eastern lifeBAICO Salvage Plan Shelved on Lack of T&T Monetary Commitment

Significant progress has been made towards launching the Fund. This includes the establishment of a company to act as the Trustee, finalizing which insurance policies will be covered by the scheme, and developing the rules and materials under which the Fund will operate. … Our intention is that BAICOs traditional life eastern life and health insurance companyinsurance business will be sold in a competitive tender process. Court approval is likely to be needeeastern lifeBAICO Salvage Plan Shelved on Lack of T&T Monetary Commitmentd for this approach. However, because BAICO is insolvent, it would be impossible to sell the traditional insurance portfolio without first injecting some additional capital into the portfolio… Annuitants constitute approximately 11,000 BAICO policyholders, and represent approximately 90% of BAICOs liabilities. The total amount and nature of financial relief for annuitants is currently under consideration and will depend on the establishment of, and available funding for, a proposed regional support fund, the communiqu read.

According to former St. Kitts-Nevis Minister of Finance Hon. Dr Timothy Harris, BAICO poses a $1.2 billion exposure for the ECCUs financial sector. In the Federation, some 7000 individuals and corporate entities stand to lose over EC$135 million in annuities, deposits and investments.

The regional organization announced that it will concentrate on alternate solutions as it relates to the ECCU/BAICO Health Insurance Support Fund, the Traditional Business and the annuity, and an investment contract business New plan for BAICO policyholders.

The ECCU statement said a regional technical committee is devising various options to be presented to Country Heads for consideration at the 22nd Inter-Sessional Meeting of the CARICOM Conference of Heads of Government to be held this week (Feb. 25-26) in Grenada.

Since our last public update, a number of regional developments have forced the ECCU Governments to reassess the viability of our proposed response to the BAICO collapse. In November 2009, the ECCU Governments announced a proposed solution that would involve the establishment of a new insurance company to take over the majority of BAICOs business (the Newco Plan). We pursued this for many months but, by the end of 2010, were unable to gain the necessary confirmation. Without the required financial commitment of the Government of Trinidad and Tobago, Newco is not feasible as originally envisaged, the ECCU statement said.

With the Newco plan unofficially abandoned, the ECCU plans to undertake other options to bring some form of financial relief to the 33000 BAICO policyholders in the Eastern Caribbean.

Policyholders, depositors, and investors of the collapsed British American Insurance Company (BAICO) were dealt another blow on news of the ECCUs latest setback on the regional dilemma.

eastern lifeBAICO Salvage Plan Shelved on Lack of T&T Monetary Commitment,The governments of the East Caribbean Currency Union issued a joint press release on Wednesday (Feb. 23) announcing that plans to have a new company take over the majority of BAICOs business have been indefinitely delayed.

Given BAICOs insolvency, the only feasible option to establish such a company was that its capital be provided mainly by Government contributions. The successful finalisation of the Newco Plan would have taken time and significant will on the part of all stakeholders, but the ECCU Governments believe that the Newco Plan had real potential to produce a more vourable outcome for BAICOs policyholders within the Eastern Caribbean. Importantly, such a plan requires the political will and financial commitment of all the proposed stakeholders, including all of the anticipated government contributions, read the aforesaid statement.

According to the release, the new Kamla Persad-Bissessar-led government of Trinidad and Tobago reneged on the previous administrations commitment to provide US $100 million towards the proposed Newco Plan. The additional capital requisite to fund the Newco plan was to have come from the ECCU governments, a strategic investor, and US$5 million from the Government of Barbados.

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