November 6, 2009
Plans to form new company to salvage ailing British American

Plans are in place to form a new insurance company to salvage the ailing British American Insurance Company (BAICO).{{more}}

This proposal, put forward by the Judicial Managers handling the BAICO fiasco, has been endorsed by the Governments of the Eastern Caribbean Currency Union (ECCU).

Prime Minister Dr.Ralph Gonsalves made the disclosure in Grenada last Tuesday evening while announcing the strategies agreed upon by the ECCU to handle the BAICO affair.

The new company, which will be capitalized by ECCU Governments and the governments of Trinidad & Tobago, Barbados, as well as other investors, will have its headquarters in the Eastern Caribbean and will assume the traditional life insurance, medical insurance, and annuity business of BAICO branches in the Eastern Caribbean.

Gonsalves, who is also Chairman of the Insurance Sub-committee of the Monetary Council, stated that the governments of the ECCU are mindful of the grave consequences of BAICO if it is liquidated.

Before the new company comes into operation, it has to be endorsed by the judiciary.

Once it is given the all clear, Gonsalves said the ECCU

governments stand ready to participate in the proposed new entity with a view to protecting the interest of regional policy holders and annuitants.

Without a substantial capital injection, policy holders

and investors are expected to suffer tremendous losses, said Gonsalves.

“It is with this in mind that the ECCU governments are pleased to announce that we have agreed upon a strategy to assist the Judicial Managers with the structuring and funding of the proposed new entity to take over certain of the assets and liabilities of BAICO in the Eastern Caribbean,” said Gonsalves.

The prime minister said the ECCU Governments wish to see the new company set up within six months of the court’s approval of the plan.

He added the process of forming and funding the proposed new company is one that will take some time.

“Indeed even after the company is established, it will take time before there is sufficient liquidity to allow for payouts to nay policy holders.

“Policy holders and annuitants should, therefore, not expect to have immediate access even to those funds which may ultimately be recoverable,” adding that the Governments of the ECCU are committed to preserving the principal investments of its citizens and residents in BAICO as far as practicable.

Gonsalves expressed optimism that this plan is perhaps the only real opportunity to avoid liquidation.

In July this year, regulators in the ECCU and the Bahamas intervened in the operations of BAICO and applied to the Courts in the several jurisdictions to appoint Judicial Managers. (HN)