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Dáil Éireann debate -
Tuesday, 7 Nov 2000

Vol. 525 No. 2

Written Answers. - Insurance Corporation of Ireland.

Brian O'Shea

Question:

375 Mr. O'Shea asked the Minister for Finance the estimated cost to the taxpayer in the year 2000 brought about by the collapse of the Insurance Corporation of Ireland in 1985; and if he will make a statement on the matter. [23868/00]

The former Insurance Corporation of Ireland, now called Icarom plc, was taken over from Allied Irish Banks by the State and placed under High Court administration in 1985. The High Court administration of Icarom plc still continues and is not expected to be completed for some years.

The only cost falling on the Exchequer as a result of the funding arrangements for the High Court administration of Icarom arises from an interest-free loan of £32 million which was advanced to Icarom by the Exchequer in 1993 and which is repayable not later than 2012. The cost to the Exchequer of this loan is represented by the interest forgone, which is estimated to amount to £2.1 million annually, based on the yield on 20-year fixed-rate Government stock at the time the loan was advanced. The £32 million interest-free loan was part of additional funding arrangements which were put in place in 1992 and which also involve an additional annual contribution of £8.8 million from Allied Irish Banks for each of the 20 years up to 2012.
The final cost to the Exchequer cannot be determined until the administration is completed and may be less than the £2.1 million annually referred to above.
The Exchequer contribution to the funding arrangements for the High Court administration of Icarom plc consisted of a £100 million loan, advanced in 1985 for a term of 15 years, and the £32 million loan which I have outlined above. The Deputy may be aware that the £100 million loan was repaid by Icarom from the company's own resources in September 2000, as scheduled. Under the 1985 funding arrangements AIB and the other banks made an annual contribution of £7 million towards the interest costs of the £100 million loan. The Exchequer did not bear any of the costs of that loan.
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