ONE OF the largest US insurance companies has said it is interested in buying Quinn Insurance as a means of significantly expanding its operations in Europe.
Liberty Mutual, the fifth largest home, motor and general insurer in the US, said that it had contacted the administrators of Quinn Insurance to express an interest in taking over the troubled company.
The firm operates a business in the International Financial Services Centre (IFSC) in Dublin and also has a small presence in Britain.
A spokesman for the company confirmed it had contacted the joint administrators of Quinn Insurance, Michael McAteer and Paul McCann of accountants Grant Thornton, expressing an interest in the Cavan-based firm.
Liberty has a track record of buying and restructuring struggling insurers trading in difficult conditions and running and managing them locally.
The company has no significant overlapping business with Quinn Insurance in Ireland or Britain. If a takeover proceeded, the sale could leave the Cavan-based insurer intact and minimise further job losses beyond the 902 sought from the 2,450-strong workforce.
Liberty is one of 40 parties, including State-owned Anglo Irish Bank, large international insurers and private equity firms, to have expressed an interest in the firm.
The administrators are compiling an information memorandum to be circulated to the interested parties next month.
They told the High Court yesterday that a sale was not their priority “at this time” but that they had held talks with the insurer’s owner, Quinn Group, on a joint approach to any proposed sale.
This could lead to the separate sale of the firm’s health insurance and general insurance businesses or both combined. They have agreed to sell the firms free of any debts due to the wider group. The administrators plan to appoint a global merchant bank over the coming weeks to manage a sale process and assess interest among international companies. Liberty Mutual, which is run by Armagh-born chairman and chief executive Ted Kelly out of Boston, made profits of $315 million (€255 million) from revenues of $8.2 billion in the first quarter of this year.
The firm, which is owned by its policyholders, had assets of $109 billion last December. It employs 45,000 people in 26 countries.
The company would view a takeover of Quinn Insurance as “transformational” for their business, a source close to the company said.
In a report presented to the president of the High Court, Mr Justice Nicholas Kearns, the administrators said a review by auditors had found that Quinn Insurance had under-provided for liabilities by €68 million last year.
The court was told that the firm made a loss of €47 million in 2009, but that many parts of the business remained at trading levels before the appointment of the administrators in March.
The Financial Regulator asked the court to put the insurer into administration after it discovered in March that guarantees were provided by Quinn Insurance subsidiaries as far back as 2005 on Quinn Group debts of €1.2 billion. The regulator said the guarantees reduced the firm’s reserves, which protect policyholders against potential claims, putting 1.3 million customers at risk.
The court was told that the boards of 25 Quinn Insurance subsidiaries will resign and be replaced by the administrators who are seeking “a standstill agreement” from the guarantor subsidiaries to protect those firms’ assets. The administrators say the company can pay its debts and that they do not intend applying to the Insurance Compensation Fund.
The administrators are seeking costs of €565,000 for work carried out between March 30th and April 30th, and want to invoice the firm monthly to the end of July for sums not exceeding €1.8 million. They want to pay their solicitors McCann Fitzgerald
€120,000 and their public relations firm Hume Brophy €50,000 for work between March 30th and April 30th and a further €10,000 a month from this month to July.
Mr Justice Kearns said he wanted independent material on which he could assess these costs.