(Barbados Nation) Two Barbados insurance companies have been prohibited from writing new business by the Supervisor of Insurance.
Prime Minister David Thompson announced on Monday that Clico International Life and British American Insurance company are also both set to be placed under judicial management – but for different reasons.
In the case of Clico International Life, he explained that the Oversight Committee, which was set up by the Ministry of Finance and parent company Clico Holdings Barbados Ltd. to oversee the sale of three of Clico’s subsidiaries, was experiencing difficulty in selling Clico Life, because of the large number of Executive Flexible Premium Annuities, which carried high interest rates and were short term deposits.
He stated that potential bidders had expressed concern about this liability which was in excess of B$300 million – most of which matured in 2012.
“The Oversight Committee is therefore exploring with management and the actuary a number of restructuring options for the company in order to make it saleable,” Thompson said, adding that as a result the life of the Oversight Committee had been extended for six months ending June 12, 2010.
“It is hoped that within that period a feasible restructuring plan can be achieved in order to bring about a sale of the life company,” the Prime Minister said.
He explained that the restructuring process would involve some adjustment to the terms of the short-term liabilities, so as to achieve a better matching of assets and liabilities.
This, he said, might involve having to place the company under judicial management if there was no policy-holder agreement to the proposed restructuring of the company.
“In the meantime, the company has been prohibited from writing new business by the Supervisor of Insurance until it has been able to satisfy the conditions in the Insurance Act, pertaining to the Statutory Fund,” Thompson said during Monday’s annual Estimates debate in Parliament.
However, the Oversight Committee has made recommendations to the board for the sale of Clico General Insurance Ltd. and Clico Mortgage & Finance Co Ltd to CGI Ltd and the Barbados Public Workers’ Co-operative Credit Union, respectively. The Prime Minister stated that these negotiations should be concluded shortly with the signing of agreements.
With regard to British American Insurance Company, Thompson explained that the Solicitor General was in the process of preparing the necessary paperwork to request the court to place that company under judicial management to protect the interest of policy-holders.
He said the Bahamian Company and its branch operations in the Organisation of Eastern Caribbean States (OECS) were all under judicial management and the judicial managers were trying to achieve a sale of the operations along with the Barbados entity.
The Prime Minister also announced that the Financial Services Commission would come into effect on July 1, with responsibility for the regulation of insurance and pension business; credit unions; the securities industry and international business companies, where applicable.
