Quinn Direct, the insurance group owned by cement entrepreneur Sean Quinn, lost £15.6 million (€20 million) on its investment portfolio last year. The downturn in global equity markets in 2000 hit Quinn Direct hard.

Although the firm declined to reveal its precise investment mix, a spokesman said it had "a fair amount in equities", which led to the losses at the insurance group.

Despite reporting a 60 per cent increase in premium volumes last year, Quinn Direct reported an overall pre-tax loss of £38.5 million compared with a profit of £8 million the previous year.

In addition to the investment loss, the company suffered an underwriting loss of £22.9 million, not unusual in the industry in the current climate.

But the Quinn Direct underwriting loss was particularly high because the company had to readjust the previous year's reserves upwards by about £16 million. The increase in reserves was made in response to unanticipated inflationary trends in settlement costs in the Republic, the company said.

Meanwhile, reports that the company's owner, the Sean Quinn Group, was considering the sale of a key stake in its cement company, had nothing to do with the difficulties at its insurance arm, a spokesman said.

The Sean Quinn Group injected £55 million in capital into the company in 2000 and 2001. "The company is looking at divesting a majority equity stake in some of its businesses, one of which is cement, over a three to five-year period, to strategic partners," a company spokesman said.