Financial services firm PricewaterhouseCoopers paid €53 million to settle a €900 million legal claim for negligent auditing over the collapse of Quinn Insurance, The Irish Times has learned.
The settlement was one of the biggest of its kind in Irish corporate history. But the State fund that pays the liabilities of the failed insurer received considerably less than €53 million because of large legal fees incurred in the case against PwC.
The disclosure of the settlement terms comes one day before the Central Bank meets the Dáil Committee of Public Accounts on Thursday to discuss the affairs of the Insurance Compensation Fund, which is financed by a 2 per cent surcharge on all home and motor insurance policies in the State.
The insolvent insurer has been run for 13 years by administrators Michael McAteer and Paul McCann of accountants Grant Thornton. They took charge in 2010 as Co Cavan entrepreneur Seán Quinn, once considered to be the wealthiest Irish businessman, lost control of an empire that included cement, manufacturing, hospitality and banking interests.
Between 2011 and 2015, the exchequer paid out €1 billion to meet Quinn Insurance liabilities.
Quinn’s administrators sued PwC for negligent auditing of the insurance underwriter in 2005-2008. The firm denied such claims but settled last June on terms not disclosed then.
When PwC legal fees of some €25 million were paid, the cost to the firm was €78 million. That sum is considered virtually certain to have been covered by PwC’s professional indemnity insurers.
The administrators ran up similar legal fees, which were deducted from the amount paid to the Insurance Compensation Fund. Some figures briefed on the settlement said the ultimate benefit to the fund was between €20 million and €30 million.
The €53 million settlement was confirmed by two people familiar with the arrangement but PwC, Grant Thornton and the Central Bank each declined to comment.
Similarly, the Department of Finance was silent on the terms: “The department welcomes the settlement reached which resulted in the finalisation of this long-running case, was a positive gain for the ICF, and avoided escalation of further costs.”
