The action taken by the Financial Regulator against Quinn Insurance has the full backing of the Government, Minister for Finance Brian Lenihan insisted today.
The legal hearing to put Quinn Insurance into full administration was yesterday postponed for a week after the company filed a lengthy affidavit.
The action was taken by regulator Matthew Elderfield following concerns the insurer had fallen below the regulatory solvency levels on how much an insurer must hold in reserve to cover potential liabilities on policies.
"The regulator has the Government's full confidence and support in the various steps he has taken because he has to protect policy holders and the wider economy," Mr Lenihan told RTÉ's News At One programme.
“If there is an insufficient provision in a particular company, he has to take action,” he said.
While potential job losses at the Quinn Group were a “core concern” for the Government, Mr Lenihan said, “the regulator has to ensure that no one insurance company has an unfair advantage over another because it’s breaking the rules.”
“Surely, we’ve learnt enough from this banking crisis to understand that,” he said.
Mr Lenihan said he would not seek to influence the regulator’s action in any way, insisting that “the perception that the regulator can be subject to political interference would be very bad for this country.”
“His job is to ensure that this insurance company is properly capitalised,” he said.
Asked if he supported attempts by Anglo Irish Bank to take over the Quinn Group in order to secure repayment of the €2.8 billion it is owed by the Quinn family, Mr Lenihan said Anglo would not be doing its duty, as a bank owned by the taxpayer, if it did not explore these options.
He said much of the media commentary surrounding such a move was “pre-empting matters which have not yet been fully considered”.
“If Anglo Irish Bank did take over an insurance company, there would have to be very satisfactory guarantees that the insurance company would be operated at arm’s length from the bank,” he said.
Two weeks ago, Mr Justice John Cooke appointed provisional administrators to Quinn Insurance, under Section 2 of the 1983 Insurance No 2 Act.
The regulator had claimed the company had "significantly breached" its solvency ratios and its subsidiaries had entered into a series of guarantee agreements that had reduced its assets by some €448 million.
It was also claimed the company had failed to deliver a financial plan aimed at restoring its financial health.
The regulator said the application was "urgent" because of concerns about the way the company was conducting its affairs and its abilities to comply with supervisory regulations.
The company, it was claimed, was unable to comply with the requirements of the supervisory regulations of the Act because it had failed to make adequate provisions for its debts, including contingent and prospective liabilities.
