Regulator to block Anglo from bailing out Quinn

Financial watchdog to disclose 'compelling' evidence for investigation of insurance firm

THE Financial Regulator will block any attempts by Anglo Irish Bank to take control of Seán Quinn's empire, the Sunday Tribune has learned.



Talks between Anglo and Quinn Group's bondholders are continuing this weekend to find a way that would allow the nationalised bank take over Quinn Group.



However, it is understood the regulator is opposed to any deal because of concerns about the health of the insurance company and the impact a tie-up would have on Anglo.



The regulator believes it could not allow Anglo, which is facing major challenges of its own, to take responsibility for an entity for which it has no capability or expertise.



In the High Court tomorrow, the Financial Regulator – Matthew Elderfield – will disclose "compelling" new evidence to persuade the court to confirm the appointment of Grant Thornton as administrators.



Sources close to Elderfield said he is more convinced than ever that Quinn Insurance needs to be investigated for solvency breaches, the failure of internal controls and the actions of individuals within the company.



It is believed Elderfield is prepared to reveal details of a highly secretive settlement his office made with Seán Quinn in 2008. The regulator fined Quinn Insurance €3.25m, its highest ever sanction, for breaches of the Insurance Acts after the company provided loans of €288m to help Quinn finance his share-buying spree in Anglo.



Anglo is owed €2.8bn by the Quinn family and it would be at the end of the queue behind other creditors, including a consortium led by UK bank Barclays, to recoup its money if the Quinn Group collapses.



The regulator stepped in to take provisional control of Quinn Insurance on 30 March because of concerns the company would be unable to pay out on claims.



Quinn Insurance provided guarantees of over €1.2bn of its assets to cover the debts of other companies within the Quinn Group, effectively wiping out its solvency cushion.



The regulator had demanded for nearly two years that Quinn bring its solvency levels up to the required standard and was alarmed that Quinn Insurance was providing it with "unrealistic" business plans.



Quinn said last week that if the insurance company was removed from administration, there would be "no difficulty in repaying both the group and family debt as well as continuing to provide long-term employment".



Meanwhile, Quinn's chief rival, Aviva, is understood to be adding thousands of new customers as business leaves Quinn.



The volume of enquiries for both health and general insurance has doubled.



Insurance brokers have reported "enormous disquiet" among commercial clients, but only marginal shifts in business.



Quinn's loss on Anglo is "undoubtedly" the biggest loss an individual has suffered on a single share using contracts for difference, financial instruments used for betting on the direction of a stock, according to David Buick of financial brokerage Cantor Fitzgerald.



Leading market historian David Schwartz described Quinn's overall losses as "eye-watering".

