Wednesday, November 04, 2009

New Company To Handle BAI

Governments of the Eastern Caribbean have agreed to create a new company to deal with the troubled British American Insurance Company.

The governments have approved a regional plan to assist in the structure and funding of a proposed new entity to take over some of the company’s assets and liabilities. The plan will require the approval of the court.

The proposed strategy was adopted to maintain continued financial stability in the region, and to protect the interests of creditors and investors.

The new company will be capitalized by the governments of Trinidad & Tobago, Barbados, and strategic investors.
The goal in funding the new company will be primarily to cover as far as possible the principal amounts invested by policyholders.

Judicial managers were appointed from among professionals of a single group, the chartered accounting firm of KPMG.
Except for Dominica, the full reports of these Judicial Managers were filed with the respective courts last Friday October .
The proposed new company would have its headquarters in the Eastern Caribbean and would assume the traditional life insurance, medical insurance and annuity business of British American branches in the region.

Over the next few weeks, the governments of the ECCU will be meeting with a broad range of stakeholders to explain the proposed plan and to address their concerns and receive their views and suggestions.

A status report on the troubled company was presented by the Vincentian Prime Minister, Dr. Ralph Gonsalves at the Tenth Sir Archibald Nedd Memorial Lecture at the St. Georges’ University on Monday November 2nd, 2009. He currently serves as the Chair of the ECCB Monetary Council Sub-Committee on insurance matters.

Dr. Gonsalves said that The ECCB Monetary Council’s sub-committee is pursuing a regional solution to prevent systemic risk to Eastern Caribbean Currency Union’s financial system, adding that the Committee is seeking to raise USD $75M to inject into the company.
So far, positive responses have come from the Bahamas, Barbados, a commercial bank and other entities.

One of the main concerns centered around whether investors will get their money back. He told the audience that investors will get “some” of their money back “over a period of time”

Dr. Gonsalves pointed out that since 1997 British American has been operating as an insolvent company. And that it was kept afloat by the balance sheet of its parent company C.L. Financial.