Thousands of policies transferred, millions paid out

The liquidation of the collapsed British American Insurance Company (BAICO) is expected to be completed by May this year, but all the creditors will not be able to recover the full amounts they invested in the Barbados insurer.

In making the revelation during an interview with Barbados TODAY, the man in charge of the BAICO liquidation, Dave Collins said however that the judicial manager – accounting firm KPMG – has already dealt with the vast majority of policyholders with third party funding having been provided by the Barbados Government.

Collins, the Director of Advisory Services with KPMG – also the Liquidator – said that this funding enabled over 10,000 policies to be transferred to Sagicor Life Inc. and more than $35 million to be distributed to eligible policyholders.

Collins, who has had day-to-day control of the engagement since 2015, pointed out that while most of the policyholders have been fully taken care of, under the final phase of the liquidation of the company, there will not be enough money left to fully settle with the remaining creditors.

“During the liquidation, the liquidator’s duty is to take control of the remaining assets and distribute them to the remaining creditors in accordance with the Companies Act. It is anticipated that the remaining funds will be insufficient to settle all of the creditors’ claims in full,” he stated.

“Although the liquidator has been able to determine that the remaining assets will be insufficient to pay all the creditor claims, it is unable to provide a detailed estimate of what the creditors would recover, until all the claims have been reviewed. The liquidator is still reviewing the claims received. Following the liquidation process, there will be no further funds available to the creditors from the liquidator,” the BAICO Liquidator told Barbados TODAY.

Collins added: “The liquidator expects the liquidation to be substantially complete within the next three months.”

He said that since the appointment of a liquidator on September 30, 2020, he has taken control of the remaining funds in the company’s bank account and had also advertised for creditors to lodge claims for any outstanding monies.

“Once the claims are reviewed, the liquidator will make a formal application to the Court ahead of a distribution of the remaining funds to creditors in accordance with the Companies Act,” the accounting advisor said.

He explained that the restructuring of the insurance company comprised two distinct High Court-led formal appointments – the first one being that of the judicial manager on September 30, 2010 followed by the appointment of the liquidator on September 30, 2020 in the final phase.

He noted that during the period of judicial management, KPMG delivered a restructuring plan that has ensured continuous insurance coverage for a vast number of policyholders across a range of insurance products.

In addition, Collins stated, where the life and annuity policies had unpaid claims, KPMG negotiated funding from the Government to ensure they were settled in full.

“In summary, the judicial manager successfully ensured 3,471 health and property insurance policyholders were provided alternative insurance coverage with Sagicor General Insurance Inc; the transfer of 11,000 life annuity insurance policies to Sagicor Life Inc; the distribution of $35 million to those policyholders with unpaid insurance claims; and 71 employee pensioners received a total of $4.5 million of accrued pension benefits as well as a guaranteed future income from Sagicor,” the liquidator declared.

Collins said the final phase of the restructuring process is to orderly wind down the rest of the assets of BAICO for the benefit of the remaining creditors.

British American Insurance Company which collapsed in January 2009 – like its sister firm CLICO International Life Insurance – is said to have taken funds via deposit-like investment products as well as through traditional insurance and pension policies and channeled them to over-leveraged affiliate companies and real estate developments which had sharply lost value during the global crisis.

The company’s collapse placed at risk, the assets of a wide range of depositors, investors and policyholders, including individuals, corporate and public pension schemes and financial institutions.

The collapse of BAICO and CLICO along with their mother company – CL Financial in Trinidad and Tobago – have had spillover effects in all 15 CARICOM states except for Jamaica and Haiti, with exposures as high as 17 per cent of GDP in the Eastern Caribbean, leading to costly government interventions.

(emmanueljoseph@barbadostoday.bb)