Business group to meet regulator on Quinn Insurance

A group of companies that trade with the Quinn Group have called on the government to launch a bond to bridge the Quinn Insurance solvency shortfall. The call from Concerned Irish Businesses (CIB), which claims to represent almost 300 companies north and south of the Border, comes as the High Court has granted Quinn Insurance and its administrators permission to retain the services of merchant bankers Macquarie Capital Europe Ltd to advise them on the sale of the company. However, John Maguire, a spokesman for the CIB lobby, has concerns about the sale of the company. "We feel that a new initiative will have to be taken before the end of June, because Quinn Insurance could be sold off at a ridiculously low price to a competitor who will transfer the business out of its present headquarters and run it down. That is the risk we see at this time." CIB has secured a meeting with financial regulator Matthew Elderfield tomorrow (Thursday, June 10) when it will present its detailed proposal, The Way Forward, for Quinn Insurance. The plan proposes that the government would address the solvency issues that pushed Quinn Insurance Ltd (QIL) into administration at the end of March. The plan suggests the government could bridge the solvency gap by issuing a bond which QIL would repay at normal interest rates. Failing this, the government could issue a 'surety' to any commercial institution that would shore up Quinn's solvency base. The outline proposals include appointing a new board to the stricken insurer, including three government representatives, three Quinn Group nominees and one Quinn family member. "Our proposal offers the Irish government an opportunity to do the right thing and thereby what is in the best interests of all concerned," Mr. Maguire told The Anglo-Celt. "As business people we see the situation dragging on. All that has happened since the administrators have been appointed is the loss of 900 jobs. The company was apparently making money, and is not any more and only part of the English market has been reopened." Mr. Maguire said they now wished to hear first-hand from the regulator what the options are and what the time line is. "We have a fair idea what his position is but often regulation can get stuck on a hook and can find it difficult to get itself off it. We're not in the blame game and we are not pointing the finger at anybody. This thing has to be stimulated and regenerated. I suppose the easy thing is to say put in €150m and encumber the property, against which guarantees have been given, and everything will be fine." He revealed that there are parties interested in putting money into the company, which would have to be a direct cash injection. "That may or may not come back down the road, but that is the kind of risk that has to be taken at this point by somebody - because the way we see it for a cash injection of €150m, Anglo Irish Bank and the government have their best chance of getting back the €2.8bn and the Quinn Group can continue to service its debt of €1.2bn, save the group and save the jobs. Quinn Insurance had plans to create another 1,000 jobs in the UK when the administrators were appointed. Now, instead they have lost nearly 1,000 jobs locally." Mr. Maguire said he had represented the quarry and concrete products industry for 30 years and he still represents around 130 policy holders. "Quinn was the saviour of our industry post 9/11, when Lloyd's pulled out of the Irish market, because of lack of capacity. A lot of small and medium sized businesses were glad to have Quinn Insurance available to us," he said. He also predicted that this BP disaster out in the Gulf will put serious strain on some of the major insurers, because this is a massive environmental disaster. "We could well find ourselves in a similar post to post 9/11, because many of the international insurers are bound to have risk attached to them," he said. "It is rather ironic that there are so many insolvent companies being propped up by the state in various ways and here we have the most profitable and successful Irish company for over 35 years, being out at risk on technical grounds. We are not diminishing those. We are policy holders ourselves and most of us with the Quinn Group. We don't want to be left high and dry and we support the principle of regulation. The challenge is how it is done," added Mr. Maguire. He added: "Looking at this commercially, a cash injection of €150m could well save the taxpayer €2.8bn and save 6,000 or 7,000 jobs. I don't want to be scaremongering but all of this could well be on a knife edge. Every day that goes past a company that was making money is now losing money - that can't go on."