Mary White (Carlow-Kilkenny, Green Party)

I am taking this Adjournment matter on behalf of the Minister, Deputy Brian Lenihan, who would like to thank the Deputies for raising this issue.

At the outset, Deputies will understand that the Minister for Finance is constrained about what he can disclose to the House in respect of a competitive sales process in regard to the sale currently under way in respect of Quinn Insurance Limited, including the participation of any party to that process. It is important to keep in mind that responsibility for the sales process is a matter for the joint administrators who were appointed by the High Court. The administrators are currently deciding on a preferred bidder with a view to entering into detailed discussions with them to seek to conclude an agreement on the sale of Quinn Insurance Limited. It is important in that context that the confidentiality of the process is respected and that we remain careful in our debate to ensure the fair process and the commercial nature of the transaction are respected.

Deputies will be aware that the Minister for Finance has responsibility for the development of the legal framework governing financial regulation. The day to day responsibility for the supervision of financial institutions, however, is a matter for the Central Bank, which is statutorily independent in the exercise of its regulatory functions. It was in this independent capacity that the Central Bank, then the Financial Regulator, applied to the High Court to have Quinn Insurance Limited placed in administration.

For the benefit of the House, it made its decision because it had a number of concerns in respect of the financial position of the company, the manner in which it was being managed, and its inability to comply with supervisory regulation. These concerns included an ongoing breach of the Central Bank-imposed solvency ratios; the discovery of guarantees, through unregulated property subsidiaries, to senior lenders - a syndicate of banks led by Barclays and a number of bondholders - over insurance company assets which the Central Bank was unaware of until March 2010 and which had the potential to significantly increase its solvency shortfall; and the manner in which the business was being managed raised governance and accountability questions about the internal control mechanisms as well as the accounting and administration procedures and practices within the company.

The appointment of the joint administrators, pursuant to the Insurance (No 2) Act 1983, to take over the management of Quinn Insurance Limited was taken in the best interests of the firm's policyholders to allow the firm to remain open for business and to continue to be run as a going concern with a view to placing it on an ongoing sound commercial and financial footing.

From the outset the joint administrators have concentrated on fulfilling this agenda and one of their main aims is to ensure that the value of the business was maintained in order to make it as attractive as possible to potential buyers. A key factor here was the reopening of the profitable parts of the UK business.

In response to a detailed case from the joint administrators, the Central Bank, in the first instance, allowed Quinn Insurance Limited, QIL, to reopen private motor insurance business by the end of April. As part of its consideration, the bank considered the information provided by the administrators in regard to key improvements in the company's underwriting model and significant strengthening of its pricing structure. It also consulted closely with the UK Financial Services Authority. Later on, the administrators also sought to have the commercial lines of business in the UK re-opened. However, the Central Bank decided in September that such a move would not be appropriate as QIL would require additional capital which it currently does not have.

The next significant step was the appointment by the High Court on 3 June 2010 of advisers on any prospective sale of Quinn Insurance Limited at the request of the joint administrators. The advisers, on behalf of the joint administrators, issued an information memorandum on 27 August 2010 on the sale of the company to interested parties which set out a two stage process for selecting a purchaser. The first stage required the submission of a non-binding indicative proposal by Friday, 17 September 2010.

The Minister for Finance understands that following evaluation by the advisers and the joint administrators of the above mentioned proposals, a limited number of prospective purchasers were shortlisted by the administrators to participate in phase two of the sale process. They have conducted further due diligence, including the consideration of the necessary commercial information, enabling them to make a final bid.

The joint administrators are currently considering the final bids. In doing this the Deputies should note that the administrators are working to find a solution that addresses the issue of putting the company back on a sound commercial and financial footing. As part of that process their role is to assess bids which will protect the interests of policyholders and which will enable the company to continue to operate as a going concern. The retention and protection of employment is another important element of the administrators' responsibilities subject, as always, to their statutory responsibilities.

Once a preferred bidder is chosen the administrators will enter into detailed discussions with them to seek to conclude an agreement. The Minister for Finance understands that the administrators wish to conclude a sale transaction as soon as possible.

As the Deputies will know, the final decision of the joint administrators is subject to the approval of the High Court. It is important to be clear that neither the Minister for Finance nor the Government has any input or influence over the administration process, including any decision on the sale of the company. It should be noted, however, that he is very conscious of the employment implications of any decision made by the joint administrators in regard to the sale of Quinn Insurance Limited and is keen that as many jobs as possible are safeguarded as part of this process. However, the Minister is of the view that it is inappropriate to speculate as to what may happen in regard to jobs before any decision is made on the sale of the company.

Nevertheless, the Deputies will be aware that last year, in response to the developments in Quinn Insurance and its impact on the employees' jobs, the Minister, Deputy Batt O'Keeffe, established an inter-agency team comprising Enterprise Ireland, FÁS, IDA Ireland, the relevant county enterprise boards and the Department of Social Protection. The group meets regularly under the chairmanship of Dan Flinter.

The Minister, Deputy O'Keeffe, considers that the inter-agency team has been an effective solution to co-ordinate the activities of the relevant Departments, State development agencies and county enterprise boards in order to support employment opportunities for the people concerned.

The Government continues to monitor the position on employment and the Quinn Group generally. That is why the outcome of the sales process is important in putting the company back on a sound commercial and financial footing. This is the best way of protecting jobs and the wider interests of the taxpayer.

See this speech in context