A member of the Barbados-based Sagicor Financial Corporation Group, Life of Jamaica Limited, will buy a 51 per cent controlling interest in Cayman General Insurance Company this week.
CGI President Danny Scott said the deal is scheduled to be finalised Friday after approval by the Cayman Islands Monetary Authority.
CIMA’s approval should be a formality at this stage, Mr. Scott said.
‘This is basically a rubber stamp procedure,’ he said. ‘CIMA is fully aware of this already. They have asked their questions and been given the responses. But it still has to officially be taken to them.’
Mr. Scott said the change in ownership will not affect his position as president, but that some details concerning staffing and office location of CGI have yet to be worked out.
‘There is a lot we’re going to have to do in the short term. We’ll keep our offices for the time being, but we’ll have to merge the two operations at some point,’ he said, pointing out that Sagicor already had a life insurance division here in Cayman.
Negotiations with Sagicor began early this year, but were stalled first because of the delay in finalising Cayman General’s Hurricane Ivan claim with the Cayman Islands Government and then because Sagicor purchased the US-based American Founders Life in June.
When the negotiations stalled, Cayman National Corporation, which currently owns controlling interest of CGI, opened talks with five other potentially interested companies.
Stuart Dack, president and CEO of Cayman National Corporation, said his company wanted to find the right major business partner.
‘We see this as a long term partnership strategy,’ he said, noting the CNC intends to hold its 24.2 per cent stake in CGI. ‘We expect considerable business growth to stem from this.
‘Our relationship with LOJ and Sagicor will go far beyond their acquisition of a majority stake in Cayman General,’ Mr. Dack said. ‘This is a very good result for everyone involved.’
Mr. Dack said Cayman consumers will see some of the benefits.
‘This will enable (CNC) as a financial service provider to offer a much wider range of insurance products to all of our clients.’
Mr. Scott said LOJ and Sagicor’s involvement would allow CGI to become ‘one of the strongest multi-line insurance providers in the Cayman Islands, offering clients attractive prices, more products and better services’.
CGI weathered Hurricane Ivan, but not without difficulties because it was exposed to millions of dollars of claims not covered by reinsurance.
In total, CCI faced nearly 1,300 property claim settlements totalling nearly $270 million, and another 900 auto claim settlements totalling $10 million.
The insurer negotiated a settlement with the Cayman Islands Government that included a 24 per cent stake in the company, which the government still owns.
With its recapitalisation plan unclear, international insurance rater AM Best downgraded CGI to B- (Fair). CGI later withdrew from the rating system.
Sagicor, however, currently holds an A- (Excellent) AM Best rating, and it is expected that rating will fall to CGI now that ownership has changed.
‘(Cayman General) will be acknowledged as a subsidiary of Sagicor,’ said Mr. Scott. ‘That could determine AM Best’s decision to reinstate.’
Mr. Scott said he wasn’t sure if the name Cayman General Insurance would be maintained, but he hoped so.
‘We’ve spent 22 years building a name, and though the ownership of the company changed, I don’t think it would be a good thing to give that up.’
Sagicor, which was formed as Barbados Mutual Life Assurance Society in 1840, held US$2.3 billion of assets through June of this year.
The 35-year Life of Jamaica Ltd. currently has more than US$1 billion of assets, and earlier this year acquired the insurance and managed pension funds business of First Life Insurance Co. Ltd., as well as a 51 per cent stake in the Merchant Banking Group’s Pan Caribbean Financial Services Ltd.
LOJ’s president and CEO Richard Byles said he was looking forward to the new venture with CGI.
‘We’re excited by these new business relationships with Cayman General Insurance and the Cayman National Corporation,’ he said. ‘Along with the individual life products we now offer through Sagicor Cayman, it will allow us to provide property and casualty insurance as well as augment our interest in health insurance, for which we are well known in Jamaica.’
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