Jul 2012 Financial News

Sagicor to acquire BAICO life business - Deal includes OECS subsidy

Jul 04, 2012

The governments of the Organisation of Eastern Caribbean States have struck a deal with Barbados-based Sagicor Life Inc, which will acquire the traditional life insurance business of British American Insurance Company (BAICO).

In a statement issued after their weekend meeting in Basseterre, the sub-regional group said the agreement was reached with the court appointed BAICO judicial managers to sell the life insurance sector of the Trinidad-based financially strapped company to Sagicor.

Governments of the Eastern Caribbean Currency Union (ECCU) will provide funding of up to US$38 million to assist in restoring value to the transferring policies.

There were initially seven interested investors, four of which were shortlisted, the group said, but did not name them.

The business being sold spans comprises group pensions and traditional life policies issued by BAICO in Anguilla, Antigua, Dominica, Grenada, Montserrat, St Lucia, St Kitts and Nevis and St Vincent and the Grenadines as well as universal life, term life, whole life, endowment and home service life policies.

The deal will affect approximately 17,500 policyholders and is expected to restore the policy values for nearly two in every three BAICO policyholders.

"It should be noted that under the terms of the sale, all valid and in-force life policies as at the Scheme Effective Transfer Date will be transferred to Sagicor without any amendment or change to the respective policy, allowing policyholders to benefit from the terms they historically agreed with BAICO," said the statement.

"The life insurance business will be transferred to Sagicor once all necessary approvals for the scheme of transfer from the relevant courts and insurance regulators in The Bahamas (where BAICO is incorporated) and throughout the ECCU countries are received."

Sagicor Life Inc is a wholly owned subsidiary of Sagicor Financial Corporation.

The regional governments said that the approvals for all countries will take three to six months at which point the transfer of the business can be finalised.

"It is intended that the entire business will be transferred at the same time. However, as a precaution, if any approvals are delayed or not received within the next four months, the parties can agree to transfer the business in stages," said the OECS.

Sagicor Financial Corporation is a listed entity in Barbados, Trinidad and Tobago and the United Kingdom. It operates 19 countries in the Caribbean as well as in the United Kingdom and the United States.

The statement said that Sagicor has demonstrated its commitment to the ECCU by agreeing to set up an ECCU Consultative Committee for oversight of the performance of the business.

It will also create a separate ECCU-based entity for the operation of the business within a year of completion of the transaction, and list at least 25 per cent of the shares of the ECCU entity on the Eastern Caribbean Securities Exchange within two years of operation.

The statement said that the ECCU governments, Sagicor and the judicial managers "are currently considering whether it will be possible to offer to reinstate policies that have lapsed in this period and further information regarding this issue will be communicated to affected policyholders prior to the completion of the transfer".

Policyholders who need clarity on the status of the policies are advised to contact their local BAICO office.

"The sale represents an excellent outcome for traditional life policyholders, and reflects the ECCU governments' and judicial managers' continued efforts to work to identify solutions for individuals and institutions affected by the BAICO collapse," said the OECS group.

"Although the sale is structured specifically to transfer the ECCU traditional life policyholders to Sagicor, the sale is also beneficial to all other policyholders and creditors of BAICO who are not covered by the terms of the sale by reducing the remaining liabilities of BAICO."

- CMC


Source:
Jamaica Gleaner
Wednesday July 4, 2012

http://jamaica-gleaner.com/gleaner/20120704/business/business91.html