Brian Hayes (Dublin South West, Fine Gael)

I thank Senator Wilson for raising this matter and recognise the substantial all-party work that has gone on for a substantial period behind the scenes with both this Government and the previous Government to arrive at the result we have on this matter. As the Senator is aware, the appointment of the administrators to take over the management of Quinn Insurance Limited, QIL, was taken in the best interests of the firm's policyholders and the purpose of the appointment was 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, with one of their initial concerns being to try to ensure the value of the business was maintained to make it as attractive as possible to potential buyers. A key factor was the reopening of the profitable parts of the UK business.

In response to a detailed case from the joint administrators, the Central Bank allowed QIL to reopen private motor insurance business at the end of April 2010. Before making its decision, the bank carefully considered the information provided by the administrators on the important improvements in the company's underwriting model and significant strengthening of its pricing structure. It also consulted closely with the UK. In this regard it should also be noted that the administrators also sought to have the commercial lines of business in the UK reopened. 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 last of advisers on any prospective sale of QIL at the request of the joint administrators. The advisers, on behalf of the joint administrators, issued an information memorandum on 27 August last 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. I understand 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 2 of the sale process. They conducted further due diligence, including the consideration of the necessary commercial information, enabling them to make a final bid.

The joint administrators have considered the final bids and have selected the preferred bidder, Liberty Mutual-Anglo, which they believe best meets the objectives of their appointment, namely, a solution that puts the business back on a sound commercial and financial footing while at the same time protecting the interests of policyholders. Another factor in their decision to go with the Liberty Mutual-Anglo proposal is the fact that virtually all the jobs are protected, aside from 24 redundancies in Manchester. The sale is subject to regulatory approval and the completion of contract details. It should be noted that Liberty Mutual is the fifth largest property and casualty insurer in the United States and is a very well respected company. Liberty will own 51% of the joint venture and will operate the insurance company. Anglo Irish Bank will own 49% and will have no involvement in the business. As the Senator will appreciate, the financial details remain confidential and are subject to the completion of legal and other arrangements being finalised.

The position regarding the wider Quinn Group is that Anglo Irish Bank has appointed a share receiver to the Quinn family's shares in the Quinn Group. The receiver holds these shares on Anglo Irish Bank's behalf. It should be noted that a share receiver is fundamentally different from a company receiver and will not be involved in the sale of businesses or assets. However, this appointment has allowed Anglo Irish Bank, together with the senior creditors, to restructure the boards and to remove Quinn family members and their associates from key board and management positions.

This decision by Anglo Irish Bank to appoint a share receiver is very much a commercial one and I, in my role as Minister of State, and indeed the Minister for Finance had no input into this matter. In this context it should be noted that under the relationship framework put in place under the Anglo Irish Bank Corporation Act 2009, which governs the relationship between the bank and its shareholder, the State, issues relating to the commercial activities at the bank and day-to-day management decisions are a matter for the board in respect of which the Minister for Finance has no role. I have been informed, however, that the decision to appoint a share receiver will have no significant impact on jobs in the wider Quinn Group.

I understand that the joint administrators did an initial evaluation of the Quinn Group proposal which they considered highly conditional. However, they came to the conclusion that it was not feasible as, funding issues aside, they felt that, among other things, the assumptions underpinning it were overly optimistic, and there was likely to be a consensual agreement with the banks and bondholders. In summary, they felt that the proposal was not a realistic alternative to the Liberty Mutual-Anglo proposal.