Claims for up to IR pounds 650m ( pounds 620m) are being made jointly by Allied Irish Banks, which took over the Insurance Corporation in 1983, and by the insurance firm's administrators, Price Waterhouse.
Ernst & Young is alleged to have been negligent and in breach of duty and contract in its audit of the Insurance Corporation between 1978 and 1983, and it is claimed that as a result the business suffered substantial losses. The claims are being strongly resisted by Ernst & Young.
Within a year of buying the Insurance Corporation in 1983 AIB found it had heavily under-provided for claims. In 1985 the bank wrote off its investment and pulled out altogether, leaving the separately incorporated subsidiary to be taken over by the Irish government for a nominal amount, to prevent a financial crisis. An administrator was appointed and the government established a IR pounds 100m fund to bail out the company.
The administrators are thought to be suing for between IR pounds 300m and IR pounds 500m through Icarom, as the company formed to take over the rump of the Insurance Corporation is now called.
AIB is thought to be claiming about IR pounds 150m as a result of its losses and agreements with the Irish government lasting into the next century to cover continuing costs of the failure.Reuse content