Speaking during a Dáil debate on the Insurance (Amendment) Bill Sinn Féin finance spokesperson Pearse Doherty has described the €720 million fund as “yet another bailout by the public to a toxic bank, its bondholders and a major US insurance company”.
The Insurance Bill, which is due to pass all stages in the Dáil this week proposes the imposition of a 2% levy on all non-life insurance policies in the state to pay off bond holders and other liabilities at Quinn Insurance as part of the sale of the company to Liberty Mutual and Anglo Irish Bank.
Deputy Doherty said:
“We are being told that the proposed changes to the Insurance Compensation Fund are required in order to provide €720 million to cover payments on policies to customers of Quinn Insurance in the North of Ireland and Britain.
“However, like so many aspects of this story things are not that clear. It appears that assets from Quinn Insurance of more than €400 million were used as security against loans for the same value from Anglo Irish Bank for other commercial activities pursued by the company. As a result, bondholders with Anglo Irish Bank effectively have a hold on this portion of Quinn Insurance’s insurance book. Liberty Mutual, seeing this as a liability is insisting that the Government and the Insurance Compensation Funds fill the gap.
“In order for the Anglo Irish bond holders to relinquish their claim on the €400 million of assets at Quinn Insurance they have been offered a payoff of €200 million.
“Put another way €200 million of the €720 million requested by the administrator will effectively be used to pay off senior bondholders in Anglo Irish Bank, after the Compensation Fund monies are lodged and become part of the general assets of the company.
“No matter what sophisticated financial semantics that are used to describe this sorry affair it is hard to see it as anything other that yet another bailout by the public to a toxic bank, its bondholders and a major US insurance company.”