The Gleaner - May 20, 1999

Another slice of Ja to T&T

Guardian Holdings wins portfolios of FINSAC-controlled insurance companies

TRINIDAD won yet another slice of Jamaican business yesterday. Insurance giant Guardian Holdings proved the successful bidder for the Pension and Annuities and the Individual Life portfolios of the three insurance companies up for divestment by FINSAC, Finance and Planning Minister Dr. Omar Davies announced in Parliament yesterday.

The Group Life and Health portfolio has gone to First Life Insurance Company Ltd.

Detailed negotiations will now begin, the Minister explained.

Dr. Davies said the bid price for the entire portfolio was $1,310.3 million. "Assets amounting to $5.5 billion will need to be transferred to the purchasers. Of this amount, it is expected that $2 billion could be sourced from the existing assets of Mutual Life, Crown Eagle and Dyoll and other companies controlled by FINSAC. Negotiations with the successful bidders will determine the assets which will be transferred," the Minister said.

He added that the remaining $3.5 billion will be in the form of a Government debt instrument. "It is proposed that a significant portion of this instrument be in the form of a 10-year or longer bond instrument."

In effect, Guardian and First Life will not actually pay over the sums to the Government, but reduce the amount of Government debt they will take over by the amount they have agreed to pay.

Guardian is the latest in a growing list of Trinidad companies aggressively investing in Jamaica, along with the likes of drinks giant SM Jaleel, whose Busta brand burst on to the local scene recently. Guardian is the third major operation headed by leading Trinidad businessman Arthur Lok Jack.

Mr. Lok Jack was recently named chairman of Caribbean Cement Limited, after Trinidad Cement acquired Government's stake in the company. He is also head of Associated Brands Industries (ABI), which has been successfully importing Sunshine cereals, Devon biscuits and Holiday snacks, among others, for years.

Two phases

Dr. Davies said that in the two-tier strategy which was used in the first phase, the lump-sum interest-sensitive policies were separated from the remaining portfolios of the insurance companies and sold separately.

"To date, lump-sum policyholders who have signed the FINSAC agreement will recover $1.768 billion which they had placed with Mutual Life, Crown Eagle Life and Dyoll Life."

In the second phase, the Individual Life, Pensions and Annuities, Other Group and Health portfolios were valued and put to tender. He said expressions of interest were received from nine companies ­ three local and six other countries in the Caribbean.

Total liabilities stood at $4.984.7 billion, required capital at $665.2 million and appraisal value at $1.423.1 billion.

Dr. Davies said that predetermined criteria were used to determine minimum requirements. These included fit and proper, non-receipt of FINSAC support and the Insurers Capital Adequacy. Based on the criteria, one company was disqualified.

Those qualifying were Barbados Mutual Life, Blue Cross of Jamaica, Colonial Life Insurance Company (Trinidad), First Life Insurance Company, Guardian Holdings Ltd., Life of Barbados Ltd., Maritime Life (Caribbean Ltd,) and Prime Life. Life of Jamaica is thought to have been asked not to bid due to its previous FINSAC involvement.

Criteria were set for them and points awarded with the bidders with the highest points being the winners.

Dr. Davies said that the Supervisor of Insurance for Trinidad and Tobago indicated that Guardian Life "is one of the leading Health and Life Insurance Companies in Trinidad, is financially sound and has filed all the required returns with the Supervisory Authority".

The $8 billion assets remaining with FINSAC would be sold as soon as suitable buyers are found, and will in time offset the payment of $3.5 billion now being put up by the Government, the Minister said.

He said the assets could not be transferred to the purchasers, as that would leave them with too high a concentration of assets in real estate, one of the main factors which led to the demise of Mutual, Dyoll and Crown Eagle.

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