A Central Bank inquiry into alleged regulatory breaches at Quinn Insurance Limited (QIL) prior to its collapse in 2010 cost the bank almost €1.9m.

According to the regulator's annual report for 2020, the inquiry formally ended last year after settlement agreements were reached with two former directors of the company.

Details of the settlements with Liam McCaffrey and Kevin Lunney were never disclosed by the parties.

The inquiry, set up under the Central Bank’s Administrative Sanctions Procedure, was focused on one alleged prescribed contravention by the two former directors.

The probe involved eight private inquiry management meetings from 2016 to 2019, as well as seven days of public hearings that began in May of 2019.

Fees and expenses for the members of the inquiry totalled €216,202, while fees for the legal professionals advising the inquiry and enforcement team came to €725,539.

Document management and stenography services cost €954,562.

The costs of successfully defending a High Court action in 2016 and 2017, that was brought by the two former QIL directors challenging the inquiry, came to €364,844.

But costs were awarded to the Central Bank by the court following the ruling.

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 €800m. It was later sold to Liberty Insurance for €1.

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

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 were 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 an EU non-life insurance regulation.

The bank launched a formal inquiry in 2015 into the conduct of Mr McCaffrey and Mr Lunney.

The suspected breach related to the soundness and adequacy of QIL's administrative and accounting procedures and internal control mechanisms relating to the management and monitoring of the assets of QIL's subsidiaries.

The procedures were necessary because assets of subsidiaries of QIL formed part of the group's technical reserves and some of those subsidiaries had provided guarantees on certain Quinn Group finance arrangements.