Quinn sale to Liberty signed

The acquisition by LMDI of certain assets and liabilities of QIL follows the 14 April announcement of a preferred bidder.

It will see jobs in the Republic of Ireland and Northern Ireland preserved and an investment of €200m in the new company. LMDI will be fully solvent and will operate its head office from Cavan.

LMDI is 51% owned by LM and 49% owned by JVN. Each party is investing in line with their shareholding with LM contributing €102m and JVN €98m.

LM will be wholly responsible for the operation of LMDI; JVN will have no involvement in the day to day operation of the new company. QIL and Anglo Irish Bank will each have a 50% economic interest in JVN.

QIL will provide funding of €98m, while AIBL through its role in restructuring Quinn Group financing, has facilitated the lifting of guarantees over Quinn Property Holding’s assets held by banks and bondholders.

This will release value of €264m to QIL which will reduce the call on the Insurance Compensation Fund. As part of this arrangement QIL’s advance of €98m will be repaid first and thereafter, benefits of the investment realised will be shared equally between QIL and AIBL.

QIL will have no role in the operation of either LMDI or JVN. QPH, a subsidiary company of QIL, has assets valued at €464m. As part of the deal, banks and bondholders holding guarantees over QPH assets will release these in return for €200m.

The remaining QPH assets, valued at €264m, will be transferred to QIL to reduce a call on the Insurance Compensation Fund, minimising taxpayer and policyholder payments.

In the Republic of Ireland, LMDI is acquiring the existing and future business of QIL which includes both the assets and the liabilities of the business.

Following the completion of the sale, which is subject to certain conditions and estimated to take at least 12-14 weeks, LMDI will assume €81m in ROI net liabilities (€792 million QIL net liabilities offset by €711m in QIL assets).

These liabilities will be offset by the investment of €200m by LM and JVN. The investment by LM and JVN means that LMDI will have net assets of €119m when the transaction completes.

This level of net assets satisfies the solvency requirements set out by the Central Bank of Ireland.

A 12-14 week transition process will commence from today during which time LMDI will obtain all the necessary regulatory consents from parties including the Central Bank of Ireland and the European Competition Authority as well as achieving compliance with relevant consumer legislation.

A decision on the brand name that the company will trade under in the future will be announced in due course.

Mr McAteer said: “Whilst we are confident all business written since our appointment in the UK is profitable, all bidders expressed concern around the scale of the prior year losses and the sustainability of the UK business. Consequently, QIL will remain under administration, will retain existing and future UK business, and will write profitable UK motor policies until 31 December 2012.”

LMDI will administer all aspects of any new and existing UK policies (including claims handling), and will have the ability to purchase the UK book from QIL at any point up to 31 December 2012. As part of LMDI’s management of the UK book, LMDI will enter into a transition services agreement with QIL.

Quinn-healthcare Limited is not a party to this transaction, and is being sold separately to QIL.

As previously announced, all 1570 staff in ROI and NI will transfer to LMDI under TUPE thereby protecting their current terms and conditions.

The Manchester office will close on 27 May 2011. In the Republic of Ireland and Northern Ireland, the core offices will be Cavan, Enniskillen and Blanchardstown and these will continue to operate on a business as usual basis.

Mr McAteer said: “The preservation of all jobs in ROI and NI will have a hugely positive impact on local economies and communities considering that these QIL jobs are estimated to have a value to their regions of approximately €100m per annum.

Mr McAteer said: “QIL has retained a significant customer base despite the uncertainty of the administration process. Over 275 000 customers have chosen to continue doing business with the company because of the excellent value and service it delivers, and its ongoing presence in the marketplace has maintained competitive intensity for the benefit of all consumers. I would like to thank them for their loyalty over the last 14 months.

“I am confident that LMDI will further enhance the brand and product offering for all customers. In particular, Liberty Mutual’s financial strength will provide assurance to many commercial brokers and offer them further opportunities to grow the business together.

“Finally, but most importantly, I would like to thank all QIL staff who have experienced a great deal of uncertainty since the administration process began. I would like to thank them for their continued professionalism and commitment over this time.”

Mike Aynsley, group chief executive, Anglo Irish Bank, said: “I welcome the result of the joint administrators’ bidding process in that it stabilises and secures this important business which has strong prospects and it preserves Irish jobs. It is also a key step in the broader strategy to maximise, over time, the recovery of Quinn Family debt for the taxpayer”.

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