Dáil Éireann Debate, Thursday - 29 May 2014
53. Deputy Noel Grealish asked the Minister for Finance if he or his officials have raised the issue of Setanta Insurance at EU level; if his Department is aware of the reason the Malta Financial Services Authority did not use the option of administration instead of liquidation, as was done here in the cases of Quinn Insurance, ICI and the PMPA; and if he will make a statement on the matter. [23552/14]
Amharc ar fhreagraIn my role as the Minister for Finance I have responsibility for the development of the legal framework governing financial regulation in Ireland. The day to day responsibility for the supervision of Irish authorised financial institutions is a matter for the Central Bank of Ireland which is statutorily independent in the exercise of its regulatory and supervisory functions.
Setanta Insurance Company Limited (Setanta) is a Maltese incorporated company which was both authorised and prudentially supervised by the Malta Financial Services Authority (MFSA). Its financial position was not supervised by the Central Bank of Ireland. Setanta was regulated at EU level in accordance with a directive known as Solvency I which places requirements on the amount of regulatory capital European insurance companies must hold against unforeseen events. I understand that Setanta met its EU regulatory obligations and under EU law and was therefore, entitled to trade across EU borders before this development.
The Central Bank was notified by the MFSA on 16 April that the shareholders of Setanta had resolved to wind up the company. The effect of this was that Setanta did not have sufficient funds to be able to honour its full obligations towards claimants, policyholders and other creditors. Consequently Setanta was formally placed into liquidation by the MFSA on the 30 April 2014 and Mr. Paul Mercieca was appointed as Liquidator. It should be noted that the option of placing the company into administration as happened to Quinn Insurance - thus supporting the operation of the business on a going concern and safeguarding the interests of all policyholders - is not an option available under Maltese law.
My officials have been in discussions with the Central Bank of Ireland, the MFSA and with the Setanta Liquidator and I have asked them to convey my wish that every effort is made to facilitate Setanta policyholders in obtaining new motor insurance policies and in understanding their overall position. Furthermore the Central Bank continues to have ongoing contact with the MFSA and with the Liquidator of Setanta on a range of matters.
My Department and the Central Bank will be reviewing the circumstances relating to Setanta and will be reporting to me on what lessons can be learnt, though it should be said that because most of the relevant legislation is EU determined there may be limits on what can be done in the short-term. Because of this however the matter has also been raised with the European Commission and it has indicated that it will also review whether any issues raised relating to the regulatory and legislative framework require action. In this regard, it should be noted that with the introduction of the more risk sensitive Solvency II from 1 January 2016, there should be less likelihood of this type of situation arising in the future.
