BASSETERRE, St. Kitts – POLICYHOLDERS and investors of British American Insurance Company Ltd. (BAICO) may be made aware of the best way forward for the insolvent company by the end of this month, Minister of Finance and International Trade Hon. Dr. Timothy Harris stated.
In his ministerial address to Parliament yesterday (Oct. 20), Harris indicated that even though the institution has been under judicial review for almost three months, it is important that all stakeholders remain patient for the report, which is due at the end of October.
He stressed that it is equally important for policyholders and the authorities to avoid pre-empting the outcome from the judicial manager.
“I want members to bear in mind that British American’s involvement in our society and region was, and is, broad, deep and pervasive. Any rash move or injudicious statement would affect not only British American, but other institutions with beneficial and other interests in the company’s survival and survivability,” he stated.
Recognizing the gravity of the situation and the risk exposure that would have been caused to policyholders and investors in the Eastern Caribbean Currency Union (ECCU), regional governments moved to appoint a judicial manager in each Member Country.
In St Kitts and Nevis, Lisa Taylor of KPMG, Barbados was appointed pursuant to an order of the Eastern Caribbean Supreme Court dated July 31, 2009. The terms of her appointment, according to Harris, are outlined in the Court Order and she is obliged to provide the Court with guidance on the way forward.
At the level of the ECCU, the Ministerial Subcommittee on Insurance maintains its four-pronged approach to resolving what Harris deems to be a “financial debacle”.
This approach includes making decisions in the interest of policyholders, continuing operations of BAICO in some form, pursuing a regional solution and making decisions to prevent systemic risks.
Against this backdrop, Minister Harris put forward three main considerations to Parliament.
“The ‘do-nothing’ option would not produce efficacious results,” he asserted. “That is why we have been doing some things, such as updating of the Insurance Act, the intervention in the Branch and the appointment of a Judicial Manager.”
Secondly, he noted that liquidation of an insolvent company is “never an attractive proposition”, as it can be very timely and difficult to have a full settlement.
A third option, according to Harris, would be to determine whether there is any way of carrying on some or all operations of BAICO by a new entity set up for that purpose, or by other entities acquiring some of its operations. This was suggested by the ECCB Monetary Council previously and would require much attention to be placed on the legal and financial considerations.
Harris stated, “In the interim, I am advised that the Judicial Manager is in effective control here. She has taken control and management of all assets. Premiums paid are kept in a separate account rather than being mixed in a pool.”
The Judicial Manager is available to answer queries of the various policyholders and investors in British American regarding their personal and private situations, a move the Finance Minister strongly recommends.
