BASSETERRE ST. KITTS (July 5, 2009) -- The Government of St. Kitts and Nevis, while making a commitment to make decisions which are considered prudent in securing the interests of all policyholders and investors of the British American Insurance Company Limited, is not in a position to bail out the company.
In statement issued at National Assembly on Friday July 3, the Minister of Finance, the Hon Dr Timothy Harris, said that his ministry, through the Registrar of Insurance, Kerstin Petty, had maintained contact with the management of British American Insurance Company in St. Kitts and Nevis.
“I must make it clear that this government is not intervening as a guarantor of the funds of depositors and investors of British American,” pointed out Dr Harris. “This government as is the case with all other governments of the Eastern Caribbean Currency Union (ECCU) does not have financial wherewithal to bail out British American for its failed management and investment policies and action.
“Neither does the government consider it in the public interest to overwhelm the country by adding British American Insurance Company’s liabilities to national debt. Our debt strategy calls for debt reduction not accumulation.”
Minister Harris told Parliament that as a result of the recent financial problems affecting CL Financial, the Board of the British American Insurance Company has conceded that the situation has spiraled to a level which is now beyond their control, and policyholders and investors in St. Kitts and Nevis stand to lose in excess of $135 million.
Action being taken, he told Parliament is the result several meetings of Ministers of Finance, Financial Secretaries and Insurance Regulators of the ECCU as well as meetings of officials of the Eastern Caribbean Central Bank that were convened to discuss the issues surrounding the grave situation and to propose the way forward in dealing with British American Insurance Company.
The government of St. Kitts and Nevis, according to Harris, is intervening so as to ascertain the true position of the company and to verify and corroborate certain information, claims, and statements presented to the Registrar of Insurance by British American, its depositors and investors.
“Such information will assist us in determining the best way forward for the company, the investors and policy holders,” said Dr Harris. “Such intervention is necessary and urgent if we are to mitigate instability and systemic risk to the Eastern Caribbean Currency Union.”
He announced that the Registrar of Insurance, Kerstin Petty, had met on Thursday July 2 with staff of British American in Basseterre and Charlestown where she outlined the nature and objectives of the intervention, among them the protection of policyholders or potential policyholders of the company against the risk of the registered company’s inability to meet its liabilities.
Other terms included to avoid further exacerbating the risk of the company being unable to meet its liabilities, avoid further jeopardising the reasonable expectations of policyholders or potential policyholders, and generally grant access to company files and documents and to allow the Registrar or anyone appointed by the Registrar to take such action during the intervention as appears to her necessary to ensure the proper administration at the Act.
The Finance Minister told Parliament that this measure of intervention was at the request of the members of the Board of Directors of British American Insurance Company, disclosing the fact the Board had chosen to step aside and allow the Regulators to take control.
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