The Quinn Group is to proceed with its planned takeover of health insurer Bupa Ireland but has pledged to fight emergency legislation introduced by the Government to close a loophole which could have saved it tens of millions of euro in risk equalisation payments.
The takeover deal will secure about 300 jobs in Fermoy and ensure continued health insurance cover for about 475,000 Bupa subscribers.
However the group warned of further challenges to Government health insurance policy. It also indicated that it would compete strongly with VHI on price.
In a personal statement, group chairman Seán Quinn strongly criticised the Government over introducing the emergency legislation, which he said was "unhelpful and unnecessary".
He also revealed that the Quinn Group had offered to take over VHI's entire business to resolve the row over risk equalisation at a meeting with Minister for Health Mary Harney last Monday.
He alleged that the VHI was "trading illegally" without the required solvency and was charging far too much for its products. He said his company intended "to fight this draconian [ emergency] legislation, the risk equalisation scheme and the legality of the VHI through the necessary and appropriate channels".
Mr Quinn did not spell out how he would challenge the Government on these issues. However sources close to the company said last night that it would consider all options, including court action in Ireland or in Europe.
The Quinn Group had argued that as a new entrant to the market it was entitled, under law, to a three-year exemption from risk equalisation payments.
However Ms Harney said that the previous legislation was not designed to encompass a situation whereby a company could buy an existing operator and acquire a further exemption from risk equalisation payments.
Mr Quinn said his company had completed a contract to purchase Bupa based on the existing legislation at the time.
"How can we be expected to run a business if Government can change legislation retrospectively which changes this business from a profitable activity to a loss- making one?" he said. However Mr Quinn said he intended to honour a commitment given to Bupa staff last Friday that the new company would remain in Fermoy.
Ms Harney last night welcomed the Quinn statement that it was proceeding with the takeover of Bupa. She again signalled that she planned to introduce reforms to the market shortly following a review by an expert group.
The Quinn announcement was also welcomed by the Opposition parties which cautioned, however, that the long-term future of the health insurance market was uncertain. Fine Gael health spokesman Liam Twomey said a legal battle on the emergency legislation now seemed to be in prospect.
Labour Party health spokeswoman Liz McManus said she was "very relieved" at the Quinn Group's decision to go through with the Bupa deal but predicted that the company would put pressure on the Government for reforms.
VHI also welcomed the Quinn announcement but rejected the allegation that it was "trading illegally". It said that it would have to meet the same solvency requirements as other insurers by 2012. VHI also said that its membership base was "not for sale".