The High Court approved a scheme to transfer certain Quinn Insurance Limited (QIL) non-life insurance business to Liberty Mutual Direct Insurance Company Limited (Liberty Direct), finding that objections to the proposal lacked substance. The judgment did not itself complete the transfer: the court said the transaction remained conditional on specified requirements being met and said it would hear counsel on any further orders needed.
The petition was brought under section 13 of the Assurance Companies Act 1909. QIL had been in administration since court orders in March and April 2010, after it became unable to meet supervisory requirements. The proposed transfer covered specified property, motor and casualty insurance business relating to risks in Ireland and certain UK risks. Some QIL business, including policies retained by QIL, was outside the transfer.
The court considered objections lodged by the Law Society of England and Wales, the Concerned Irish Businesses group and the Concerned Irish Citizens group. The Law Society’s representative withdrew its objection during the hearing. The other groups raised concerns including the effect on policyholders, the release of guarantees, claims reserves, employees and the absence of public access to the asset purchase agreement.
The judge found that the scheme and actuarial report gave objectors sufficient information to make their case, and that they had not shown grounds to inspect the confidential asset purchase agreement. He also rejected the claim that the proposed transfer would prejudice transferring or remaining policyholders. The independent actuary had concluded that a material adverse impact on either group was unlikely, and the court said objectors had produced no evidence to challenge that assessment. The judgment said €320 million from the Insurance Compensation Fund was required for the transfer, with a further €418 million available for QIL’s remaining business following the court’s earlier approval in principle of a €738 million drawdown.
On guarantees, the judge accepted that the administrators had obtained legal advice on enforceability and found the proposed release would preserve the solvency of relevant subsidiaries and release assets to QIL. The judgment said a €200 million payment to secure releases would be funded from the relevant subsidiaries’ assets, not by QIL. The court also accepted actuarial evidence that claims reserves were appropriate and noted that the transaction documents provided for a post-closing review, within limits, if reserve levels were disputed.
On employees, the judge accepted evidence from the chair of QIL’s Employee Representative Board that most staff supported the transaction and wanted to retain their jobs. The judgment said employees’ contractual and pension entitlements would carry over and found no evidence of a regulatory breach or danger to their position.
The court approved the scheme after considering the Minister for Finance’s assent, Central Bank outline approval and European Commission approval. Completion still depended on conditions including final insurer authorisation and solvency certification for Liberty Direct, the required fund arrangements, and other transaction approvals. The judgment also noted that the parties could walk away if matters, including court proceedings, were not concluded by 15 December 2011.