News Analysis: Quinntessential downfall

Sean Quinn has built an expansive empire of companies in Ireland, the UK, Europe and beyond, but the credit crunch and poor investments have caught up with him. Despite only last year being reportedly worth billions, he failed to appear on the 2010 Sunday Times Rich List.

Quinn Insurance's attempts to fight off administration imposed on it by the Irish Financial Regulator failed and now two administrators - Michael McAteer and Paul McCann of Grant Thornton - are firmly in charge and have already had to announce plans for large-scale job losses. At the time of writing, around one third of employees, approximately 800 people, could lose their jobs, with a mixture of voluntary and compulsory redundancies. Quinn's staff in Enniskillen, Cavan, Navan, Manchester and Dublin are under threat.

The ban on UK business was only partially lifted allowing Quinn to underwrite drivers with provisional driving licenses, but the firm will be losing around £1m a day in income as its UK book is thought to be around £300m GWP. Quinn Insurance has been under investigation for non-disclosure of loan guarantees, incorrect calculation of solvency and reserves and a lack of systems and controls.

Leslie Hughes, chairman of Northern Ireland-based broker Hughes and Co, said he had not been able to understand Quinn's pricing over the years and questioned why Quinn Insurance had been given over £5m in government support since 2003 by jobs-creation body Invest NI for training, employment and property development. Hughes told PB: "[Sean] Quinn was regarded well because of the number of jobs he created." Hughes had not placed business with Quinn but said his firm with over 10 branches in Northern Ireland had seen an increase in demand for insurance.

Another worry for Northern Ireland and Eire is that Quinn's company has become an important part of local regions' economies, such as Fermanagh, and there is already an impact on small businesses that rely on serving Quinn. Several rallies - including a truck drivers' protest in Dublin - have shown how Quinn raises the passions. In April the Quinn Group, which provides services from pre-stressed concrete to roof tiles, appointed Talbot Hughes McKillop to provide financial restructuring assistance to the board. In a statement on its website, the Quinn Group says it has "a very extensive property asset portfolio held by the Quinn family" to secure €2.8bn worth of debt, which is outside the €1.2bn debt of the manufacturing company, this year forecast to make a profit of €300m. However, there are reports that property giant Laing O'Rourke is in talks to buy parts of the business, and part of the Irish financial regulator's probe is looking at the links between guarantees given from Quinn Insurance's subsidiaries to the wider Quinn Group. In addition, the Anglo Irish Bank has been looking at ways of recouping the €2.8bn it is owed by Quinn.

Solicitors' PI
There were reports in the Irish newspapers that the Irish Government had written to the Financial Services Authority to back up policies taken out by Quinn customers in the UK. Neither the FSA nor the Irish Government would confirm this. There have been guarantees from the Irish regulator to Quinn policyholders.

Richard Brown, director at London broker Prime Professions - which placed 1,700 UK sole practitioner solicitors with Quinn - has been reassured by the advice from the regulators so far and said that he always kept his customers informed of Quinn's position at all times. He also had high hopes customers would renew with Prime Professions when the solicitors' PI renewal process begins again, to be completed by 1 October. He said he dealt with Quinn in Ireland and defended Quinn's pricing by saying Quinn had also lost business to rivals based on price.

The fallout from Quinn will be far and wide, although there was some good news for the Irish: the economy is out of recession as of the first quarter of 2010, with unemployment expected to peak in the third quarter at 13.6%.

Source: PB – May 2010