New business insurance provider owners gain capital

The new owners of business insurance provider Quinn Insurance have recently been able to secure more finance due the lifting of guarantees to Quinn Group lenders.

US commercial insurance provider Liberty Mutual and Anglo Irish Bank, the two new joint owners of Quinn, recently made their final arrangements for the purchase of the insurer.  Liberty and Anglo will take over Quinn Insurance’s Irish business but will be avoiding Quinn’s UK division, which resulted in a deficit of nearly €600 million for the company in 2009.

Quinn Insurance’s losses – most of which emerge from its commercial and professional indemnity insurance policies from the UK – are now expected to result in a call to the Insurance Compensation Fund of Ireland. Paul McCann and Michal McAteer, Quinn Insurance’s joint administrators from Grant Thorton, are believed to be outlining their intentions to file a claim against the fund in order to cover the firm’s losses, which could easily lead to a levy being applied to insurance customers industry wide.

Quinn Group was restructured earlier this April, an essential forerunner to the firm’s sale.  This was due to the more than €460 million in guarantees to the group’s bondholders and banks related to the insurer’s subsidiaries.

These guarantees led the Irish Financial Regulator in search of administrators due to concerns over the solvency of the insurer.  More than €1.2 billion, is owed to these lenders, who have dropped the guarantees related to Quinn Insurance’s assets – which includes the Slieve Rushen wind farm.

Nearly €200 million of assets and cash in the subsidiaries of the insurers will be put towards meeting the more than €500 million the debts to bondholders and banks under the new restructure.  This will result in the freeing up of more than €260 million remaining in the company’s assets, which will then be used in funding the new insurer under the joint owners.

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