QUINN INSURANCE has said it was not obliged to disclose the existence of the controversial loan guarantees on its subsidiaries’ assets in solvency returns supplied to the Financial Regulator.
Last week the regulator applied to the High Court to have provisional administrators appointed to Quinn Insurance because of solvency concerns arising from the existence of the guarantees, which were given to lenders to the Quinn Group.
It is understood the regulator does not agree with the insurance company, though a spokeswoman would not comment on the Quinn Group’s statement yesterday.
The regulator is of the view that Quinn Insurance was obliged to disclose the guarantees in its solvency returns. “There was a requirement. The information was not supplied,” one source said.
A Quinn spokesman said the guarantees do not have to be disclosed “unless the auditor decides it has to be”.
He said any liabilities that arise associated with the guarantees have to be disclosed, and there were no such liabilities over the past five years.
The Quinn Group has said the guarantees were disclosed in the accounts of subsidiaries of Quinn Insurance.
These accounts are not available in the Companies Registration Office, as the accounts for the insurance business are consolidated. However, the Quinn Group says they were available at all times to the regulator.
The matter is likely to feature in next Monday’s hearing in the High Court, if it goes ahead. The hearing may confirm the appointment of the provisional administrators.
It is understood that the regulator’s office will say it is not its function to look at the accounts of companies it does not regulate. Quinn Insurance has a number of property holding and related subsidiaries, eight of which are understood to have provided guarantees to bondholders who loaned money to the Quinn Group.
Meanwhile, it is understood there were contacts yesterday between Anglo Irish Bank and the Quinn family over the crisis at Quinn Insurance.
Anglo Irish Bank is owed in the region of €2.8 billion by the family, while the bondholders who have guarantees on Quinn Insurance assets, and other lenders, are owed in the region of €1.2 billion by the group.
Anglo is exploring whether it could get control of Quinn Insurance as part of a move aimed at maximising its chances of recovering its money.
If the Quinn Group was to collapse, Anglo Irish Bank, which is owned by the State, would rank behind Barclays Capital and the other bondholders and lenders owed €1.3 billion.
The approval of Minister for Finance Brian Lenihan would be sought before the nationalised Anglo Irish Bank would move in to take control of Quinn Insurance.
Under the relationship framework that governs the Minister’s dealings with the State-owned bank, Mr Lenihan would have to approve any deal before it went ahead, because of its public-interest importance.
The bondholders and other lenders are also looking at ways in which the regulator might be convinced not to press ahead with the appointment of the administrators. Leaving the business under the control of the Quinn Group is not something the regulator is expected to agree with.
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