Feb 2006 Financial News

NCB (J) nears accord for major stake in Medical Associates

Feb 22, 2006

Jamaican/Canadian billionaire, Michael Lee Chin, is on the verge of deepening his stake in the Jamaican health industry with the acquisition of a substantial stake in Medical Associates Hospital and Medical Centre, a deal which the owner of one of the largest mutual funds in Canada, AIC, and the National Commercial Bank (NCB), says is imminent.

Lee Chin now has major interest in private health care provision in Jamaica.
"We have an interest," Lee Chin told the Business Observer yesterday after an NCB forum at the Sunset resort in Montego Bay. "We have an interest generally in health care. As you know the health care in Jamaica is not robust. We have an interest in bringing 21st century facilities to Jamaica. So that may entail getting into the hospital business and Medical Associates may be one such that we may be interested in becoming a part of."

Lee Chin's confirmation of the imminent acquisition, was in line with a statement from the hospital's administrator, Simone Khouri, two weeks ago, in response to a Business Observer query.

Khouri had confirmed then that just over 40 per cent of the shares in the hospital was being sold, but claimed that there were no buyers of "a majority shareholding in the hospital".

Medical Associates is currently owned by a group of individual doctors. It is not clear, however, whose stake in the hospital is being sold.

Lee Chin, in acknowledging his plans to take a stake in the business, told this newspaper that he and the group of doctors were in negotiation, and said that a deal would be imminent.

When concluded, the arrangement would give Lee Chin's Jamaican operation seamless vertical integration, from the provision of health insurance - through the recent acquisition of 75 per cent stake in Blue Cross of Jamaica - to the administering of health care.

According to the NCB's 2005 annual report, NCB Insurance Company, Environmental Health Foundation (EHF) and Blue Cross of Jamaica had "signed a shareholders' agreement for the subsidiary to purchase 75 per cent of Blue Cross of Jamaica... on October 27, 2005."

"The transaction is subject to approval by the Jamaican regulators and Blue Cross/Blue Shield International," said the note to shareholders.
The partnership between the health insurance provider and NCB Insurance would give Lee Chin a substantial toehold in the health insurance business and help round out what has been a rapid and deepening foray into the island's financial sector by the Jamaican/Canadian billionaire.

NCB insurance has for years largely sold investment and savings related policies through its bank branches. It has recently been expanding its product range.

Blue Cross, on paper, would be a nice fit, bringing a large portfolio of existing business, and a name that is well-known in the Jamaican market. In 2004, the company earned $1.9 billion in gross insurance premiums and another $262 million in gross income from health fund management.

This generated a net surplus of $228 million - an amount which pushed the company's accumulated surplus to just under $1 billion at the end of 2004. NCB would likely add the marketing savvy that has been at the bank since its acquisition by Lee Chin, and the ability of Blue Cross to market its products from its more than 40 branches.

Blue Cross of Jamaica, has operated in the island for decades under the Blue Cross/Blue Shield banner.

Camilo Thame and Horace Hines
The Jamaica Observer
Wednesday, 22nd February, 2006
http://www.jamaicaobserver.com/magazines/Business/html/20060221T210000-0500_99224_OBS_NCB_NEARS_ACCORD_FOR_MAJOR_STAKE_IN_MEDICAL_ASSOCIATES_.asp