Cayman National Corporation Ltd. announced its plan to recapitalise subsidiary Cayman General Insurance at an extraordinary general meeting of its members on Thursday.
Stuart Dack, president and CEO of Cayman National indicated that recapitalisation will come from a substantial sale of Cayman General shares, as well as from a significant cash injection from the parent company.
‘All businesses in the Cayman Islands were impacted in some way by Hurricane Ivan, and Cayman National was no exception,’ he said.
Mr. Dack said that although Cayman General’s reinsurance levels were up to industry standards, like many other local insurance companies, Cayman General was exposed to a substantial level of claims beyond its reinsurance coverage because of the enormity of the losses associated with Hurricane Ivan.
‘The percentage of claims to insured value was unprecedented in the world-wide history of the insurance industry,’ he said.
Mr. Dack said negotiations with the Sagicor Group for a substantial stake of Cayman General are to the point where the sale will most likely proceed in a short period of time.
Sagicor operates in 20 countries throughout the Caribbean and in the United States.
If the deal with Sagicor were to fall through, Mr. Dack said, there were a number of other parties interested in buying into Cayman General.
Mr. Dack said the substantial cash injection from the Cayman National Corporation to Cayman General was possible because of the group’s overall continuing profitability.
He noted CNC made a profit in 2004 and still projects profitability in 2005 in spite of Hurricane Ivan.
With those profit projections, Mr. Dack said CNC’s board of directors consider it desirable to issue a final dividend for the financial year ending 30 September, 2004.
‘If there’s one time in our history when shareholders would welcome a dividend payment, it’s now,’ he said.
A final decision will not be made until the Annual General Meeting.
The date of the Annual General Meeting was also discussed. Mr. Dack said the necessary final accounts for the last financial year were delayed by Hurricane Ivan, but that he expected the AGM to take place in late April or early May.
Mr. Dack said every entity in the CNC group, including Cayman General, had been performing well, except for Cayman General’s “black hole on the balance sheet caused by Ivan.’
Cayman General received more than 1,200 insurance claims, he said, and 800 have been settled so far.
With the sale of a major stake in Cayman General and the cash injection from CNC, Mr. Dack said the rest of the outstanding insurance claims would be settled very quickly.
‘I would expect all claims to be settled… by the end of May,’ he said.