The Central Bank has reached a settlement with former Quinn Insurance Limited (QIL) director, Liam McCaffrey, bringing to an end its inquiry into allegations about his actions while in charge at the company.

The development was revealed in the bank's annual report for 2019 published today.

"In December 2019, the Central Bank entered into a settlement agreement under its Administrative Sanctions Procedure with Mr Liam McCaffrey, a former director of QIL and a person formerly concerned in the management of QIL," It said.

"This concluded the Central Bank’s Inquiry into Mr McCaffrey, under Part IIIC of the Central Bank Act 1942 (as amended)." 

Five years ago the regulator established the inquiry to investigate allegations that Mr McCaffrey and another former director, Kevin Lunney, contravened 1994 regulations requiring that administrative and accounting procedures and internal control mechanisms at the insurer were sound and adequate.

Quinn Insurance Limited collapsed into administration in early 2010 after the discovery of a massive financial hole in the firm's accounts, estimated to be more than €800 million.

It was later sold to Liberty Insurance for €1.

Seven years ago the Central Bank fined QIL €5 million after it found that it had failed between October 2005 and March 2010 to maintain adequate solvency margins and had insufficient internal control mechanisms.

However, because the firm was in administration and the fine would therefore have come from the Insurance Compensation Fund, the penalty arising from the settlement was waived.

The regulator also carried out another investigation to establish whether there had been breaches of regulations by management of Quinn Insurance between 2005 and 2008.

It found there was reasonable grounds to suspect that "certain persons who were concerned in the management of Quinn Insurance participated in the commission of a suspected prescribed contravention" of EU non-life insurance regulations and launched a formal inquiry in 2015.

The administration of Quinn Insurance has led to claims totalling €1.1 billion from the Insurance Compensation Fund.

A 2% levy was imposed on non-life insurance policies by the Government in 2012 to bridge a financial deficit left in the fund after the insurance company's collapse.

Mr McCaffrey and Mr Lunney currently both work for building products and packaging firm Quinn Industrial Holdings, 

Mr Lunney was abducted on his way home from work on 17 September last year, severely beaten and left on the side of a road in Co Cavan.

The Central Bank didn't say whether or not it had also reached a settlement with Mr Lunney.

"Given the circumstances arising for Mr McCaffrey at the time we reached the settlement, which were unrelated to the Central Bank’s Inquiry, the Central Bank will not be making any further comment," the bank said.