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Quinn Group and Quinn Insurance Announce 2007 Financial Results
24th October 2008
Quinn Group
Gross sales have increased by 29% to €2.115bn (€1.640bn, 2006), whilst operating profit before exceptional items has increased by 22% to €315m (€256m, 2006). Due to the impact of reduced gains in Quinn Insurance’s investment portfolio pre tax profit before exceptional items has reduced to €403m (€433m, 2006). This performance reflects strong trading across all parts of the Group despite the more difficult economic backdrop during 2007.
Exceptional charges of €829m were incurred in 2007 reducing the recorded pre tax position to a loss of €425m. These exceptional costs related primarily to a provision against amounts advanced to related party investment companies. These advances were deemed not to be fully recoverable due to a fall in the value of the underlying investments as a result of exceptionally difficult investment conditions. Whilst the turmoil in investment markets has continued any further write downs necessary in its 2008 accounts will not exceed €130m.
Net cash flow from operating activities in 2007 was €500m and whilst economic conditions in the current year are more difficult, our investment in new projects, for example a new 54 MW wind farm, a new packaging plant, a new radiator plant now commissioned in Newport, and a significant property portfolio in emerging economies, will allow us to grow underlying profits in the overall group. As outlined in the 2007 Financial Statements the value of Quinn Group was €3.8bn net of debt.
Quinn Insurance
|
2007 |
2006 |
Premium Income |
€1,093m |
€779m |
Operating Profit |
€161m |
€168m |
Investment Gains |
€84m |
€155m |
Pre-Tax Profit |
€245m |
€323m |
Quinn Insurance continues to play a key role in the performance of the Quinn Group. The business performed strongly in 2007 with gross written premium increasing by 40% to just under €1.1bn. The new health insurance business contributed 22% of the growth. The company remained very profitable in 2007 generating profit before tax of €245m compared to €323m in 2006. Underwriting profits remained strong but investment gains reduced, as the exceptional equity gains in 2006 were not repeated in 2007 due to weaker global equity markets.
As outlined in the notes to its 2007 Financial Statements, Quinn Insurance advanced funds that supported investments made outside of the Group during 2008 and as at May 2008 these loans amounted to €288m. Whilst at that time there was some uncertainty as to the valuation of these loans due to the volatility of the underlying assets the security on them has been restructured and the majority of the loans have now been repaid. Consequently it is envisaged there will be no impact on the Company’s 2008 financial statements. Quinn Insurance is in a very strong financial position with €2bn of assets (including over €800m in cash), shareholders funds in excess of €500m and continues to be very profitable in 2008.
Commenting on the results Sean Quinn, Chairman of Quinn Group, stated:
“This past year has been the most eventful in my 35 years in business. Our established businesses have continued to trade very profitably and we have being building up a substantial property portfolio in Eastern Europe, Russia and India and have also invested heavily in listed equities initially through contracts for differences. Our property investments have proved to be very successful but unfortunately we have incurred significant losses on equity investments. Whilst the equity losses were one off and have not put undue financial strain on our business I am very disappointed with the decisions I made in over-exposing ourselves to equities.
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. While I accept that I made mistakes, I feel that the levels of fines (€3.25m for the company and €0.2m for myself) do not reflect the fact that there was no risk to policyholders or the taxpayer but are a result of the pressures existing in the current environment. However we will pay the fines and move on.
Because of the above issues I informed the board on 27th June this year of my intention to retire from the board of Quinn Insurance. Whilst I will continue as Chairman of Quinn Group, given the experience and capability of the existing management team, I will be able to spend more time on family assets outside the Group particularly our exciting property portfolio, which is now active in 10 countries. I am pleased to announce that Jim Quigley has agreed to take over from me as Chairman of Quinn Insurance. Jim has a long and successful career in the insurance industry including senior executive and board positions in GRE and VHI. I am confident that Jim, our Chief Executive Colin Morgan and the management team and staff in Quinn Insurance will ensure that the company continues to be Ireland’s most successful and fastest growing insurer. To facilitate this growth the company will open new offices in Navan and Cork in the coming months.”
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