“one thing is obvious: there should be no role for Seán Quinn in what happens”

With reported talks between Anglo Irish and the Irish Financial Regulator, the Quinn Group’s ongoing campaign against the regulator’s intervention looks set to lawyer up. Eamonn McCann takes on the “forelocking tugging”, and electioneering, interfering ‘foreigners’. And WorldbyStorm points to an Irish Times article by John McManus last Monday that’s well worth a read.

The only amazing thing about Quinn Insurance – and sadly it’s not that amazing in the Irish context – is that the company was not seized years ago. Mr Quinn’s decision to use the reserves of the insurance company to finance his disastrous foray into Anglo Irish Bank shares should have been sufficient grounds to seize the company in 2008, demonstrating as it did his blindness to the prudential fundamentals of insurance.

Over and above that, the whole – and as yet unexplained – thinking behind taking a secret 28 per cent stake in the country’s third-largest bank should, as a minimum, have shown an approach to investment at odds with running an insurance business. Never mind what it said about an attitude to corporate governance. The anger expressed by Quinn Insurance staff is entirely misplaced. The person they should be asking questions of is the man whose massive investment gambles pushed the company into the arms of the administrator.

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  • Alias

    “…the only thing standing between ourselves and the workhouse is the border.” – Eamonn McCann

    He’s not far wrong there. Private and business borrowers not covered by NAMA are being told that the problems in the economy are short-term, and so they are meeting their obligations out of reserves rather than cash flow or profits or they have arrangements with the bank to juggle their repayments. As soon as they cotton on that the problems are long-term, they’ll realise that their ad hoc arrangements are not sustainable and default. On what fun the next two to three years will bring as 1.67 trillion of eurosystem debt accumulated since joining the Eurozone comes crashing down around our wee heads…

    The Anglo proposal seems the best option for the State and for the policyholders at Quinn Insurance. If the business – which is massive profitable – is not substantially damaged by the current process, then it should fetch a PE multiple of circa 10, making it worth about 2.3 billion. That will repay a substantial part of the Quinn’s family’s debt to Anglo.

  • Comrade Stalin

    Be nice to the Quinn employees. They’re almost certainly merely doing what they’re told.

  • Cynic2

    I hope Mr Quinn and his family will have a very clear role ….in paying back the debt. His arguments that it will all be alright if only those regulators get out of the way are simply beyond belief

  • alan56

    Whatever happens it the people who might lose their jobs in Fermanagh and Cavan that I feel sorry for. It would be hard to over estimate the damage that will follow to the economy of these areas if it all goes pear shaped.

  • GavBelfast

    Do people seriously believe that the Quinn Insurance business is profitable?

  • jtwo

    As has been pointed out by several commentators (not least in the McManus piece) it’s somewhat easier for an insurance firm to post a profit when it’s operating with a solvency cushion which is several hundred million lighter than it should be.

    As an aside doesn’t this expose rich lists as a load of old toot – they’re fine at estimating what people’s assets are but terrible at estimating liabilties eg. there’s currently an issue of Forbes on the shelves at Easons which estimates the Quinn family fortune at 4bn which we now know to be miles from the truth.

  • Alias

    Solvency targets have nothing to do with how profits are calculated on the core business. The minimum capital required or the target capital can make a profit or a loss on its investments which can affect the profit of the core business but a requirement to increase the solvency ratio does not by itself result in a loss of profit for the business of the amount required.

    The solvency ratio is simply the level of net capital relative to outstanding liabilities in the form of policies – net worth divided by net premiums. The Solvency II Directive (EU law) sets the target at 150%. There is no point being anal about that since it is just a simple matrix that does not reflect the level of risk associated with the policies, and so it should be considered as a soft limit. But as it is EU law, the Financial Regulator has no discretionary authority to consider each case on its merits. This is a fundamental problem with one-size-fits-all regulation. If it isn’t too anal, it’s too sloppy, e.g. Irish banks being able to borrow insanely high amounts of money relative to their capital because banks in other EU states require higher leverage ratios than are safe.

    McManus is also wrong about “Mr Quinn’s decision to use the reserves of the insurance company to finance his disastrous foray into Anglo Irish Bank shares should have been sufficient grounds to seize the company in 2008, demonstrating as it did his blindness to the prudential fundamentals of insurance.” At the time when Mr Quinn made that investment, Anglo more than qualified as a sound investment, with pension funds, banks, and blue chip companies being among its depositors and investors. Mr McManus is applying wisdom that was applied after the fact.

  • Driftwood

    If Quinn Insurance, and only Quinn Insurance ,is solvent and has lots of cash to cover its liabilities, then fine.
    But perception is King in banking and insurance.
    Either the British government (and/or) the Irish government put out a statement soon, saying this is is a viable business(which it appears to be) then perception will kill the business(no matter how viable).
    I assumed this was what all those North/South bodies were supposed to cover. If they don’t ‘cover’ this one- and this is vital for the region- then they’re useless.

  • [quote][i]As an aside doesn’t this expose rich lists as a load of old toot – they’re fine at estimating what people’s assets are but terrible at estimating liabilties eg. there’s currently an issue of Forbes on the shelves at Easons which estimates the Quinn family fortune at 4bn which we now know to be miles from the truth.[/i]….. Posted by jtwo on Apr 10, 2010 @ 09:54 PM [/quote]

    Perhaps that Forbes rich list tabulates the biggest and best Ponzis on the planet, for no one starring in its lists actually does any physical work to generate payment, they just shuffle and deal ideas and sweet talk whoever they target to rest whatever they do not need and wish to invest and make them more money for the System and Bankers to gamble on their behalf to find FUture Ponzis which don’t actually do any physical work to generate payment but just shuffle and deal new ideas and sweet talk whoever they target to rest whatever they do not need and wish to invest and make them more money for the System and Bankers to gamble on their behalf to find FUture Ponzis which don’t actually do any physical work to generate payment but just shuffle and deal new ideas and sweet talk whoever they target to rest whatever they do not need and wish to invest and make them more money for the System and Bankers to gamble on their behalf to find FUture Ponzis which don’t actually do any physical work to generate payment but just shuffle and deal new ideas ……ad infinitum in a perpetual immaculate supply and sustainable demand loop

    But that does require the Banking System to let currency flow rather than the Bankers themselves [and yes, let’s get up close and personal and put faces and names to those who stop progress with their decisions on who is and who is not to get whatever they want from the global money supply which feeds the System] thinking that they can Control Everything and Enslave the Masses to Generate Money for Power rather than Free the Masses with Money Supply for Energy …….. for of course, as we all now know only too well, Money is easily printed and costs practically next to nothing to make and wealth is just a big number on a balance sheet in an account held in a bank, which is easily adjusted and transferred to whomever, for whatever, in a flash, electronically.

    The Mighty Mouse leads Control with ITs Powerful Moves, Searching Selections and Send Transmissions/Slick Click Decisions.

    So who sits at a screen wielding the Mighty Mouse ruling and/or ruining your Life. What are their names?

    However, …….. In the Live Operational Virtual Environments of AI Fields, Life is a Much Greater Mind Game, and in ITs Civilised Societies with Advanced IntelAIgents, rather than it being thought and arbitrarily decided that all are born and die and move on with nothing, everyone is born and dies and moves on with everything they will ever need so that they can easily feed their every need and create it themselves if it is not readily available. And that is effortlessly facilitated with a SMART SWIFT System of Positive Constantly Reinforcing IDEntity Control so that Networks InterNetworking Know of All Needs to Feed.

    Quite why Any would be Pimping and Pumping the Present Perverse Primitive Abortion of a Subversive System which Deals in Poverty rather than Creates with Wealth is, if it is not Due to a Lack of Advanced IntelAIgents, a Mystery you might care to explain, for too many Mysteries are too easily Evil Rooted and Routed to Server the Idiot Savant with Fools’ Gold, Enriched with the Sparkling Paste Gems that Beguile, Deep Dogged Ignorance and Attendant Aspiring Arrogance.

  • jtwo

    ‘At the time when Mr Quinn made that investment, Anglo more than qualified as a sound investment’

    True when the CFD building began around 2005 but far from a universal sentiment in latter years when he was exposing himself in way which was borderline insane.