Quinn increases net loss to €905m

QUINN INSURANCE has increased the net loss made in 2009 by €200 million to €905 million to account for the pay-out to repay the banks and bondholders of the Quinn Group as part of its restructuring, according to accounts just filed.

The joint administrators of the insurance company, Michael McAteer and Paul McCann of Grant Thornton, announced a loss of just over €700 million for the company for 2009 at the end of April.

The loss is higher in the accounts after auditors PricewaterhouseCoopers advised the insurer to include the €200 million charge in 2009 instead of in the current financial year, said Mr McAteer.

The payment was made to the banks and bondholders owed €1.3 billion by Quinn Group to release guarantees given by subsidiaries of Quinn Insurance to the lenders.

The insurer made investment losses of €181 million as a result of the writedown in the value of investments, including hotels and a wind farm owned by the insurer.

Provisions taken by the insurer in 2009, including the €200 million payment to the Quinn Group lenders, totalled €380.7 million.

Some €67 million was written off on a loan to a related company.

The insurer made an underwriting loss of €562 million in 2009 and was €715 million in the red in its technical account.

The administrators said last April that the insurer’s losses were primarily due to the performance in the UK, where it made an operating loss of €559 million.

A further loss of €180 million was pencilled in for 2010.

The accounts say that despite the losses for 2009 and 2010, business written since the appointment of the administrators in March 2010 has been profitable.

The Central Bank’s discovery of the guarantees led to the appointment of the joint administrators after the regulator expressed grave concerns about the effect on the solvency of the insurer.

The group’s lenders agreed to lift the guarantees of €464 million provided by Quinn Insurance subsidiary Quinn Property Holdings and its own subsidiaries in return for the €200 million payment.

The guarantees were released under the restructuring that has led to the banks and bondholders taking 25 per cent of Quinn Group and State-owned Anglo Irish Bank taking the remaining 75 per cent.

Anglo and US insurer Liberty Mutual have taken ownership of the insurance company following the restructuring of the group.

“The release of the guarantees is essential to the sale of the general insurance business,” the company said in the 2009 accounts.

Liberty Mutual has the option to buy the UK business any time up to the end of December 2012.