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European Commission - Press release
State aid: Commission clears aid from Irish Insurance Compensation Fund for restructuring of Quinn Insurance
Brussels, 12 October 2011 - The European Commission has approved under EU state aid rules support measures of over €700 million provided by the Irish Insurance Compensation Fund (ICF) for the restructuring of Quinn Insurance Limited (QIL), an Irish general insurer which ran into difficulties in 2010 and is currently in administration. As part of the restructuring, the viable Irish general insurance part of QIL has been sold to a joint venture between the US insurer Liberty Mutual and Anglo Irish bank, while the non-viable UK operations will be wound-down. The viability of the healthcare insurance of QIL is not assessed in this decision as its own sales process is still going on.
Commission Vice-President Joaquín Almunia, in charge of competition policy, said: "The administrators of Quinn Insurance have worked out a plan that provides for a viable future for the healthy parts, ensured an adequate burden sharing by the shareholders and limited the distortions of competition."
QIL was put under administration in 2010 due to a breach of regulatory solvency requirements. The Commission's decision finds that QIL's Irish general insurance business is viable, because it represents the historically profitable part of the firm and will benefit from Liberty Mutual's expertise. Anglo Irish Bank is itself the subject of an orderly winding down, and does not contribute in cash to the transaction. It is merely an existing creditor to the Quinn Group. In this context, by releasing some guarantees, Anglo Irish will receive partial ownership of QIL and will improve its position as a creditor, acting thereby as a private creditor would.
An important measure to restore viability was the closure of the loss-making UK business, with the exception of the private motor insurance business, which will be continued until it can be sold or closed down. Furthermore, the Irish general insurance parts of QIL were split-off and sold to the highest bidder. Overall, the restructuring measures result in a substantial reduction of the market presence of QIL. As a result, the restructuring of QIL is in line with the Commission's Communication on restructuring in the financial sector during the crisis (see IP/09/1180) and as such is compatible with Article 107.3.b of the Treaty on the Functioning of the EU (TFEU).
QIL has been providing general insurance service to the Irish and UK market since 1996 and was put under administration in March 2010 due to a breach of regulatory solvency requirements.
To allow the administrators to conduct the reorganisation of QIL as a going concern, the Irish Insurance Compensation Fund (ICF), a state-body established to finance the repayment of policyholders' claims in case of an administration or liquidation, will cover the gap between the firm's assets and liabilities. With the help of the ICF, QIL could continue to compete on the Irish and UK general insurance markets until the good parts of it will be sold. The policy holders' claims will be repaid from the proceeds of these sales. Without this support, QIL would have been liquidated, leading to limits on the repayments to policy holders.
The non-confidential version of the decision will be made available under the case number SA.33023 in the State Aid Register on the DG Competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.
Amelia Torres (+32 2 295 46 29)
Maria Madrid Pina (+32 2 295 45 30)