KINGSTOWN, St. Vincent – The government here is taking practical steps to recapture investments by citizens and local companies jeopardised by the collapse of British American Insurance Co. Ltd (BAICO), and its parent company, CL Financial.
Prime Minister Dr. Ralph Gonsalves told Parliament on Monday that the Registrar of Insurance has instructed lawyers to put in court a commercial bank here, “which had held out that it was in a fiduciary position in relation to certain assets” from the failed entities.
Gonsalves, as in August 2011 when he first made the announcement, did not name the bank but said that the claim for EC$140 million (US$56 million) was not against the Bank of St. Vincent and the Grenadines, of which the state is a major shareholder.
“It had taken a while for the statement of claim to be settled. I was advised on Friday that very shortly that statement of claim will be filed, a pre-action letter has already been sent,” he told lawmakers while responding to a question from Opposition Leader Arnhim Eustace.
Gonsalves noted that judicial managers of the failed BAICO have sued several individuals in Miami in relation to US$75 million (US$27.8 million) arising from the Green Bay Property transaction.
He noted that while the Troubled Asset Relief Programme in the United States was 1 per cent of that country’s GDP, “… the meltdown for British American, CLICO amounts to liabilities of close to 16 per cent of our GDP”.
“If we had a 1 per cent GDP problem, it would have been difficult but not a challenge to the extent that this one is. And again, I ask for persons to have patience with us. This is a deeply involved issue and there are many twist and turns,” he said, noting that some Vincentian entities have invested as much as EC$13 million (US$4.8 million) in the failed enterprises.
“And I appreciate that many persons, especially those who have had their annuities, are suffering, finding it very difficult because of the meltdown of British American, CLICO.
“Mr. Speaker, I use sometimes that you can’t get words more powerful in our Caribbean [than] Colonial Life, the word ‘colonial’; British-American. When you have those three combining, and if you put a dash of something else along to it – I don’t want to say what that dash is – they are very powerful words; can lead you to buy anything so,” Gonsalves said.
18,700 policyholders to benefit
Meanwhile, in a ministerial statement to Parliament, Gonsalves said 18,700 — or two-thirds of BAICO’s policyholders in the Eastern Caribbean Currency Union (ECCU) — would benefit from the capitalisation and sale of the traditional insurance business.
This figure includes 3,515 Vincentian policyholders; 4,725 Grenadians; 3,960 Kittitians; 3,321 St. Lucians; 1,706 Antiguans; 954 Dominicans; 368 Anguillans, and 127 Montserratians.
Gonsalves said that “a significant number” of the 2,700 policies across the ECCU “would have elapsed because of the uncertainties” surrounding the companies.
“So it is only fair that we seek to have the resources available to say to those persons … ‘If you pay up your outstanding premiums and interest for that particular period, a new entity is buying so that you would not have lost’, I suspect that individuals would decide as to how they would do it,” he said.
He, however, added that it would be difficult to find out which policies have lapsed because of uncertainty.
Gonsalves further said that he last Wednesday updated his cabinet on the progress for the recapitalisation and sale of BAICO’s traditional insurance business.
Cabinet authorised him, as Minister of Finance, to sign the deed of delegation and appointment on behalf o the government.
The cabinet also directed the Attorney General to advise on the steps that may be required to effect the deed, and authorised the waiver of taxes and other government charges payable on the transaction.