Sagicor gives up on general insurance in Cayman [Cayman Net News, Grand Cayman, Cayman Islands]

Mar. 9--SAGICOR Life Jamaica (SLJ) announced that it has sold its general insurance portfolio in the Cayman Islands to Bahamas First Holdings, following a US$4.42 million loss from its operations in 2009, according to a report in the Jamaica Observer last Thursday; however its life portfolio in the Cayman Islands will remain. Sagicor officials stated in the article that the general insurance industry in Cayman no longer offered "attractive prospects" for the group.

"This decision was taken by SLJ as its investment in the property and casualty insurance business in Cayman was no longer considered as offering sufficient strategic value at this time," said the statement issued to the Jamaica Stock Exchange yesterday. "SLJ will, however, continue to operate its life insurance portfolio in that territory through its wholly owned subsidiary, Sagicor Life of the Cayman Islands Limited."

SLJ controlled 75 percent of the general insurance division in Cayman.

According to the Jamaica Observer report, Cayman operations recorded revenues of US$46.7 million, 71 percent more than the previous year; whilst its total assets increased some 60 percent to US$292 million in 2009 versus US$183.3 million in 2008. It was not made clear what percentage of the assets was associated with the general insurance side of the business, except that SLJ reported its general insurance segment overall had a loss of US$80,000 in 2009, compared with a net profit of US$300,000 the year before, holding assets of US$55.7 million at the end of December 2009.

It is the second time in less than five years that the portfolio of business held by this particular insurer has changed hands. In 2005, Sagicor Life of Cayman Islands (SLC) acquired a 51-percent stake in Sagicor General Insurance Cayman Ltd (SGC) (formerly Cayman General Insurance Ltd) from Cayman National Corporation. On October 22, 2007, SLC purchased an additional 24.2 percent interest in SGC from CNC. Under the terms of the initial sale and purchase agreement, CNC provided certain warranties to SLC including claims in relation to Hurricane Ivan, not finally settled.

SGC filed suit in February,2006 against certain third parties to recover sums paid for work done in respect of Hurricane Ivan (the "Windsor Village litigation"). The understanding of the parties (SLC and CNC), based on discussions held, was that CNC would be entitled to retain any benefits realised from the Windsor Village litigation, and consequently, CNC would be responsible for all liabilities that might arise from it; CNC has also been responsible for the conduct of the litigation.

A few months prior to initial acquisition by Sagicor, the Cayman Islands Government had given Sagicor's predecessor, Cayman General, a reprieve on its Hurricane Ivan claims from the company by accepting a shareholding in Cayman General Insurance Ltd as part of its negotiated settlements.

In a report on this transaction, Cayman's Auditor General criticized the lack of documentation of the negotiations to support the final amounts, stating that it seemed to "...flout the fundamentals of accountability and transparency..."

The Auditor General also found that the Government did not receive good value for its money by taking an equity position of 24% in lieu of claims worth KYD$20 million or more, especially when it was learned that after the Government's settlement, Sagicor paid only KYD$8 million for a 51% acquisition.

It could not be ascertained what were the proceeds of the sale of Sagicor General to Bahamas First Holdings. Attempts to contact company officials proved unsuccessful. Such information would form the basis for an estimate of the current fair value of the holding the Cayman Islands Government has in Sagicor General and would reveal whether there has been any impairment.

Sagicor General provides property and auto insurance to the Cayman Islands as well as health care coverage.

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