Despite Minister of Finance Chris Sinckler’s protestations of innocence, it has emerged that the Ministry of Finance is not entirely blameless in the delay of a settlement to the Colonial Life Insurance Company Ltd (CLICO) and British American Insurance Company (BAICO) Ltd matter, at least in the case of the BAICO transfer.
Barbados TODAY investigations revealed that the Ministry of Finance, Sagicor, which is to take over the BAICO portfolio, and the BAICO judicial manager KPMG, have been engaged in a continuing back and forth which has stalled progress towards a resolution.
The May 30 deadline for the transfer of BAICO’s individual life and annuity policies to insurance giant Sagicor was missed, prompting the judicial manager to propose a new transfer completion date of July 31, 2017.
KPMG also pointed out that recent valuation estimated that Government support would be $88.4 million, as opposed to the previously estimated $90 million.
A major part of the delay stemmed from Sagicor’s concern about the economy and Government’s financing, given the island’s junk status rating.
A July 2, 2017 court document which followed a meeting on June 9 between Sagicor and the ministry showed the insurance company had repeated a number of concerns, raised previously in a May 25, 2017 letter to the judicial manager.
At the June 9 meeting, Sagicor had asked that the parties await a more favourable outlook on Government’s debt re-profiling and the economic environment.
It had also called for a protection clause, approved by the court, to be included with Government bonds issued as part of the transfer, essentially protecting their face value; or that the interest of the proposed Government bonds increase from the proposed range of 7.75 per cent to 8.95 per cent to a range of 10.25 per cent to 11.75 per cent.
In subsequent correspondence from the judicial manager to the Ministry of Finance, it was noted that the ministry had agreed to advance the discussions, including the holding of talks with the Solicitor General regarding the feasibility of the inclusion of a protection clause in Government bonds via court order.
Government also reportedly agreed to meet with the Central Bank regarding the re-profiling of Government debt and any indication of “eventuality and timeliness”.
“As such we would appreciate hearing from you in relation to the above as a matter of urgency. We would also like to take this opportunity to request a further meeting with the Ministry of Finance as soon as practically possible,” the judicial manager had said.
However, in its June 30 letter to KPMG, Sagicor said following its meeting with Government it had not received any formal response on the matters discussed.
“We have today contacted the Minister of Finance seeking clarity as to whether any firm decision has been taken with respect to our concerns about the Government of Barbados financing. He has assured us that he will meet with his team again today to clarify the Government’s position. We therefore await formal response of the Ministry of Finance,” Sagicor said in its end of June correspondence to the judicial manager.
In a fiery speech in the Lower House on Tuesday while leading off debate on an amendment to the National Insurance and Social Security Bill 2017, Sinckler emphatically stated that neither him nor Government was to blame for the hold up of the CLICO and BAICO settlements.
He said Cabinet and Parliament had given their support for the bailout plans for which Government provided the necessary funds.
“It is not for [lack] of trying and intervention and agreement by the Ministry of Finance or the Government of Barbados that anything in relation to those two bailout scenarios have been delayed. Everything they have asked me to do, I have done,” Sinckler said, while emphesizing that the companies were still under judicial management and the “direction of the court”.
However, court documents show the judicial manager had written to Sagicor on June 22 advising that it had sent correspondence to the Ministry of Finance providing an update of the June 9 meeting and requesting a follow-up meeting with the ministry, as well as an update regarding the issues arising from the options put forward by Sagicor at that meeting.
Up to the end of last month, Sagicor was said to be awaiting word from Government on its options.
Barbados TODAY understands that the Barbados Investors and Policyholders Alliance (BIPA) was also contacted by the judicial managers for a meeting last month to discuss the “impending challenges” relating to the transfer.
In its June 21, 2017 notice to policyholders the judicial manager, in a paid advertisement, noted that the May 31 date was not met for the transfer and had therefore requested permission from the court “for time to facilitate further discussions between the judicial manager, Sagicor and the Government of Barbados”.
When contacted Wednesday afternoon BIPA President June Fowler said there was not much left to be said on the matter, but told Barbados TODAY while Sinckler Tuesday expressed frustration at the delay, affected policyholders had been “frustrated for the past eight years”.
In one of its correspondence, the judicial manager said it “continues to make meaningful effort to communicate and exchange information with Sagicor in order to facilitate the transfer”.
However, Sagicor’s Chief Operations Officer Ed Clarke said an end to the stalemate was in sight, adding that some of the issues could be settled at a meeting among all three parties on Friday.
“We are getting close, pretty close to finalizing it. There are some matters that we need to agree on around the bond settlement. Hopefully we will come to an agreement on Friday and we can move forward. If not we will have to rethink where we are. We have to protect our interest in our policyholders and shareholders,” Clarke said.
“I have nothing more to say at this stage but we are going to be meeting with the judicial manager and the minister on Friday and hopefully we will come to an agreed position on the way forward,” he told Barbados TODAY.