Sagicor and Scotiabank Signal the Caribbean Market

The blogmaster received several messages yesterday from members of the BU family whicch highlighted two financial transactions choking local, regional and some internation newsfeeds.

The decision by Scotiabank to shed operations in nine Caribbean islands should hardly be a surprise to those who make it a business to keep ears to the ground. The region has become a hot mess regarding the state of economies and with de-risking high on the agenda of financial institutions the risk appetite of international banks operating in the region has reached an intolerable level. At some point in the future they will completely withdraw from a region to focus on bigger markets.

The acquisition of Sagicor shares by Canadian company Alignvest for 536 million dollars- reportedly to create the opportunity to efficiently raise capital by listing in a more liquid market to drive growth is the other mega transaction closed this week. The following statement by Sagicor’s Chief Operating Officer Ravi Rambarran about how regional stock exchanges operate is instructive:-

At the same time, our stock markets in the Caribbean are very thin and very illiquid. We saw just last week Friday someone sold 700 Sagicor sales out of 306.3 million shares and drove the price down to about USD1.00 That means all the other shareholders who have their stock had to value their stock at this price. That is a reflection of our stock market being very thin and very illiquid.

We look forward to a debate led by our educated class to inform a general public who are in the main disinterested and ignorant about these kinds of transaction. A shame!

Mia Promises Jail time to CLICO Offenders

The cut and thrust of the 2018 Barbados Election campaign has tossed up many issues which confirm the political party that wins the election will have to hit the ground running to rescue and restore the country to the pedestal it once occupied in the region and the world.

There is one issue which has not received the airplay it deserves in the opinion of the blogmaster.

On more than one occasion the leader of the Barbados Labour Party (BLP) – delivering on the 2018 election campaign platform – hinted at the fact should her party win the government, there will be an effort made to hold certain actors involved in the CLICO mess accountable. The blogmaster is aware promises made in the heat of a political campaign must be taken with some salt. However, given the black eye the CLICO collapse has given to Barbados, AND, the potential it poses to continue to deliver given its impact across the region, the blogmaster will continue to invite discussion on the matter in future blogs.

What the CLICO debacle exposed was that there was a catastrophic failure of the regulatory system- of which the political class and other key actors were complicit- to more efficiently manage the downside risk of the local insurance sector. An IMF report leaked in December 2017 identified the systemic risk posed by Sagicor – the dominant insurance player in the region – and the challenge posed to the local regulator (Financial Services Commission (FSC)) to effectively regulate given the complexity of Sagicor’s business model.

The IMF report found that the FSC, which was established in 2011 and is assumed to be the group supervisor of Sagicor, has neither developed, not implemented group-wide supervision processes and practices since its establishment.

It should be noted that to its credit the FSC was responsible for commissioning the report.

What has intrigued the blogmaster is the recent announcement that Sagicor acquired Harmony General insurance company. Harmony General was a small player in the sector, however, if the size and complexity of Sagicor was identified before the acquisition as a source of concern in the IMF report- the acquisition will serve to add a few more questions.

The blogmaster has no interest in the sale directly, it is more a quiet concern about how the sector is being regulated to militate against a recurrence of a CLICO.  The NEW leadership of Barbados must demonstrate firm leadership to implement learnings arising from the collapse of CLICO. We must punish those who failed to honour fiduciary responsibilities.  In this regard we have taken careful note of the lead role being played by Leslie Haynes Q.C. in BLP affairs. You may recall Haynes was very close to Leroy Parris and CLICO before its demise.

The blogmaster has also observed – lost in the din of the 2018 general election – general insurance companies have been disclosing end of year financial statements as required by law. A perusal of ALL of the finacials published so far list companies under financial stress. What is not clear to the blogmaster is how a sector that is under ‘financial pressure’ has not seen the urgency to significantly raise premiums to bolster the profit and loss. What is the blogmaster missing?

It is the expectation of sensible Barbadians the incoming government will demonstrate the leadership required to make available adequate resources to the FSC to do its job effectively. The other expectation is that players responsible for the CLICO collapse will do the ‘time’.

See the Financials of CGI, Brydens and Sagicor General insurance companies:-

Another Heather Cole Column – JERK HAM AND BALONEY

Minister of Finance Chris Sinckler

Just before Christmas 2017, the Print Media published an IMF Report that had been commissioned by the Financial Services Commission (FSC) of Barbados on the Supervisory Framework for Sagicor Life Inc. The report revealed the dismal state not only of the Insurance Industry but for the FSC itself. It alluded to the lack controls, of compliance, oversight; of an agency not equipped or staff trained; and without technical expertise and knowledge. In other words the report stated that the FSC has a mandate that is above its capacity to implement.

The FSC did not disclose the contents of the report which was subsequently published by the Print Media. The Chairman of the FSC, Dr. Frank was quick to berate the Press for making the report public; for disclosing the damaging and secretive report.

The events that led to the publication of the IMF report are somewhat disturbing. The IMF came to Barbados and their consultancy lasted from October 9th to 13th 2017 and the Report was issued on October 13th 2017.

On Friday December 11, 2017 the Minister of Finance informed the House of Assembly that all the operations of CLICO would be transferred to a company Resolution Life Insurance Limited (ResLife) by December 31, 2017.  He also stated that the process by which the assets and liabilities would be transferred would commence in January 2018. He also stated that government would “issue bonds to facilitate the restructuring of CLICO, preserve the investments of policyholders and transfer the real estate assets to New Life Investment Company (NLICO).”

Firstly, it is regrettable that the Minister of Finance chose to ignore the recommendations of the IMF. If there is no credible oversight for the Insurance industry why choose to go ahead and create a new company that will operate under conditions where the industry is a law unto itself? Why choose to continue operations within the same environment that caused CLICO to fail.  Why choose to continue when the IMF has warned that Sagicor has the propensity to fail. 

Putting the proverbial new wine in old skins will only cause the old skins to burst.  One cannot expect to reap success with any new insurance company in Barbados that exists under the same old rules.

Secondly, based on the timeline it suggests that even though he was warned by the IMF on October 13th 2017, the Minister hurried to Parliament with the Resolution.  In his haste, he also did not state who the owners or principals of NLCIO or who the owners or principals of ResLife. There was no mention of the relationship between these two companies.  It is therefore unclear if the present policy holders of CLICO will have a stake in the real estate assets once the new company NLCIO is formed.  I have not read the CLICO International Life Insurance Resolution so I am therefore not in a position to discuss any further based on the contents of the Resolution.

What stands out in my mind about this debate is Maxine McClean ranting and raving about the Resolution preventing vultures from getting their hands on CLICO’s lands. To me that was a big red flag and I wondered if it was the lands of CLICO that made the Minister of Finance disregard the recommendations of the IMF that were intended for the well- being of the industry to give the lands to his friends.

Thirdly, could it be that the Media’s publication of the IMF Report actually thwarted the secret Christmas gift of Jerk Ham and Baloney? If so, the swift actions of the Minister of Finance had nothing to do with the policy holders of CLICO but to ensure that the title deeds would be delivered well before the next general election.

Middleclass Caught Between the FSC and Sagicor

Sir Frank Alleyne, Chairman of the FSC

A report prepared by the International Monetary Fund (IMF) that reviewed the robustness of the operations of the Financial Services Commission (FSC)- specifically as it pertains to the supervision of Sagicor-  has triggered alarm bells in the local and regional financial market.   Although there is no evidence based on any public reporting Sagicor is not a well run company, the findings of the IMF report, commissioned by the FSC- supports the view that oversight body cannot conclusively give the green light to the good health of the Sagicor operations because it is under-resourced and therefore unable to execute a quality full scope review.

Based on recent reporting many have focused on the lack of adequate supervision of the insurance sector by the FSC, however, the BU household is acutely aware that the FSC ALSO has oversight for Credit Unions, Securities and Mutual Funds AND Pensions – see FSC website.

BU is very interested in the integrity of the pension slice of the market at a time when the National Insurance Scheme is ALSO under the microscope. It is no secret NIS expense will exceed revenue in the near future and necessitate drawdown on investments and possibly the need to extend the pensionable age to 70+ in the near future. Barbadians until recently were encouraged through tax breaks to open Registered Retirement Savings Plans (RRSPs) to supplement government pension in order to sustain a reasonable standard of living and create peace of mind in the golden years.

Relevant Link: IMF FSC Confidential Report

The catastrophic regulatory failure of another pan Caribbean insurance company is still fresh in the minds of a CLICO fatigued public. The findings contained in the IMF report leaked by Barbados Today should be the cause of worry for people of the region. It reveals that Barbados through its agent the FSC has not been aggressive in the  post CLICO period to strengthen the oversight framework to efficiently mitigate risk in the sectors it has responsibility to supervise.

There is a large middleclass in Barbados with a significant number holding RRSPs with Sagicor AND the employer’s pension is ALSO managed by Sagicor. If there was a financial failure by Sagicor the impact on Barbados and Caribbean economies would eradicate personal wealth by greater than 50% in BU’s estimation. The fact that the CLICO meltdown occurred in 2008 and the quality of supervision continues to be deficient suggest heads need to roll.

The FSC and government owe it to the people they serve to be as strategic, efficient and transparent as practicable in this matter. BU appreciates this is a confidence sensitive issue, however, the regulator must publicly demonstrate that it has a grip on the issue. Given the deep penetration of regional markets by Sagicor and high contribution to GDPs, a catastrophic event must not occur because of weak supervision.   Surely we learned from the CLICO mess?

By the way, why is June Fowler commenting on the matter? Does she possess the expertise or competency to comment with any certainty regarding the integrity of the regulatory framework?

The Business Blog – Sagicor Votes to Redomicile

From page A5 of the T&T Guardian (07/06/2016)

From page A5 of the T&T Guardian (07/06/2016)

Sagicor formerly the Mutual Society will vote to redomicile to Bermuda from Barbados tomorrow (8/06/2016). To carry the resolution will require 66.66% of the shareholder vote. For some Barbadians the decision to redomicile Sagicor is another key performance indicator that confirms a tanking economy.  In a nutshell, the 175 year old Bajan company will soon suffer the national disgrace of seeing this company consummate a legal divorce from Barbados. We are grateful that the company will be treated as a tax resident.

Sagicor Threatens to Part Ways With the Sugar Industry After Waiting 15 Years on a Plan

Submitted by Anthony Davis

With the future of Barbados’ struggling sugar industry already very uncertain, insurance and financial services giant Sagicor Financial Corporation today announced that it is in the process of reviewing its participation in the island’s agribusiness sectorBarbados Today

Dowridge Miller - CEO Sagicor

Dowridge Miller – CEO Sagicor

Talk about dilatory tactics!

I would like it take that long for politicians to agree to raising their money which they get from the taxpayers tax free monthly – no matter what else happens. There are public servants not being paid, and the ones who are supposed to run this country are making a mockery of it.

Fifteen years is an eternity for the cane farmers to wait for an answer from any government – whether BLP  or DLP, and it is many times worse when both of them did not have the time for or care about how the sugar industry was doing. It seems like a case of the blind leading the blind – no matter who wins the next elections.

Continue reading

The SAGICOR Debate

US based Barbadian Actuary Walter Blackman shares his views on the decision by Sagicor to redomiciled from Barbados. Sagicor, formerly The Mutual Society, always evokes emotion in Barbados given its coloured past. There is the intervention by Minister of Housing Dennis Kellman  which provoked a caustic response by Sagicor Group Head Dowridge Miller.  The decision by the Sagicor board for strategic reasons to sever its tie to Barbados as its domicile questions our capacity as a sovereign country to sustain successful indigenous companies.    How will Barbados challenge the hegemony of Trinidad and Jamaica as they cherrypick our best companies? Should it mater? How will our national pride suffer because of it.

Walter Blackman’s comment:

The difference between Sagicor and CLICO is as wide as the difference between night and day. You would have observed that Sagicor’s recent growth was achieved through the acquisition of companies, rather than through organic growth. From where I sit, it appears to me that Dodridge Miller’s focus was on the growth-through-acquisition process. Whilst he was “out” pursuing that objective, someone had to stay at home and manage the company’s operations. That responsibility seems to have fallen on the shoulders of Mrs. Pat Downes-Grant.

Continue reading

Sagicor to Move Head Office from Barbados in Response to Credit Rating Downgrades

Sagicor Financial Corporation (SFC) the parent company of the regional financial services provider, has decided to relocate its head office out of Barbados where it has been domicile do for close to 175 years. In an exclusive interview in today’s Business Guardian, SFC president Dodridge Miller said the board decision was unanimous and the Barbados government has been informed. Trinidad, London and the U.S. are options for the new SFC head office, said Miller, who is based in Miami.”TT Business Guardian

The news that Sagicor, one of the more respected regional companies, will shift its head office must strike at the core of economic fatigue Barbadians. It must have given Barbadian Group President Dowridge Miller no pleasure to be part of the decision that will see a 175 year relationship broken.

Continue reading

The Sagicor Thieves and the BCA Fraudster – Ruel Ward and Jefferson Miller Create a WTF Moment

The two main culprits in a scam that defrauded $4 million dollars from Sagicor Insurance company received suspended sentences yesterday in $5 Supreme Court. WTF!

For those who have not been following the case, it goes back to 2005 this matter was bouncing around the local courts. Here is further evidence to support the view by ordinary citizens that there is one set of of justice meted out to the Medes and another to the Persians.

How is it conceivable that an insurance company where millions of dollars are deposited to provide financial security to Barbadians and others beyond our shores is compromised by Ruel Ward and his brother in law Michael Pooler and not a day!

Continue reading

Politician Could Be Charged Shortly With The Disappearance of $500,000.00

A reliable source has advised that an aspiring politician nominated to run in the East is to be charged for the disappearance of BDS500,000 shortly. Barbados Today is the only media outlet to date to have carried the story as far as BU is aware which raises the issue of freedom of the press in Barbados. The matter is not yet sub judice which is the ‘crutch’ traditional media often uses to explain its silence on stories the public has a right to know.

Here is a quote from a note circulating on email which BU intercepted:

“More and more it appears that for the Barbadian public to be well informed on current affairs they seem to have to turn to Blog Sites and Barbados Today for those big news stories.

I heard since Friday last week about the case of the missing money at Sagicor – only $500,000.00 of it – but I am yet to see a single mention of this news breaker story published by the Nation or carried on VOB. I seriously wonder how this could have failed to capture their attention, or did it capture their attention but set aside hoping and wishing for it to go away ? Then again some are so busy trying to elevate certain characters that the real news slides by them. It is with interest and I will wait to see if either the Nation or VOB set about reporting the story to the public as they ought to do.

Continue reading