BASSETERRE, St. Kitts – MINISTERS of Finance from across the region recently outlined a proactive proposal to deal with the financial breakdowns of the Colonial Life Insurance Company (CLICO) and British American Insurance Company (BAICO).
One of the major plans put forward is an intervention by the international audit, tax and advisory company KPMG.
During the 65th Meeting of the Eastern Caribbean Central Bank Monetary Council, held in Dominica last Friday (Jul. 10), the 2008/2009 report of the Governor of the Central Bank was presented. The report addressed monetary and credit conditions, while also providing directives and guidelines on matters of monetary and credit policy.
In relation to CLICO and BAICO, the Monetary Council reaffirmed its commitment to pursue four guiding principles on the matter. These principles include keeping BAICO a concern in a form yet to be determined, crafting a solution which is regional in nature, protecting the interests of depositors and investors and ensuring BAICO does not become a “systematic risk” to the region’s financial system.
A great deal of emphasis was placed on devising a next step to build upon the guiding principles. It was agreed that the Council should contract the consulting firm KPMG to perform the technical work required in bringing into existence a new company to take over the operations of British American Insurance Ltd.
KPMG is a global network of professional services firms with over 135,000 people working together to provide audit, tax and advisory services to more than 140 countries. It works with clients drawn from the corporate, government and non-profit sectors.
According to the report from the Monetary Council, KPMG will undertake its task in two phases.
“In Phase 1 it will advise the sub-committee of the Monetary Council charged with insurance matters on the latest financial position of BAICO and prepare a financial feasibility study on the establishment of an OECS Insurance Company (ECI), and in Phase 2 it will execute the agreed strategy,” the report stated.
The scope of work, which includes the financial review of BAICO-Eastern Caribbean (EC) branches and a feasibility study on a new Insurance entity, is outlined in KPMG’s letter to Dr. the Hon Ralph Gonsalves, the current Chairman of the Council. A report from such scope KPMG is anticipated to be submitted by September 30, 2009.
Another issue of great concern to the region is the decision by the Monetary Council to proceed in appointing a judicial manager for EC branches of BAICO. This decision came as the Council also proposed to revise the Memorandum of Understanding (MOU) with Trinidad and Tobago to take into account recent developments with the company.
With respect to CLICO, the Council agreed to the development of an MOU with the Government of Barbados. This will form an understanding and commitment of the Government of Barbados to the depositors, investors and policyholders of CLICO.
