Thursday, April 17, 2014

Never trust a small island with a financial centre

Remember after the European financial crisis when we were assured that never again could a dodgy operator work out of one country and run up massive liabilities in another? --

[RTE] Up to 75,000 van and car drivers are being advised by the Central Bank to purchase a new motor insurance policy immediately following the collapse of Setanta Insurance. The insurance firm, which was licenced by the Malta Financial Services Authority and sold car and van insurance in Ireland, had been in the process of winding up its business here since January. However the company recently decided that a solvent run-off of the business was no longer viable and, at an Extraordinary General Meeting yesterday, decided to immediately dissolve and surrender its business licence.

The fact that the firm had adopted name from Irish mythology and yet chose to be based in Malta was perhaps a warning sign. There might be some in the EU who view it as rough justice that Ireland got caught out in this case, given the corporate tax issues.