Published: Wednesday, 31st March, 2010 5:00pm

Quinn Group must be supported

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The news yesterday (Tuesday) that two provisional administrators have been appointed to Quinn Insurance is certainly worrying for the 400 plus workers based at the Dublin Road headquarters. The move means that, for the moment, the company is effectively in the control of the state. For policy holders, it's business as usual and anybody with a policy from Quinn should rest assured that any valid claims will be paid out (as the state is effectively in charge now).

The country's financial watchdog said it had "very serious" concerns about the company's ability to meet its liabilities and this has led to the High Court appointing joint provisional administrators at Quinn Direct and Quinn Healthcare in the interest of policy holders.

While the specific issues of concern are not known publicly at this stage, it's thought that the concerns relate to solvency at Quinn Insurance, which employs more than 1,000 people in Ireland. Regulation stipulates that insurance companies have to keep a percentage of the total cover of their combined policies (on average of 40%) in their holding accounts to be able to meet any claims that arise.

What's important to remember at this stage is that the High Court has not appointed a liquidator. There is hope. The administrators may yet work to address the issues of concern, and improve solvency if that is at the core of the problem, before handing the company back to Quinn.

In order to do so, it may be necessary to make serious cuts, and slim down the business but still it could be handed back to the owners.

The worst case scenario is that the administrators decide that the company is insolvent and not capable of continuing to operate under the present ownership. This would result in a liquidator being appointed and the company being sold, perhaps in a number of different pieces. That could be a disaster for the Cavan workers.

That said, the financial regulator and the High Court have seen fit to appoint an administrator at this stage, and not send in the liquidators. That means there is hope.

At this early stage commentators, including The Anglo-Celt finance columnist, Jill Kerby believe that the latest development at Quinn Insurance should not directly affect other aspects of the business - Quinn Glass, Quinn Cement, Quinn Packaging and the hotel sector.

But the appointment of an administrator at Quinn Insurance raises concerns about how business is being conducted within the wider Quinn Group. Sean Quinn and his company are among Cavan's most valued assets, particularly where employment is concerned, and never more so than in the current economic climate.

If difficulties are being experienced at Quinn Insurance and the wider group, state help should be extended to the group to support the existing jobs. Although, the Quinn Group is a private entity, it too should be prepared to accept such help in the interest of its employees and stakeholders.

Many believe that it is exceptional in the current climate for companies that have been put into administration to regain control. But Sean Quinn is an exceptional entrepreneur and if anyone can come through this, particularly after absorbing losses of the order of €1 billion as a result of Anglo Irish Bank, Sean Quinn can.