Page last updated at 13:13 GMT, Friday, 9 April 2010 14:13 UK

The threat to the House of Quinn

By Conor Spackman
BBC News

Quinn Insurance office
Quinn Insurance headquarters are in County Cavan

For 600 people who work for Quinn Insurance in County Fermanagh, the future is far from certain.

Last week, the company was put into administration after the financial regulator just across the border in the Irish Republic said that it had breached key rules governing the insurance market.

In its most basic form, the regulator's claim was that the group's liabilities outweighed its assets and that in the worst case scenario, the insurer would be unable to pay claims against it.

That claim has been hotly disputed by the man behind the business Sean Quinn, who, as recently as Thursday, told Irish state broadcaster RTE that Quinn Insurance was "cash rich" and was sufficiently solvent.

He said that the company does not need a massive cash injection from Anglo-Irish Bank which has been proposed as one means of taking the business out of administration.

That would make Anglo-Irish a majority shareholder, injecting 150m euros into the insurance company and using another 550m euros to pay off bondholders.


That path is a matter of concern for the regulator Matthew Elderfield.

One of his worries is the fact that Anglo, a huge casualty of the banking crisis, is now state-owned and the EU Commission has strict rules about state aid to private companies.

More importantly, the proposal is anathema to Sean Quinn.

He built his family empire, said to be worth 3.8bn euros in 2008, from nothing, starting by selling gravel from his family farm.

Fermanagh people still talk about the man who made billions out of a hole in the ground, and it is a matter of personal pride to him that he keeps control of his business.

But what Mr Quinn wants and what will happen may be two different things.

His family is already in debt to Anglo-Irish to the tune of about 2.8bn after a series of complicated deals with the ill-starred bank went badly wrong.

If he is unable to raise enough capital, then the possibility of the business being sold casts a particularly gloomy spectre over Fermanagh and its neighbouring county in the Irish Republic, Cavan.

Sean Quinn
Sean Quinn and his family were said to be worth 3.8bn euros in 2008


That is because Mr Quinn is a "local champion" a man who believes in putting most of the jobs he has created in the area from which he sprung.

In an era of globalisation, his jobs remain in his home town of Derrylin with the possibility of outsourcing them to Durban or Delhi apparently far from his thoughts.

The same sentimental attachment is extremely unlikely to apply to any prospective buyer of his company.

Profit is the sole name of their game and if that means moving jobs from Cavan to Cape Town, then so be it.

That would be potentially disastrous for the remote, rural economy. While several hundred people are employed, several thousand rely on the salaries, whether relatives of those who work for Quinn, or those whose shops and businesses are sustained by employee spending.

And it is not as though this remote border area is coming down with alternative sources of employment.

Five years ago, the construction industry was a major source of jobs but has now been effectively reduced to dust by the housing market crash.

Ironically, construction and property are also key elements of the wider Quinn business portfolio.

The initial gravel pit has grown into major operations, selling cement and glass but those businesses now face their own threats because of the construction downturn.

A year ago, Quinn Cement announced that bulk production was being temporarily halted. The company told 65 workers not to return to work for a month.

Matthew Elderfield
The Irish financial regulator Matthew Elderfield applied to put Quinn Insurance into administration

The company insisted that the business was sustainable in the long-term but it shares with the other parts of the Quinn Group the burden of approximately 1.2bn euros of debt - a separate debt from that which the family owes.

Because of the downturn, the servicing of that 1.2bn euros debt relies on healthy revenue streams from the insurance business which Mr Quinn insists remains a cash cow.

He has projected profit of between 400m and 500m euros for the group as a whole over the next three years and said that the retention of the insurance business is key to that projection.

In short, if the insurance business is sold off, then the other parts of the group lose their lifeline and will also be in trouble.

That is why Mr Quinn talks about 5,500 jobs - every job in the Quinn Group - being put at risk because of the administrator's decision.

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