding the group through Anglo. 

I would not be happy for it to continue under the direction of Sean Quinn who has made some very bad decisions. He has apparently lost €3billion on Anglo. His company was fined €3m by the Regulator two years ago. I wouldn't have confidence in his ability to sort out the mess, no matter how much I admire his general business and entrepreneurial skills.


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## Brendan Burgess (5 Apr 2010)

Ed - that really is a great piece of writing by John McManus. 

Here are some extracts, but it's worth reading the entire piece.



> *Quinn should have no role in insurance group rescue
> *
> 
> 
> ...


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## Brendan Burgess (5 Apr 2010)

Brian Carey had a great short piece in the Sunday Times 


> Irony is so often lost on the strongminded and self-absorbed. Sean Quinn who lost €2.5billion on Anglo shares, last week said the new Financial Regulator had made "one of the biggest errors ever in the history of corporate Ireland". Sorry Sean, I think that was you.


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## Ed054 (5 Apr 2010)

Brendan said:


> Ed - that really is a great piece of writing by John McManus.
> 
> Here are some extracts, but it's worth reading the entire piece.


 
He really gets to the nub of the matter.

I wonder how people would react if the regulator did nothing and subsequently Quinn went to the wall.

The regulator is there to protect us all and whilst the previous one manifestly failed to do that I at least have some confidence that the new one will do so.

I think for a lot of people it would be worth researching what happened to both ICI and PMPA.

Particulary in the case of PMPA the similarities between it and Quinn are stark.


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## crby (6 Apr 2010)

Im an employee with Quinn Insurance and at the moment one of the major concerns is that the Regulator has put a stop on us writing new business in the UK (department in which i work) and we are hoping that this is revoked as soon as possible as its only going to make the situation worse!


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## jpd (6 Apr 2010)

How is that going to make it worse / The UK business is/was making a loss ?


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## crby (6 Apr 2010)

Dont know where they got that info..it has been making a profit in recent times.


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## DerKaiser (6 Apr 2010)

papervalue said:


> Only connection I have to him is my car insurance.



Yeah, and the regulator is looking after your interests as a customer i.e. if quinn can't pay all of its claims it shouldn't be let write business.

After all we've been through with the banks, anyone who thinks we should ride roughshod over the regulations is simply still not getting it.


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## jpd (7 Apr 2010)

UK business is making a loss as reported by the Fin Regulator in his submission to the High Court - difficult to imagine he made this claim without backup


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## D8Lady (7 Apr 2010)

The Regulator had to go to the High Court and make his case. 

The High Court was sufficiently convinced of the case that was made and granted the order. So there is obviously something up.

What's interesting about him, Fingleton and  Sean Fitzpatrick is that they all started out small and grew their businesses but all could not distinguish  between themselves and the business. 

The problem with the Quinn Group that it appears to be a bit of a mess of businesses - cement, hotels, insurance. And for insurance there are solvency rules. 

Regulator did the right thing. We're just not used to seeing it being done!


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## Brendan Burgess (7 Apr 2010)

jpd said:


> UK business is making a loss as reported by the Fin Regulator in his submission to the High Court - difficult to imagine he made this claim without backup



Estimating profits in an insurance company is very difficult. As the premiums are paid up front and the amount of the losses are not known for years. 

At the end of the financial year, the company has to provide for future claims and this is a guessing exercize. 

So it would be quite easy for one accountant to estimate that a company is profitable while another would estimate that it was loss making. 

Brendan


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## OkeyDokey (7 Apr 2010)

crby said:


> Im an employee with Quinn Insurance and at the moment one of the major concerns is that the Regulator has put a stop on us writing new business in the UK (department in which i work) and we are hoping that this is revoked as soon as possible as its only going to make the situation worse!



I hope there is a positive outcome for you crby.


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## canicemcavoy (7 Apr 2010)

markpb said:


> I thought that was odd too. I understand they don't want to appear to be interfering with an independent regulator but there are other issues at stake here. On the opposite side, all the MLAs for Fermanagh showed up at the Group building within two days to show their support.


 
I'm baffled at this argument. Are you saying that politicians should be able to interfere in the process of the Financial Regulator? Are you saying that the problem with Ireland has been too much financial regulation?

Quinn employees might be better off marching to Sean Quinn's house to ask him why he broke insurance regulations and wasted money bankrolling Anglo.


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## Mpsox (7 Apr 2010)

An important point to remember about the Financial Regulator is that he is just that, the Financial Regulator, he is not the concrete maker regualtor or the hotel business regualtor. If the Quinn Group have themselves so intertwined that the failure of one part of it could bring down the whole group, that is not and should never be his concern.

Likewise, the employees are only one part that he has to concern himself with, he also has to concern himself with the integrity of the insurance market overall and the integrity of the Irish Financial system. We've spent the last 2 years giving out about the lack of regulation in Ireland and the mess with Anglo/INBS/AIB/NAMA etc and how much it is going to cost to put right. Perhaps if the new Reg had been there 5 years ago, much of what has happened may never have occured. He deserves praise for what he has done, not protests. Whilst I have sympathy for the staff concerned, their protests should be directed far closer to home.

Let's not forget that if Quinn Insurance goes bust, not only will people lose their jobs but anyone who pays insurance could find a levy on their insurance policies to pay off Quinn Insurance liaibilities. Yet again, the "golden circle" and the mess they have created may require the taxpayer to bail them out


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## Round Tuit (7 Apr 2010)

+1
Canicemcavoy & pmsox - couldn't have put it better myself.


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## Brendan Burgess (7 Apr 2010)

canicemcavoy said:


> Quinn employees might be better off marching to Sean Quinn's house to ask him why he broke insurance regulations and wasted money bankrolling Anglo.



That's a great suggestion Canice. I hope someone picks up on it. And as Mpsox points out, the rest of us might be interested in joining that march if we have unpaid claims against Quinn or have to pay an insurance levy.

Brendan


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## csirl (8 Apr 2010)

Do the people who are out protesting about this not realise that the reason the Administrator has been put in place is because the company does not have enough unburdened reserves to cover potential claims? In laymans terms, this company more than likely would have gone bust at some stage with the loss of all jobs if it had continued down the path that the Administrator is putting a halt to. The Administrator is protecting the jobs of the employees and the interests of those who have insurance policies. In my opinion, the best option would be for the Administrator to force the company to be sold - if it is profitable in its own right (which the media has suggested), then it would be better off being independent of the rest of the Quinn empire. And with Quinns links to Anglo and his heavy dependency on the construction business, I would have little confidence his ability to raise the funds to restore the insurance companies reserves. I think there is a real risk that a failure elsewhere in the empire could bring down an otherwise profitable business.

Another point - where have all these idiots who are out protesting been for the past couple of years? Dont they realise that the political cronyism that they are advocating is the reason the whole country is in a mess? They want a situation whereby local parish pump politicians allow companies to break financial rules?


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## Sunny (8 Apr 2010)

All makes sense in a normal world but the issue is the €2.8 billion that Quinn owes Anglo a.k.a. the taxpayer. The regulator doesn't care about that but it is not in the taxpayers interest to see Quinn insurance sold off now. 

Having said all that, the regulator will have my full support in whatever he decides. Amazing the difference an outsider can bring to the game.


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## Brendan Burgess (8 Apr 2010)

Hi Sunny

I would say that the FR is very concerned about the implications of problems in Quinn Insurance Ltd for Anglo. You can be quite sure that we now have joined up thinking in the FR. They will be acutely conscious that selling off Quinn in a firesale could cost Anglo aka the taxpayer €3bn. I would think that he will look at the big picture. 

But he won't be deterred by ill-informed protests and poitical pressure, such as it is. 

Brendan


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## Shawady (8 Apr 2010)

Slightly off topic, but didn't Sean Quinn share out many millions of euro to his children last year. 
Probably all legal, but he obviously suspected something like this was coming down the tracks and was making sure they were looked after.


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## Sunny (8 Apr 2010)

Brendan said:


> Hi Sunny
> 
> I would say that the FR is very concerned about the implications of problems in Quinn Insurance Ltd for Anglo. You can be quite sure that we now have joined up thinking in the FR. They will be acutely conscious that selling off Quinn in a firesale could cost Anglo aka the taxpayer €3bn. I would think that he will look at the big picture.
> 
> ...


 
I would hope so Brendan but if the Irish Times is to believed he isn't too impressed by Anglo's attempts to come up with a solution for whatever reason. I reckon the taxpayer will end up owning a bank and an insurance company soon enough though!


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## OkeyDokey (8 Apr 2010)

csirl said:


> Another point - where have all these idiots who are out protesting been for the past couple of years?



Nice..

I think the "idiots" you are referring to are those desperately trying to save their jobs in an area that has no alternative employment.


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## NoBother (8 Apr 2010)

I think the Quinn situation hasn't been put into perspective in much of the coverage recently. I understand the the FR's actions are a major concern for anyone employed by Quinn or who have any of his businesses as a customer. I also admire his entrepreneurship over the year. However, insurance is a regulated industry and if you chose to go into such a business you have to abide by the rules. 

Last year Quinn insurance was fined for giving loans to non-insurance businesses within the Quinn group in order to buy Anglo shares. However, despite this breach it then went on to guarantee loans for other Quinn group companies (presumably creating off balance sheet liabilities that would reduce regulatory capital level). The guarantees are one thing, but the failure to openly disclose them to the regulator and factor them into its solvency calculations was mismanagement, a lack of controls or plain evasive. 

Insurance businesses are regulated to protect policyholders and at this time Irish insurers have had the worst weather related claims in memory (winter 09/10 weather related losses are said to be as large as weather related losses for the previous decade) which would already be putting stresses on solvency (I'm not suggesting there are problems at any other insurers, but these losses are why we are seeing prices rising as insurers need to enhance reserves). Obviously we are all aware of the financial climate currently, and if it were not an insurance company owned by an Irish entrepreneur I don't think anyone would have any issue with the regulator doing what he needs to do - show that consistently putting policyholders at risk for the sake of other group companies is not acceptable. Bad timing on Quinns part given the current climate!

With Quinn being one of the (if not the) largest insurers in Ireland and at a time when prices are rising, there will be plenty of interest in the company (although some companies would be limited by their large share in the Irish market already), so it is not a case that jobs will definitely be lost.


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## Ed054 (9 Apr 2010)

Have a look at the editorial in today's Irish Times.

John McManus really got it right on Monday and this nailed it today.

Here is one extract.

Mr Elderfield has been painted as the bad guy in all of this, jeopardising more than 5,000 jobs through unnecessary and precipitate action and by making one of the worst blunders in Irish corporate history. The reality is very different. The regulator has acted to protect consumer interests. Seán Quinn has been the architect of his own difficulties. It was his irresponsible behaviour and a series of disastrous investments that brought the Quinn Group to the brink of ruin. His actions echoed those of some other high-flyers who have since left the jurisdiction. But Mr Quinn fights on, invoking Cabinet, party political and local support in an attempt to retain control of the companies he built up.
It is the statutory duty of a financial regulator to monitor the soundness of individual institutions and to protect consumer interests. In doing that, he relies on co-operation from the companies concerned. But Quinn Insurance failed to notify the regulator about certain loan guarantees that had effectively wiped out its solvency cushion. It reflected a cavalier approach to corporate affairs that should be confined to the past. The discovery effectively led to a High Court application and the appointment of administrators.


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## Attica (11 Apr 2010)

If Quinn is correct in saying that 100m-150m would resolve his solvency issues, is the simple solution not staring us all in the face? Ask his children to give back the 100m. he is reputed to have given them a couple of months ago. When someone owes billions, they cannot afford to give away millions to anyone. That goes for Anglo also. And why are his children not rushing to offer the money back to their father in his hour of need?
Makes one wonder...


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## markpb (11 Apr 2010)

Attica said:


> Ask his children to give back the 100m. he is reputed to have given them a couple of months ago.



IIRC he's ignoring the inter-company loans when saying the company is only short €100m. In any event, I doubt the money he gave them was cash, it was more likely to be shares in the Quinn Group or shares in other companies he had invested in. In either case, they're probably worth an awful lot less now.


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## Shawady (15 Apr 2010)

Looks like Quinn is going along with the regulator and accepting full administration.

http://www.rte.ie/news/2010/0415/quinn.html


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