INSURANCE MAGNATE Seán Quinn has forecast that the sharpening economic contraction will scarcely dent the profitability of his business empire this year, stating on his website that his companies will make cash profits of €400-€500 million.

In his second quarterly update this year, he also forecasts the profitability of his companies will “increase significantly” in 2010 as the business continues to defy the disruption in the Irish and international economies.

Brushing aside the impact of the deepening recession, the renewal of his profit forecast for 2009 suggests the company will continue to throw off cash profits at a similar level to the outturn in 2007 and 2008.

All divisions in the group – whose interests straddle motor and health insurance, building materials, plastics, glass, hotels, property and packaging – were profitable in the first quarter. Sales of cement products fell 40 per cent but sales of insulation, glass and packaging products were ahead of budget.

Mr Quinn’s forecast for 2009 excludes the impact of any exceptional items. He previously said Quinn Group made pre-exceptional cash profits of between €400 million and €500 million in the previous two years, although the net outturn in 2007 and 2008 was greatly diminished by big write-offs linked to his disastrous investment in Anglo Irish Bank.

An €829 million write-off in 2007 resulted in a €425 million pretax loss.

A further €130 million will be written down in respect of 2008, a year for which final results have yet to be published.

“Although trading levels are down overall, the Quinn Group continues to enjoy superior margins to its competitors.

We have resisted the temptation to reduce prices to below economically sustainable levels and consequently, while trading is reduced, we remain comfortable that, as outlined in January, the group will generate cash profits in 2009 of between €400 million and €500 million,” the update said.

“With the infrastructure and product base that has now been established, this should increase significantly in 2010.”

The number of clients at health insurance business Quinn Healthcare breached the 500,000 threshold this month. Production volumes at a meat and dairy product packaging plant in Co Cavan, now operating at 70 per cent of capacity, “steadily increased” in the first quarter. Average consumer spend in the group’s hotel and leisure unit reduced “as anticipated”.