The Cayman Islands Government is
considering selling its shares in insurance company Cayman First Insurance
Company Ltd that it obtained as part of a negotiated settlement of its
Hurricane Ivan damage claim, Premier McKeeva Bush said Thursday.
The government received 24 per cent
of shares in Cayman General, which was subsequently bought by the Sagicor Group
and then by Bahamas First Holdings.
According to an Auditor General’s
report in 2007, the government received $50 million in cash in its post-Ivan
insurance settlement from the company for insured assets damaged in the storm,
in addition to 240,000 shares of Cayman General. In that report, the Auditor General
found that the government did not receive good value for money in the
settlement, stating that as of September 2005, the shares were worth only $3
“The committee ought to understand
that, had the government not assisted the company, Cayman General at the time,
the disastrous result would have been that hundreds of Caymanians would have
become bankrupt, without homes and loss of investments.” Premier Bush said. “The then-government
saved the day.”
He said the government was
currently considering the divestment of the shares held in Sagicor. “An update
will be provided at the appropriate time,” he said.
He did not elaborate on when the
government would begin selling the shares or if it would divest all or a
portion of them.
Mr. Bush told legislators that the
government would continue diversifying its insurance coverage with different
insurers to prevent a repeat of what occurred following Hurricane Ivan when the
government’s assets were insured by one carrier, leading it to eventually
acquire the shares in Cayman General.
The premier made the comments as he
presented the government’s response to the Legislative Assembly to the Public
Accounts Committee report on the findings of the Auditor General on the Ivan
insurance settlement and equity investment in Cayman General.
Dan Duguay, the Auditor General at
the time, said in his report that the exact insurance settlement claim was
never calculated, but that the government and the insurance company had reached
an agreement to settle the claim for $70 million from an initial loss
adjuster’s estimate of $108 million.
Asked by Leader of the Opposition
Alden McLaughlin if the government expected to recoup the entire outstanding
amount that the government would have been paid if the insurance company had
been able to pay out the claim in full, Mr. Bush said it was unlikely that the
sale of the shares would reach $20 million.
“Even at that time , there
were doubts as to whether it was $40 [million] or $50 [million] or $60 million
that would have been outstanding,” said Mr. Bush. “What we do know is that if
we had gone to a court trial and from what we were being told by the company,
it would have been disastrous for Cayman National Bank, and the insurance
company itself would have folded, so the hundreds, or perhaps thousands, of people
– Caymanians and otherwise – who had homes and who had cars and businesses
insured would have lost.”
He said the government at the time
accepted the $20 million figure in settlement of the outstanding amount. “I
don’t know whether we could get that amount if we sold [the shares]. I am
hoping we can get something close to it, but I don’t know.”
He added: “We were not forgoing any
cash; there was no cash to get.”
Mr. Bush said valuations of
government assets were being carried out and this would be done at least every
Two weeks ago, Sagicor General, now
Cayman First Insurance, was ordered in a civil court judgment to pay more than
$7 million to Hurlstone Ltd and other plaintiffs in relation to a Hurricane
Ivan claim involving Windsor Village.
This was the largest payout in a
civil trial in Cayman’s history.