BRIDGETOWN, Barbados, Thursday December 21, 2017 – Regional insurance giant Sagicor Financial Corporation (SFC) has described as “grossly inaccurate” and “recklessly careless” a report attributed to the International Monetary Fund (IMF) that suggested the company is under-regulated.
Far from that, it said, it is “one of the most highly and actively regulated financial institutions in the Caribbean”.
SFC sought to make that clear yesterday, after online newspaper Barbados Today published an article quoting an IMF draft report as stating that the Sagicor group “poses systemic risk” for Barbados and the Caribbean. The document, published based on the findings of a mission from the IMF’s monetary and capital markets department to Barbados in October, also made comparisons to collapsed insurance company CLICO.
According to the article, the IMF said a brief review of Sagicor’s financial statements and actuarial reports did not reveal any untoward or serious financial or risk-related issues. But the Fund did note that SFC – which had total assets of US$6.8 billion and capital of US$1.3 billion at September 30 – is larger than CLICO before it collapsed and that the Financial Services Commission (FSC), the entity charged with supervising and regulating non-bank financial institutions, was not in a position to conduct adequate group-wide supervision.
“The group structure, business philosophy and operations are in many ways similar to those of the CLICO Group, another Caribbean financial conglomerate which failed ten years ago, and resulted in substantial losses. Notwithstanding the acknowledgement of the systemic relevance of the group, resulting from its size and interconnectedness, no formal college of supervisor exists, nor is the group subject to basic group-wide supervision,” Barbados Today quoted from the executive summary of the report.
The IMF added that the complexity of the Sagicor group “could potentially mask significant risks, critical correlations, and assessment of contagion risk arising from interconnectedness”.
SFC, a publicly-listed company which has more than 36,000 shareholders, operates in 21 countries in the Caribbean, Latin America and the United States.
“The Sagicor group poses systemic risk for the Caribbean region, which should be monitored on an ongoing basis,” the IMF said.
But in a statement published in the press yesterday in which it sought to reassure policyholders of its financial strength, Sagicor insisted that it is a well governed, financially strong international financial institution that is actively regulated by all the regulators in the countries in which it operates, and is in good standing in each of those jurisdictions.
“While there are no provisions for group regulations in the region, Sagicor has always treated the Barbados Financial Services Commission as our home regulator and has an open and transparent relationship with the FSC.
“We therefore find it grossly inaccurate and indeed recklessly careless that an article or a report can be published to suggest that Sagicor is an under-regulated financial institution. This assertion is not supported by the facts, as all can see from our frequent and various public disclosures. We are a large company by Caribbean standards, but we are a well-governed, successful, solid institution,” it contended.
Sagicor also pointed to its high ratings by AM Best, Standard & Poor’s and Fitch to support its position.
The FSC, meantime, has vowed there will never be another CLICO-type collapse under its watch.
“As long as the Financial Services Commission has staff and leadership at the senior level, which it has now, and a board of commissioners which is as qualified . . . Barbados will be secure. There will be no more collapses of entities in Barbados,” FSC chairman Sir Frank Alleyne said at a press conference yesterday.