Level Playing Field for all Bidders

A level playing field for all bidders and the best deal possible for policyholders will be hallmarks of the tender process to determine the purchaser or purchasers of the portfolios of failed insurance companies.

Memoranda of Understanding (MOU) are in hand from a select group of local and Caribbean companies who were invited to participate in the tender process based on their standing as major life insurance companies. Some of these had expressed interest in buying the portfolios of Mutual Life, Crown Eagle Life and Dyoll Life.

Stressing that no company previously assisted by the Financial Sector Adjustment Company (FINSAC) would be considered, FINSAC Managing Director, Mr. Patrick Hylton, said all companies invited to participate have been given the same information on the portfolios.

Once past the MOU stage, due diligence will begin with bidders examining the insurance companies to finalise their offers.

At the same time FINSAC, will undertake its own due diligence of bidders to assess their financial capability; qualifications for a Jamaican Insurance Licence; whether or not they meet the standards of the new Insurance Act; their plan to manage the portfolios and how they measure up to fit and proper criteria.

Discussions will be held with all bidders and the best offer accepted.

Last week the Minister of Finance, Hon. Omar Davies, announced a new strategy hinged on accelerated divestment to resolve the problems of the troubled insurance companies. Under the new proposal, all like policies across the three companies would be combined and offered for sale. As such the following portfolios are on the table: Traditional life, equity linked, group life, non-lump sum interest-sensitive and health, as well as management of the pension schemes.

Independent Life, previously slated to take over all Mutual, Dyoll and Eagle life insurance business, will manage any unsold portfolios. It will be a much smaller entity and less cost to the public purse.

Commenting on questions raised about the new strategy and the law, Mr. Hylton said there has been and will continue to be full compliance with the Insurance Act. He pointed out that the traditional insurance business has not been "offered to" anyone, simply put to tender or offers invited. When an offer has been accepted a Scheme will be put before the Courts for its approval, and if approved, the policies would be transferred.

Where the lump-sum interest-sensitive policies are concerned, an arrangement has been worked out with the Bank of Nova Scotia which is subject to the approval of those policyholders. In the event that individual policyholders are not in agreement with the Government/BNS initiative their policies will be dealt with as determined by the Courts.

Under the proposed divestment strategy, over 215,000 policyholders and more than 20,000 persons whose pension funds are managed by these companies will be protected.

February 12,1999

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