High Court backs sale of Quinn Insurance

THE PRESIDENT of the High Court has approved the sale of Quinn Insurance Ltd to a joint venture of US insurer Liberty Mutual and Anglo Irish Bank.

The decision means €738 million of public money will be paid out of the State’s insurance compensation fund to the insurer, including an immediate payment of €320 million to facilitate the sale with the remainder later, subject to applications to the court.

A representative of the insurer’s employees had told the court the vast majority supported the sale because they believed it would safeguard their livelihoods.

After a three-day hearing, Mr Justice Nicholas Kearns yesterday approved the sale proposals advanced by the insurer’s joint administrators. He said he had decided to give his decision immediately, given the fact the proposed transaction is subject to time limits, the commercial sensitivities involved and the needs of the affected parties for certainty.

He had decided to approve the transfer by Quinn Insurance to Liberty of those parts of the insurance business as identified in the sale scheme. He would give his full reasons in a written judgment next week.

The joint administrators of Quinn had told the court the alternative to the proposed sale was liquidation, with a deficit of some €1.3 billion and 1,600 job losses.

Denis McDonald SC, for the administrators, said the sale provided for the entire workforce of Quinn Insurance to be transferred to Liberty and the management of policies would continue with the same staff. This scheme preserved the business and a full workforce and represented a “fantastic achievement”, he said.

However, two groups representing a number of Quinn policy holders and others expressed a number of concerns about the proposed deal and claimed it involved an unfair distribution of public resources.

Both groups – Concerned Irish Citizens and Concerned Irish Business – also argued that the High Court had not been given enough information about the deal to make an informed decision. They also indicated they had been supportive of alternative proposals for the insurer advanced by Quinn interests.

A solicitor representing the Quinn Group Ltd told the court yesterday the group wished to make it clear it was fully supportive of the administrators’ sale proposals and was not involved in the alternative proposals.

Solicitor David Baxter said he believed the alternative proposals had been advanced by members of the Quinn family and some shareholders.

Earlier, Pauline Walley SC, for Concerned Irish Citizens, said her clients, including retired teacher Thomas Moran, were sincere people who had genuine concerns for their communities. Mr Justice Kearns said he could understand that people had fears.

Ms Walley said her clients’ concerns included that the sale scheme would see a lot of Quinn Insurance’s cash assets, about €761 million, being transferred to the purchaser. There were also no formal certificates of solvency and authorisation for Liberty before the court, as required under the relevant law, she submitted.

Mr McDonald, for the administrators, said no alternative to the sale had been advanced by the objectors and it was “fanciful” to suggest another buyer prepared to offer a better deal could be found, he added. The Minister for Finance was most affected by the proposed sale and was not objecting.

The alternative proposals put forward by Quinn interests were entirely speculative and did not withstand scrutiny, Mr McDonald said. Those proposals required €500 million of taxpayers’ money when there was no evidence the Government would have sanctioned that, he added.

The administrators’ sale scheme was conditional on the Central Bank authorising Liberty to practise here and on the company meeting the solvency requirements, he added. Quinn Healthcare and Quinn Life were not under administration and were not being transferred under the scheme.

Kieran Lewis, for Liberty, in addressing concerns expressed as to whether there would be protection in cases of uninsured drivers, said Liberty had applied for membership of the Motor Insurers Bureau of Ireland and had been accepted.