CIMA places BAICO under controllership

On Friday 11 September 2009 the Cayman Islands Monetary Authority appointed Simon Whicker and Kris Beighton of KPMG as controllers of British American Insurance Company’s Cayman operations.

BAICO, which is licensed by CIMA as an approved external insurer, is subject to a cease and desist order issued by CIMA on 29 June amidst concerns that the insurer is underfunded.

Despite extended deadlines BAICO has been unable to fully satisfy the requirements of the order and other directives issued by CIMA in subsequent letters. These ordered the insurer to increase assets in its statutory fund within 30 days, prohibited the company from issuing new policies, barred it from moving assets out of Cayman and directed it to bring its operations into accordance with the requirements of the Insurance Law.

CIMA decided to appoint local controllers to take charge of BAICO’s operations as a result of the deteriorating financial and operational situation of the insurance company and its parent company CL Financial Limited based in Trinidad and Tobago.

There is some concern that the parent company may have drained funds from BAICO and left it underfunded.

BAICO, which is also licensed as a health insurer and operates a pension plan in the Cayman Islands, is understood to manage approximately 4,000 health insurance policies, over 5,000 life insurance policies, 1,500 home insurance policies and at least 1,000 annuities.

The appointment of the controllers aims to protect the interests of creditors and policyholders of BAICO Cayman, by securing assets belonging to, or held in trust by, the local entity. The controllers will also explore the potential sale of parts of the company.

The controllers will take immediate control of BAICO’s affairs, assess its financial position and report back to CIMA.

The operations and coverage of BAICO’s existing policies remain in effect, provided that premiums on such policies continue to be paid by policy holders.

Redemptions or the surrender of discretionary investment products previously issued by BAICO are subject to review by the controllers.

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