Quinn cuts
Over 900 redundancies have been announced at Quinn Insurance following three months of turmoil at the company. Meadhbh Monahan reports.
After it was taken out of control of the wider Quinn Group and placed into administration following “serious and persistent breaches” of the solvency rules in March, Quinn Insurance Ltd (QIL) was ordered to stop writing policies in the UK. They have since been allowed to re-open to all private motor drivers in the UK, but on 30 April the company announced the redundancies saying: “although regrettable and painful for the employees and their families, [this is] necessary to ensure the long-term security of the [1,500] positions” that will remain following the “restructuring process.”
A consultation process is underway with employees in all locations. It is expected that 200 of the 650 jobs will go from the company’s operations in Enniskillen and Derrylin and the remaining jobs will go at QIL offices in Cavan, Navan, Dublin and Manchester.
Employee representative Mona Bermingham said the news of the proposed redundancies was “shocking and disappointing” to employees.
“We are still campaigning for the segments of the ban still in place, for both commercial and household, to be removed so as to maintain as many jobs going forward as we possibly can,” she said. “The joint administrators of Quinn Insurance have also stated that the more business QIL can bring in, the more likely it is that the announced redundancies can be reduced.”
Fermanagh businessman Sean Quinn began the Quinn Group in the 1970s with a cement quarry and subsequently expanded the conglomerate to include insurance, hotels, energy, glass, radiators and plastic. He revealed that he had taken €425 million in guarantees from Quinn Insurance subsidiaries to prop-up other parts of the wider Quinn Group. This was the second time that the Irish Financial Regulator Matthew Elderfield had found Quinn doing this and he decided to appoint administrators to the company. Dublin’s High Court ruled in favour and it was further revealed that Quinn Insurance had liabilities of €200 million more than its total assets.
News of administration generated alarm amongst the insurance group’s employees who held various rallies at the Dáil, the regulator’s office, Cavan and Enniskillen, in protest at the prospect of losing their jobs.
Elderfield came up against pressure from Quinn, who called his decision “the worst in Irish corporate history.”
Fermanagh and South Tyrone MLAs and interested TDs have met repeatedly with the Quinn Group and the administrators, Paul McCann and Michael McAteer of Grant Thornton, to try to protect the jobs.
The Republic’s Finance Minister Brian Lenihan – who wanted to ensure the Financial Regulator’s credibility during the worst recession ever experienced in the South – supported Elderfield, saying: “We really need to learn the lessons of the banking crisis. The perception that the regulator can be subject to political interference or influence will be very bad for this country.”
Approximately 44 companies have voiced their interest in buying QIL, the most recent being US insurance company Liberty Mutual, which has offices in the International Financial Services Centre in Dublin. Another prospective buyer was Anglo Irish Bank, which would prop up Quinn Insurance, while attempting to recoup the €2.8 billion Quinn owes it. That debt was incurred when Quinn and his family acquired a 28 per cent holding in Anglo Irish through Contracts for Difference. These were considered risky as they were based on the assumption that Anglo Irish share prices would continue to increase. It emerged that the bank then lent money to 10 of its wealthiest customers, including Quinn, to buy its own shares. When his shares began to slide in 2008, Quinn borrowed €488 million from Quinn Insurance and transferred it into companies in the rest of the group. On that occasion the Financial Regulator fined Quinn €3.2 million and he was forced to stand down as Chairman of the Quinn Group.
Quinn and his wife stepped down from the board of the group on 5 May to “avoid any potential conflict of interest” associated with the sale of Quinn Insurance. In a statement to staff, he wrote: “Both myself and my family are devastated with [the] announcement of impending redundancies at Quinn Insurance. I greatly regret what has happened in recent weeks.”
