BASSETERRE, St. Kitts – FOLLOWING last Monday’s (Aug. 24) meeting with the Prime Minister of St. Vincent and the Grenadines, Hon. Dr. Ralph Gonsalves, St. Kitts Minister of Finance Hon. Dr. Timothy Harris updated the public on the financial woes of the British American Insurance Company (BAICO).
PM Gonsalves, who currently serves as the Chair of the Eastern Caribbean Central Bank (ECCB) Monetary Council Sub-Committee on insurance matters, discussed the British American collapse with Harris and Hon. Nizam Burke, Minister of Finance of Grenada, and a member of the insurance ministerial sub-committee.
Emanating from what Harris described as a “productive and informative” meeting, the sub-committee reaffirmed its commitment to addressing the challenges facing the teetering financial institution. The body aims to protect policy holders and investors, attempt to keep the company financially viable, pursue a regional solution and prevent systemic risk to Eastern Caribbean Currency Union’s (ECCU’s) financial system.
In his assessment of the sub-regional spinoffs, Harris disclosed that BAICO is a $1.2 billion exposure for the ECCU’s financial sector. In the Federation alone, about 7000 individuals and corporate entities who have investments in the company stand to lose over EC $100 million in annuities, according to Harris. In all, the Federation has an EC $135 million in exposure in British American Insurance Company.
Harris stated that the issue is a serious one that requires a serious response.
“I am focused on these bigger issues rather than in the blame game. The country knows that this government’s intervention at a time when the Board of Directors abdicated their responsibility is happening because we care and we understand that the do nothing option will be disastrous,” he said.
The Ministerial subcommittee exchanged information on the work done so far by the firm of KPMG International as judicial managers discuss the way forward for the company.
The ministers agreed that in concert with the pursuance of the regional solution, a meeting at the ministerial level involving members of the Monetary Council of the ECCB and Finance Ministers of Trinidad and Tobago, Bahamas and Barbados would be convened in September 2009.
Harris said the Monetary Council has made significant strides to protect policy holders and investors, a commitment he noted would remain ongoing.
“We have expended millions of dollars on reinsurance premiums for British American OECS branches to protect policyholders, particularly during this hurricane season. We have contracted the firm of KPMG to do necessary assessments.
“This will be another major cost to be borne by governments in the first instance,” Harris said. “We are reaching out to international financial institutions and governments to assist us with stabilizing the insurance sector.”
The judicial manager that has assumed control of BAICO is expected to make a comprehensive report on the situation available by 30th September.
