BASSETERRE, St. Kitts – MATTERS of jurisdiction and risk exposure regarding the teetering British American Insurance Company (BAICO) have forced the Eastern Caribbean Central Bank (ECCB) Monetary Council to seek expert legal counsel in order to protect the interests of regional stakeholders from further risk posed by the insolvent insurance company.
Although he did not outline the specifics of the Council’s next step, St. Kitts-Nevis’ Minister of Finance Dr. the Hon. Timothy Harris argued that seeking legal advice is necessary as the body aims not only to protect policy holders and investors, but also to bring clarity to information regarding the nature and extent of the exposure of BAICO.
Describing the BAICO liquidity difficulties as “sufficiently grave”, Dr. Harris explained that the Monetary Council, a group of the region’s finance ministers, decided that a sub-committee within the Eastern Caribbean Currency Union (ECCU) would meet to make a selection of a legal team. He added that the appointed team would advise Member States of the ECCU with respect to resolving the BAICO matter.
“You have a company whose board has said that they are operating as an insolvent company and that has certain implications, legally and businesswise, and we need to be able to grapple with them,” Harris asserted. “The insurance business is a very involved and complex business and what we have sought to do is to mandate that the necessary legal and technical expertise be available to advise us with regard to all matters that are relevant to the British American situation and how we may go about fulfilling our own policy positions which we have preferred,” he added.
Last week, the Monetary Council proposed a four-prong approach to bring about resolution to the BAICO issue. The plan is centred on maintaining the issue as a going concern, protecting the interests of regional investors and policy holders, promoting a collective regional response and minimising the possible risk exposure.
Harris said as the Council enters what he calls “a maze of legal issues”, it is critical to be appropriately advised in a “very delicate and specialist” nature which would coincide with the body’s four-prong approach. He therefore said the Council would have to recruit consultants and lawyers with expertise in solvency and restructuring.
“In the context of our four-prong approach, what we are doing is marshalling the requisite legal expertise because this matter is at a state where legal intervention is going to be required. The situation has deteriorated and we cannot exclude any options which may be legally available. The sooner we can get expert legal counsel to consider the breadth of options available to us, the better,” Harris stated firmly.
The Monetary Council is due to meet in the first week of July. But according to Harris, as matters unfold, there may be need to call special meetings to respond to or pre-empt the “evolving actions” that the Monetary Council may have to address.
