Court approves €100m Quinn Insurance repament to State fund

A repayment of some €100 million to the State's Insurance Compensation Fund by Quinn Insurance, which has so far cost the fund some €1.23 billion, has been approved by the High Court.

The fees for the joint administrators of Quinn Insurance Ltd (QIL), including for their firm Grant Thornton Ireland, totalled some €935,000 for the period between July 2014 and September 2015 while fees for two law firms used by them over the same period totalled more than €1.5 million, comprising €621,000 for McCann FitzGerald and €992,339 for Maples & Calder.

The legal fees are expected to “escalate” due to forthcoming litigation by QIL against its former auditors PricewaterhouseCoopers, administrators Michael McAteer and Paul McCann of Grant Thornton said in a report to the court

That litigation is the principal remaining item in the administration and is unlikely to be concluded until 2019, they said.

In that action, they are claiming some €1 billion in damages over alleged negligent auditing of the company’s accounts and, should they win, any damages recovered will be used to partly or fully repay the ICF.

Reported fees

The admininistrators reported that their fees between July 2014 and September 2015 totalled some €935,000, based on €245,000 for the administrators and three staff, plus some €675,000 for Grant Thortnon Ireland.

That sum represented a “significant overall reduction” as the total professional fees incurred in the previous five quarters were some €1.8 million, they said.

The latest fees for the administaors are based on court-approved hourly rates of €375 for a partner, €290 for a director, €265 for a senior manager, €165 for a manager, €110 assistant manager and €65 for a senior.

Arising out of the administration, which began in 2010, the administrators reported some €1.233 billion has been paid out of the State fund to date, resulting in a 2 per cent levy on all non-life insurance policies.

Mr McAteer said in an affidavit they are increasingly confident the ultimate draw down on the fund will be “at the lower end of the €1.1 billion - €1.3 billion range”.

QIL does not anticipate, “at this point in time”, it will require any further drawdown from the fund in order to complete the administration, he said.

The president of the High Court, Mr Justice Nicholas Kearns, said he would make the necessary order approving the €100 million repayment which he was sure would be seen as a "positive step" in this "long running saga".

Auditor re-appointment

The judge made a further order repappointing Deloitte as auditor of QIL, for a fee of €60,000, for the purposes of completing the 2015 audit. Mr McAteer said the administators had negotiated the €60,000 fee, which represented a 48 per cent reduction of the previous year’s fee. That 2014 fee of some €114,000, plus Vat, reflected a 16 per cent reduction on the 2013 fee.

In their 18th report to the court, the administrators said most key issues to be dealt with by them are now finalised, including the transfer to Catalina of all UK and European policies written by QIL. QIL no longer has any insurance exposure and the principal issue remaining was the litigation against PWC, the report said.

The report said the administrators expected the ultimate cost of the QIL administration to the ICF will be some €1.1 billion.

Under an asset sale agreement with insurer Liberty, agreement was reached on claims reserves and other issues, the report said. All property assets had been sold, including the Iveagh Fitness Centre for €2.1 million. Some €13 million in payments are due to QIL over the next few years linked to previous property sales while some small investment assets totalling some €6.2 million will mature or be disposed of over the next few years, they added.