Cantillon: Complex moves ensure Quinn profit

Insurance company accounting is never the most straightforward of exercises, as Quinn Insurance administrators Grant Thornton are learning. The group recorded profits of €188 million last year but only after €175 million was released from reserves, following €184 million released the previous year. This means the administrators had overprovided for likely claims by a hefty €350 million-plus when the two years are added together. Claims fell significantly last year and the administrators are selling off assets rapidly, including hotels and commercial property.

Quinn, founded by Seán Quinn, entered administration in 2010 and Liberty took on its business here, but the company in administration continues to manage the run-off liabilities. The administrators are cutting costs – expenses fell by €21 million to €6 million as the business is effectively wound down. However, fees paid to Grant Thornton went up to just under €3 million, from €2.8 million the previous year.

The joint liquidators still expect the call on the Insurance Compensation Fund from the Quinn collapse to be in the €1 billion to €1.3 billion range. The slow realisation of the scale of the hole was a matter of some exasperation to Minister for Finance Michael Noonan at the time. However, the administrators had warned that in a worst-case scenario the cost would could reach €1.65 billion. This is not now seen as likely. Still, we will all be paying for it via the insurance levy for some years to come.

Of course the big action here now springs from the decision of Grant Thornton to sue PWC, Quinn Insurance’s former auditors, for alleged shortcomings in its audit, claiming damages of up to €1 billion. PWC has said it will strenuously defend the action which, while taken in 2013, is still wending its way through preliminary hearings.