Quinn Insurance in Administration

[TabClear]

How is Quinn responsible in any way for forcing the bailout? Anglo was doomed no matter what SQ did (legally) on the cfds. Whatever your views on how the family reacted to the unraveling of the whole sorry mess, as I said earlier if he gambled and lost €3.2bn that's his prerogative. He had earned the right to do that by building up his empire to that value.

The fact that debt has landed on the taxpayer is not his fault. Do you blame every small business owner who defaulted on an Anglo loan for the bailout?

[muppet]

How is Quinn responsible in any way for forcing the bailout? Anglo was doomed no matter what SQ did (legally) on the cfds. Whatever your views on how the family reacted to the unraveling of the whole sorry mess, as I said earlier if he gambled and lost €3.2bn that's his prerogative. He had earned the right to do that by building up his empire to that value.

The fact that debt has landed on the taxpayer is not his fault. Do you blame every small business owner who defaulted on an Anglo loan for the bailout?

Firstly, we are paying an insurance levy already for Quinn.

Secondly, you easily dismiss Quinn's 28% CFD in Anglo as having nothing to do with our bailout. The €3.2bn debt was covered by the taxpayer. That is a fact. You might believe Quinn's testimony that Anglo shafted the poor wee innocent ordinary man, but I certainly don't. He brought the problem to them remember, not the other way round.

[supersarsfields]

At the minute Anglo received the Quinn Group (plus multiple overseas properties) in exchange for the 2.8 Billion. So the losses on the Quinn's loans is nowhere near the value of 2.8billion that we regularly hear from the media. So if it's decided that the Quinn's can't contest their loans the taxpayer won't be on the hook for 2.8B.

I've given my views on the insurance levy previously as we'll so there's little point in me going back into that.

[TabClear]

I don't know enough about the insurance levy but I can't see how it caused the bailout. If the levy is due to losses In quinn insurance that strikes me as a failure in regulation.

I'm not dismissing the cfds. The problem that SQ brought to Anglo was that he had pursued a legal investment strategy that had went bad with the result that his fortune was on the line. Anglo could have turned round and said bad luck Sean and let market forces do their work. Again, not sure what he did wrong in your eyes?

for example, Joe blogs owns a house worth €100k and mortgages it to buy €100k of Anglo shares. Credit crunch happens and he's lost the lot. What has Joe done wrong?

[muppet]

I don't know enough about the insurance levy but I can't see how it caused the bailout. If the levy is due to losses In quinn insurance that strikes me as a failure in regulation.

I'm not dismissing the cfds. The problem that SQ brought to Anglo was that he had pursued a legal investment strategy that had went bad with the result that his fortune was on the line. Anglo could have turned round and said bad luck Sean and let market forces do their work. Again, not sure what he did wrong in your eyes?

for example, Joe blogs owns a house worth €100k and mortgages it to buy €100k of Anglo shares. Credit crunch happens and he's lost the lot. What has Joe done wrong?

Joe Blogs wasn't Ireland's richest man.

You seem to buy the line that Quinn approached Anglo for nothing more than a chat. Of course we have been told this chat informed them that Quinn done something that they recognised instantly would probably destroy them. And then the big bold Anglo did their thing but all of it had nothing to do with Quinn. Not his fault. They forced him to take the money that allowed him to keep his business? But it wasn't his fault that he went along with it. They forced him to sign away his, and his children's assets? But when he went along with it, none of it is his fault.

Then SS reminds us of his previous argument that the removal of Quinn from the Insurance business was all about the Regulator. But again it wasn't Sean Quinn's fault.

Then we have the kids. And that letter. But none of it is Sean Quinn's fault either.

http://www.bbc.co.uk/news/uk-northern-ireland-19063419

The above explains it better than I can.

[muppet]

http://www.independent.ie/irish-news/courts/500m-loan-was-agreed-over-phone-within-an-hour-sean-quinn-tells-court-29997120.html

DONAL O'DONOVAN – 11 FEBRUARY 2014

Former businessman Sean Quinn outlined how he secured a €500m loan over the phone in less than an hour from Anglo Irish Bank in December 2007.

The bank offered the loan without being asked and it was arranged directly with then chief executive David Drumm, Mr Quinn said yesterday.

That was after Sean Quinn explained to David Drumm that his then investment in Anglo Irish Bank was set to become widely known, once audited accounts for the Quinn Group were prepared.

"I rang David Drumm in the first or second week in December 2007. He asked me what it would take to sort it out. I said about €400m and he was back within the hour, and he'd give me €500m to tidy it up," Sean Quinn told the court.

"I never asked him for any money, but I was pleased that he offered me money."

The exchange was contained in evidence given by Sean Quinn in relation to his investment in so-called contracts for difference (CFDs) linked to shares in Anglo Irish Bank, and how that led him to borrow close to €2bn from Anglo Irish Bank.

The loan from the bank was made to Quinn Group, which was running low on cash because of loans it was making to the Quinn's investment company, which in turn needed the cash to meet losses on the Anglo Irish Bank share bets.

The CFD position meant the Quinn family controlled almost 30pc of Anglo Irish Bank shares by the spring of 2008, Quinn said.

CFDs are indirect investments, but the brokers that sell them buy real shares in order to protect themselves if the investor is right, and prices rise.

Quinn invested in the bank because he believed in it, he said.

"I thought it was a marvellous institution, it had grown its profits by 30pc compound over 30 years," he explained.

He even believed the investment, which led to losses of €3.2bn, was low risk because of the amount of collateral being put up at 25pc.

"We thought, we are on our own obviously, no one else thinks it, we thought we took a very conservative approach," he said.

He remained convinced of the value of the investment even after the share price went into decline, he said

"The logic in that was very clear. The share price had reduced by around 40pc, the profits had increased by 46pc in the year 2007. It was a phenomenal result.

"Where I come from those mathematics don't add up."

The fact that accounts were signed by auditors, and assurances he got that the bank was in good shape, convinced him to boost the stake, he said.

"There were brokers left right and centre talking about Anglo being the best bank in the world. I could see no reason why you would see selling shares in Anglo would be a good idea. It turned out I was wrong."

Mr Quinn said he was responsible for decisions, such as the one to invest in the Anglo Irish Bank CFDs but did not get involved in actually carrying out the transactions involved, which were done through staff at his businesses.

"I have never been involved in the administration of the business. I'm involved in spending money stupidly. I finished school at 15. I never got involved in this aspect of the business," he said.

Irish Independent

[supersarsfields]

I don't know enough about the insurance levy but I can't see how it caused the bailout. If the levy is due to losses In quinn insurance that strikes me as a failure in regulation.

I'm not dismissing the cfds. The problem that SQ brought to Anglo was that he had pursued a legal investment strategy that had went bad with the result that his fortune was on the line. Anglo could have turned round and said bad luck Sean and let market forces do their work. Again, not sure what he did wrong in your eyes?

for example, Joe blogs owns a house worth €100k and mortgages it to buy €100k of Anglo shares. Credit crunch happens and he's lost the lot. What has Joe done wrong?

Joe Blogs wasn't Ireland's richest man.

You seem to buy the line that Quinn approached Anglo for nothing more than a chat. Of course we have been told this chat informed them that Quinn done something that they recognised instantly would probably destroy them. And then the big bold Anglo did their thing but all of it had nothing to do with Quinn. Not his fault. They forced him to take the money that allowed him to keep his business? But it wasn't his fault that he went along with it. They forced him to sign away his, and his children's assets? But when he went along with it, none of it is his fault.

Then SS reminds us of his previous argument that the removal of Quinn from the Insurance business was all about the Regulator. But again it wasn't Sean Quinn's fault.

Then we have the kids. And that letter. But none of it is Sean Quinn's fault either.

http://www.bbc.co.uk/news/uk-northern-ireland-19063419

The above explains it better than I can.

Funny I'm still waiting on the regulator to provide the legal references for what he based his decision on. Despite being challenged on it numerous times. Yet the Quinn's and PWC have provided a report WITH legal references outlining why the Regulator was wrong in relation to the cross guarantees. But as I said its pointless debating it. We've been through it already.

[TabClear]

Why does it matter that SQ was Ireland's richest man? That's my point, he had the right to gamble billions because he had it. Or have you made a unilateral decision of a threshold that applies after which you need some sort of public consent to spend your money?

Could you answer two questions? In your view did SQ do anything wrong in building up his stake in Anglo? Secondly What do you think he should have done when Anglo offered him the option of unwinding his position?

[muppet]

http://www.thejournal.ie/anglo-trial-sean-quinn-1304548-Feb2014/

SEAN QUINN TOLD the Financial Regulator that he had been greedy and needed to be reined in, the trial of three senior executives at Anglo Irish Bank has heard.

The Financial Regulator met with Sean Quinn in February 2008 to tell him that there were concerns about the scale of his financial problems.

According the minutes of the meeting on 28 February 2008 which were shown to the court, Quinn said that he deeply regretted the situation.

Speaking about himself in the third person, Quinn told Patrick Neary that "Sean Quinn  needed to be reined in". He said that he had been greedy  with his involvement in contracts for difference, the complex financial instruments which he had used to build up his investment in Anglo Irish Bank.

Quinn told the regulator that he had lost money before in tech stocks in 2001 and had committed to not getting involved again  but instead had invested in stocks he was familiar with, in banking and building, both of which had been badly hit by the burgeoning financial crisis.

However Quinn reiterated that he believed it would be a mistake to dispose of his holding in Anglo as the share price continued to drop as he remained optimistic that the share price would recover.

Liam McCaffrey, the former CEO of the Quinn Group who was giving evidence, agreed that it was not usual for the Financial Regulator to meet someone on their own.


The meeting came just eight days after Quinn had already met with the Financial Regulator about issues with Quinn Insurance Limited, which would eventually lead to the company being fined €3.5 million several months later.

The  meeting on 20 February was attended by seven people, including Sean Quinn and Liam McCaffrey on the Quinn side of things and Patrick Neary and Con Horan of the Financial Regulator. Minutes of the meeting say that Neary began the meeting by highlighting the seriousness of matters under consideration.

Sean Quinn apologised sincerely for the financial situation at Quinn Insurance and the problems that it was creating for the Financial Regulator, according to the minutes. He said that anything that would be told to the Regulator by Quinn Insurance from now on would be 100 per cent true.

Sean Quinn assured the financial regulator that €100 million in cash would be put into Quinn Insurance by the end of March 2008.
According to the minutes, Quinn also expressed the hope that the Financial Regulator would accommodate a company that had made a mistake and "freely admitted" that the company had made errors in its transactions.

Quinn was pressed several times during the meeting about injecting cash into the company immediately but he indicated that he would be unwilling to sell shares too quickly as he was optimistic that the price would recover.

Asked whether the Financial Regulator would have been told by anyone from Quinn that Quinn had been building up a stake in Anglo, McCaffrey answered: "No".

Quinn's name would not have appeared on a shareholding listing because of his use of Contracts for Difference, and while there had been some speculation in the media that he was building up his holding, his use of 9 different CFD providers meant that it would have been very difficult for anyone to know what his shareholding was, the court heard.

Patrick Neary said that the issue would remain a private matter between the Financial Regulator and the company, which Sean Quinn agreed with, saying that he wanted to get the matter sorted as quickly as possible, according to the minutes of the meeting.
image

Brendan Grehan SC acting for Patrick Whelan asked if McCaffrey agreed that Quinn was gambling with CFDs. "There's no other polite way of putting it," he said.

McCaffrey disagreed with the use of the word gambling, saying he preferred to refer to it as a highly leveraged derivative.

McCaffrey agreed with Grehan that he could see why the bank would be concerned as its share price fell even as Quinn's holding in the bank continued to increase, saying it was a large concentration of the ownership.

However he did not answer a question from Grehan about how having one owner of CFDs meant the person was vulnerable and  "it would be a little like a train going off the tracks".

"That calls for speculation," McCaffrey told the court. "I'm not in a position to speculate on that".

McCaffrey gave the evidence on the third day of the trial of three former senior Anglo Executives. Sean FitzPatrick of Greystones, Pat Whelan of Malahide and Willie McAteer of Auburn Villas in Dublin 6 have all pleaded not guilty to 16 charges of unlawfully providing financial assistance to individuals to buy shares in the bank.

Sean Quinn, who is in the courtroom, is likely to give evidence in the trial this afternoon.

[supersarsfields]

Even with the above withdrawals that SQ used to meet the marginal calls they're solvency levels were still in line with most Irish insurance companies and in fact better than some. However it was only the regulator's decision in relation to the cross guarantees that he placed the company into administration.

TOM LYONS – 12 MAY 2013

A series of reports sent by PWC – the former auditor of Quinn Insurance Limited (QIL) – to the Financial Regulator strongly disputes whether the State was right to place the insurance group into administration.

The Financial Regulator made the decision to take control of QIL from the family of former billionaire Sean Quinn based on its belief the insurance company was insolvent.

This was, it said, because of the existence of intercompany guarantees relating to assets included in the insurance group's reserves, worth €448m for the financial years 2005-2008.

Copies of the PWC reports, however, submitted to the Financial Regulator in 2010 state that the accountants believe its audit opinions on the insurance group's accounts were "appropriate".

PWC also claims it had "no reason to believe that the existence of cross-company guarantees of any type would have any financial impact".

PWC states that it "does not agree" with the Financial Regulator's assessment that the guaranteed assets should have been excluded from QIL's reserves.

The PWC reports also show that the disputed assets were only removed from QIL's reserves "on the instruction of the Financial Regulator."

Removing the cross-guaranteed assets from the insurance company's reserves overnight made QIL insolvent, according to the Quinn family's advisers, Moore Stephens.

The London accountancy firm has produced a report for the family which backs PWC and concludes the Financial Regulator was wrong to conclude QIL was insolvent.

The Quinn family has bitterly disputed the Regulator's decision, which they believe made it impossible for them to ever repay their debts to Anglo Irish Bank.

[muppet]

Why does it matter that SQ was Ireland's richest man? That's my point, he had the right to gamble billions because he had it. Or have you made a unilateral decision of a threshold that applies after which you need some sort of public consent to spend your money?

Could you answer two questions? In your view did SQ do anything wrong in building up his stake in Anglo? Secondly What do you think he should have done when Anglo offered him the option of unwinding his position?

You are the one who started comparing Quinn with Joe Blogs. I pointed out the farce of that by stating that Quinn was Ireland's richest man. To compare how Anglo would deal with a 'small business' man, with a man who held almost 30% in shares in Anglo, and who was Ireland's richest man is imho farcical and pointless.

First question:

1) In funding his CFD gamble, the Regulator believes he had illegally used funds from QI. That is why he was removed. But don't take my opinion. Here is what Sean Quinn himself said: "Quinn Insurance made loans to a related company which amounted to €288m in May 2008 when the accounts were finalised. These loans breached insurance regulations and as a result of this the Financial Regulator has sanctioned Quinn Insurance and myself. I accept complete responsibility for this breach of regulation. http://www.finfacts.ie/irishfinancenews/article_1015080.shtml

2) While you limit the question of wrongdoing to him 'building up his stake' in Anglo. That is hardly the whole story. That is why this case is so interesting and might shed some light on how the courts view, for example his part in the unwinding of the shares and in particular his kids case against everyone.

Second question:

Not for me to say. However I will point out that according to Carswell, Quinn first told Anglo he had built up a circa 24% stake. They were horrified and told him to unwind it. Quinn went out and bet more. It appears from the testimony of recent days that the loans were due to Quinn running low on cash and presumably thus struggling with the margin calls (see the underlined statement in the Indo article above). So much for his bet being his problem only.

[supersarsfields]

What also became clear in the case is that Anglo was aware of SQ's involvement before the infamous meeting in Buswells. If Anglo hadn't offered SQ the first loans in dec 2007 for 500m then SQ would have been forced to take the hit then before the share price completely tanked in 2008. Also they were still spinning the line that the bank was in "rude health" when they were well aware the bank was in a mess.

Insisting that Anglo executives were aware as far back as late 2007 that the bank was in trouble, Mr Quinn said he wouldn't have bought one share if he had similar information.

Asked how he'd feel if former Anglo chief executive David Drumm hadn't been willing to lend him money at the end of 2007, Mr Quinn replied: "I'd be a happy man today."

[muppet]

What also became clear in the case is that Anglo was aware of SQ's involvement before the infamous meeting in Buswells. If Anglo hadn't offered SQ the first loans in dec 2007 for 500m then SQ would have been forced to take the hit then before the share price completely tanked in 2008. Also they were still spinning the line that the bank was in "rude health" when they were well aware the bank was in a mess.

Yes, there were rumours. A Sunday paper had speculated on the matter. The market is usually rife with rumours. But it was a CFD. No one knew how much he had for sure.

As for Anglo talking about 'rude health'. Did you expect a press release stated they were goosed?

[TabClear]

Why is it farcical to compare SQ and Joe blogs if we are talking about principles of law? Surely they should apply equally?

Anglo told SQ to unwind the position. So what? That's not their call to make. Do you think if some multi billion fund manager was told to do something by a portfolio company but they thought they could increase their profit or reduce a loss by acting differently they would agree to it? For everyone with a pensions sake I hope they wouldn't.

It's one of the functions of being a public company, you want to access the public markets for cash you have to accept the volatility of the same markets.

[supersarsfields]

What also became clear in the case is that Anglo was aware of SQ's involvement before the infamous meeting in Buswells. If Anglo hadn't offered SQ the first loans in dec 2007 for 500m then SQ would have been forced to take the hit then before the share price completely tanked in 2008. Also they were still spinning the line that the bank was in "rude health" when they were well aware the bank was in a mess.

Yes, there were rumours. A Sunday paper had speculated on the matter. The market is usually rife with rumours. But it was a CFD. No one knew how much he had for sure.

As for Anglo talking about 'rude health'. Did you expect a press release stated they were goosed?

Not at all. I just would have expected them to not get involved in share support. Had they not at that stage then Quinn would have been forced to unwind his stake at that stage before the St Paddys day massacre.