Longer wait for payment claims

POLICYHOLDERS of the British American Insurance Company Ltd. (BAICO), which collapsed along with its sister company CLICO just over eight years ago, will have to wait longer for their payment of outstanding claims.

Yesterday was set to be the date that 15 000 BAICO policies be transferred to Sagicor, to be followed by the commencement of payment of claims.

However, when the Judicial Manager (JM) for BAICO, the Financial Services Commission and all other relevant parties returned to the High Court yesterday, it was agreed that 30 days would be given for meetings to be held between Sagicor, the JM and the Government of Barbados (GOB) in an attempt to resolve the situation.

Following the 9:30 a.m. Court hearing, President of the Barbados Investors and Policyholders Alliance Inc. (BIPA), June Fowler, told the media outside the Supreme Court complex that the setback was as a result of concerns raised by Sagicor, regarding the recent economic downgrades.

“Really, what we have heard is that Sagicor has some concerns. They have issued a formal letter to the Judicial Manager outlining their concerns and those concerns really are with the last downgrade.

“They are concerned about that because we are looking at $92.1 million in the value of bonds that are to be a part of this deal and also the possibility of a credit event likely happening.

“So really and truly, we came here today to let the Judge know what’s happening and Sagicor has asked for further extension to have negotiations…

“We have 30 days or less, depending on when those meetings are held with Sagicor and the Government, to come back to let the Judge know what’s happening,” Fowler said.

The president said she is hoping that when the relevant parties return to court on July 3, there is a positive response. She said given the setback, BAICO policyholders who were looking forward to the transfer taking place yesterday, continue to be anxious.

“Now to have this setback, given the economic situation, it gives us cause to be anxious. But we are hopeful that as they sit at the negotiations table that the Government and Sagicor and the Judicial Manager will be able to hammer out whatever concerns Sagicor have…

“Whatever guarantees they need, whatever additional support Sagicor needs from the Government to make this deal happen, will happen. We will play our part in seeking to make that happen as well,” Fowler said.

The Barbados Advocate has seen a copy of a letter written by Sagicor in relation to the GOB funding for the transfer of insurance business of BAICO to Sagicor Life Inc.

The letter, dated May 25, 2017, read that prior to the December 2016 Court approval of the Sales and Purchase Agreement, Sagicor had expressed concern about the adequacy of the funding to be provided by the GOB, in light of the then economic climate.

The letter also read that in February 2017, recognising the legitimacy of Sagicor’s concerns about the sufficiency of GOB funding, the GOB agreed that it would issue bonds to cover an increased principal sum of Bds$92.1 million with higher yields.

“Regrettably however, in March 2017, the GOB was downgraded further to CCC+ (negative outlook) and CAA3 (stable) by S&P respectively, with Moody’s assessing the likelihood of a credit event in the near-term as ‘very high’.

“There is currently a high level of uncertainty in the economic climate with compelling indications that there will be future restructuring of GOB bonds. To the extent that the implicit worth of the GOB bonds is now a matter of some debate, the requisite level of GOB funding cannot be determined reliably at this time,” the letter read.

The correspondence also outlined that in as much as necessary regulatory approvals are unlikely to be secured before the intended completion date of May 31, the adequacy of GOB funding is yet to be agreed; and an updated actuarial valuation of the portfolio is still pending, “we propose that the parties continue to negotiate in good faith with a view to reaching agreement on funding arrangements at such time as the prevailing economic uncertainty resolves, and in any event not later than September 30, 2017”.

Meanwhile, BIPA’s public relations officer Michael Goodman told The Barbados Advocate that he hoped the new development does not mean that policyholders would have to wait much longer for their money.

“We hope it’s just a little longer and it’s not worse than that. BIPA hopes that the Government of Barbados and Sagicor can revise the agreement to suit both parties and that the deal will go ahead as planned, even if a little delayed,” Goodman said. (AH)