Sell-off of British American in Eastern Caribbean still on course
BASSETERRE, St Kitts and Nevis, Thursday, November 10, 2011 – The Monetary Council of the Eastern Caribbean Currency Union has revealed that a number of high quality bidders have come forward to purchase the traditional business of the British American Insurance Company (BAICO) and the Council expects to complete transactions within the first half of next year.
In a recent statement, the Council acknowledged that while in February it had indicated that the complex transaction would take six to nine months to complete, the need to obtain regulatory approvals for the sale of the business across nine territories (the Eastern Caribbean and The Bahamas) was a process unlikely to be completed by the end of this year and therefore the final phase of the process of selling BAICO’s traditional business was expected to be completed in the first half of 2012.
The council disclosed that it was seeking legal advice on the best way to effect the transfer of the traditional business across nine separate countries, among other issues. It said that the Eastern Caribbean governments and the judicial management team handling BAICO had worked together to identify some of the key technical and practical challenges involved in effecting this transfer.
According to the statement, actuaries have been engaged to undertake more detailed analysis of the portfolio and the financial contribution needed to recapitalize BAICO’s traditional business. For a start, the judicial managers of BAICO have begun legal proceedings against CL Financial in Trinidad and Tobago as they seek to recover US$49.5 million owed by CL Financial to BAICO as part of their work in rationalising BAICO’s liabilities.
Trinidad is also expected to play a key role in providing assistance to BAICO policyholders (including important institutions within the ECCU, such as banks and credit unions) who have non-traditional policies, such as Executive Flexible Premium Annuities. At the moment funding is still being sought from the government of Trinidad and Tobago in order to provide financial support to these policyholders.
In Barbados, where the sale of BAICO’s assets is being undertaken as a separate transaction, the judicial manager has indicated that the company’s insurance portfolio could soon be transferred in a two-phase transaction to a reputable and highly regarded company.
David Holukoff of KPMG has stated that this multi-tiered transaction would see the health and property books would be transferred ahead of the life and annuity business.
The chartered accountant and certified fraud examiner said the decision to first transfer the health and property books was because they were smaller, less complicated and required more immediate attention.