‘Regrettable’ British American Letter

December 21, 2011

The provisional liquidator of the Bermuda branch of British American Insurance Company Ltd. [BAICL] yesterday [Dec.20] criticised the anonymous writer of an eight-page letter circulating among policyholders of the failed insurer.

Stephen Lowe said the document — released as policyholders this week received 35 percent of agreed claims from BAICL — was “regrettable” and an attempt to undermine efforts to wind down the business and reimburse Bermudian creditors.

“It is not my intention to respond to each and every allegation set out in the document,” said Mr. Lowe. “However, I would like to make it clear that the liquidation of this branch of the company in Bermuda has been conducted in accordance with the laws of Bermuda governing the winding up of companies.

“It has been an extremely time consuming liquidation due in part to the number of policyholders and the type of insurance business involved.

“The added problem is that BAICL in Bermuda is only a branch of a Bahamian incorporated company. As a result we have had to deal with the official appointed in the Bahamas on a number of issues, not least of which is the question of what assets of the company as a whole that I could secure for the exclusive payment of Bermuda resident claims.”

British American in Bermuda was the local branch of the British American Insurance Company Limited, a Bahamian company which had operations in many jurisdictions across the Caribbean.

An Official Receiver was appointed as provisional liquidator of British American on August 3, 2009 by the Supreme Court of Bermuda upon the application of the Bermuda Monetary Authority.

Mr. Lowe’s statement appears in full below:

Late yesterday afternoon I was provided with a copy of a document which I understand was being distributed to BAICL policyholders who were at the BAICL office collecting their dividend cheques. The document is not signed, appears to be addressed to policyholders, and the identity of the writer is not known.

It sets out a litany of complaints against various parties including the Bermuda Monetary Authority [BMA], KPMG [acting as my agents in the liquidation of BAICL], and Ms Wenda Krupp, a consultant with BAICL who has been assisting in the winding down of the business.

It is not my intention to respond to each and every allegation set out in the document. However, I would like to make it clear that the liquidation of this Branch of the Company in Bermuda has been conducted in accordance with the laws of Bermuda governing the winding up of companies. It has been an extremely time consuming liquidation due in part to the number of policyholders and the type of insurance business involved.

The added problem is that BAICL in Bermuda is only a branch of a Bahamian incorporated company. As a result we have had to deal with the official appointed in the Bahamas on a number of issues, not least of which is the question of what assets of the company as a whole that I could secure for the exclusive payment of Bermuda resident claims.

As I have said, the sheer number of policies and policyholders issued to Bermuda residents which we have had to deal with has been a challenge. The first step was to ensure that the health policies be continued without interruption and I was extremely grateful to Argus Group for agreeing to replace BAICL as the insurer for these policies and for facilitating this transfer.

Significant efforts were also made working with other local insurers and the BMA, to find a way in which the remaining policies could be continued. It was a source of considerable regret to all those involved that this was not achievable despite those efforts. Once it became clear that there was no way we could continue those policies, the scheme was put into effect and all premiums paid by policyholders since the beginning of the liquidation were repaid in full.

My principal job as provisional liquidator is to gather in the assets of the company and to distribute them to those who have claims. That is what KPMG and others have been employed to assist with. That is the most important focus for all of us who have been involved. We have now reached the position where we can distribute 35% of the agreed policyholder claims to policyholders.

A further distribution –- at this point the level of which is unknown — will be made as soon as possible following the sale of the building which is partially owned by BAICL in Bermuda. It is notable that the distributions to Bermuda resident policyholders have been made well in advance of payments to policyholders of the company in other jurisdictions in which it operated. This is in no small part due to the prior steps taken by the BMA in Bermuda to secure assets exclusively for the benefit of Bermuda resident creditors.

It is regrettable that an anonymous source has sought to try and undermine the efforts that have been made in this way. I am satisfied that the liquidation has been carried out in a proper and professional manner and in accordance with the relevant laws and regulations.

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Comments (13)

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  1. Family Feud - Survey says:

    I’m sure the letter was from some frustrated customer who, like many, paid good money to that company who lost it due to incompetence and crookedness. People whose entire job is to invest money and make money – did the opposite and lost it instead. Has happened to all our pensions too due to greed and incompetence. If someone ever told you they could give you a return that was always two or three times the inflation rate – then it was a scam. Madoff did that and see what happened. If the investors had kept the money in dollar bills at least they would have got the same amount out – but no – they got greedy – just like Butterfield bank who had to be bailed out by BMA. Half a dozen investors were to blame for the entire bank going under. AS for me, my wife and I paid into Brit Amer for twenty years. Now when we need it – we get ziltch. Bunch of crooks all of them. If you don;t like it then you shouldn’t have cheated all of your customers. You should be in jail picking up soap.

    • all clogged up says:

      KPMG and BA can kiss where the sun don’t shine….I dropped out of BA when my investment was minimal back in the 80′s and got pennies on the dollar….I really feel for the older bottom feeders that probably would never see the second payment….its not gonna happen. Ask Lowe how much he and KPMG got paid and did they get theirs first……your croc tears ain’t foolin anyone Steven,

  2. tricks are for kids..... says:

    Having read the document myself…I can assure you that the intent of the letter was not to “undermine efforts” as Mr. Lewes has stated..Yes I as a policy holder understood the agreement but that is not the point. The letter gives a whole lot of information and if Mr. Lewes was being honest and truthful instead of as he puts it, “It is not my intention to respond to each and every allegation set out in the document”
    The contect of the document seems to be very factual and it is my understanding that it came from an inside source. Whether policy holders knew in nadvance what they were getting is neither here nor there..my questions would be

    1.) Why did policy holders not receive ALL that they put in?
    2.) Why hire such an expensive firm to handle the liquidation? (KPMG are the only ones that seem to be benefiting at this point)
    3.) Why are bonuses being paid when that money can go towards policy holder claims
    4.) Was the amount of money stolen ever recovered? If not why as this to could have went towards policy holders
    5.) Why weren’t receprients of matured policies notified if the person who had the policy is now deceased?
    6.) Why were staff told what to say (scripted)? Why were the cleaners not allowed in at night and staff had to work in dirty areas with dirty bathrooms?

    That is JUST A FEW of the things that are in the document and for Mr. Lewes to take the COWARDS way out and not respond is not acceptable…To Mr. Lewes I would like to ask if everything was on the up and up and there was no wrong doing why was there a concern that pilicy holders would break down the doors at KPMG thus the doors of the uilding would be barricaded at night with office furniture?
    The truth will eventually come out………

  3. Truth is killin' me... says:

    You all shouln’t be surprised that Bermuda always gets the short end of the stick when dealing with the rest of the Caribbean. “The added problem is that BAICL in Bermuda is only a branch of a Bahamian incorporated company.” While our Government wants to be included in CARICOM and the like, my view is that we should stay the hell away from any links with the Caribbean. Especially when it comes to finances. There are more snakes down there than Bermuda has as a population. Just ask Doc Brown where he learnt his trade from.

  4. True Dat says:

    Insurance!!!! The Biggest Scam in the Universe!!!

  5. Triangle Drifter says:

    It is never good whenever a comany goes under, for whatever reason. People lose. They lose big time.

    Remember Televest, right here in Bermuda? Depositors did not get much back on the dollar there either. Has anyone looked at what their house is worth today vs say 5 years ago? How many are upside down in their mortgages.

    The biggest one of all of course our debt, which is still climbing & will hit $2B before you know it. Each & every one of us owes something like $20,000 on that, all thanks to the PLP.

    • pick & choose says:

      If you want maximum impact get your figures right. It’s currently about $200,000 per person owed to gov’t thanks to our outrageous debt situation.

  6. Pseudo Nim says:

    I switched off from Stephen Lowe’s comments as soon as I read “…the liquidation of this Branch of the Company in Bermuda has been conducted in accordance with the laws of Bermuda governing the winding up of companies..”.

    All that means is that policyholders get the short end of the stick as KPMG crank up the fees and drag it out as long as they can. You try to do the right thing by insuring and investing for your future and all that happens here is that they pull the rug from under you when you need it most. Typical.

    Wonder how much of a bonus Mr. Lowe got this year???

  7. VJ says:

    I know for a FACT that the few remaining staff members of British American have received bonuses…why?!!! Mr Lowe doesn’t want to address every allegation because he knows they are TRUE!!! I also find it very suspect that the policy holders are receiving their money Christmas week…KPMG and BA know that people will be so desperate for funds they will take what little they get and run…Just saying!!!

  8. The Hell says:

    First of all Lowe will not respond to the letter because its all true. Its know worlwide that KPMG has allways been a shady operration.

  9. JesusLovesMeBetter says:

    “It is not my intention to respond to each and every allegation set out in the document,” said Mr. Lowe.

    Know why not, people? Because he has no proper response-it’s all true! Furthermore, the act of Argus taking over the policies was concluded way back in December of 2009 so he can’t use that as an excuse for what was taking so long.

    I can’t say too much because I know how things go in this country (just ask Leoni Junos)but this is just the tip of the iceberg, Mr. Lowe-trust me. If all goes well there WILL be an investigation into what happened here and how this whole fiasco was mishandled from the start.

    Lowe calls Wenda Krupp a ‘consultant.’ Well, maybe that is the title KPMG decided to give her, but she was the manager of British American for the last seven years. He’s trying to make it look like she’s someone who just came on board which is not the case. Everything in the handout was TRUE and Mr. Lowe knows it.

    The liquidators deliberately chose just before Christmas to hand out the cheques because they know people will be so desperate for cash at this time of year that they’ll happily accept whatever pittance is given to them gratefully and with minimal fuss-just more evidence of how they are manipulating policyholders. They didn’t count on the expose handouts being given out. If the allegations were so frivolous, Mr. Lowe wouldn’t even bother responding. He responded because he knows they are serious allegations and all true! Again, there is more where that came from so I hope he’s prepared with something besides a generic, wishy-washy response next time.

  10. verbal kint says:

    Who was the judge who handling the winding up of BA? How was it that KPMG were chosen to liquidate it?

    • Sickening! says:

      I worked at British American and they have always used PWC for audits, and they did a really big one in January, 2009 at the orders of the BMA. It seems that KPMG is the firm of choice for the Registrar of Companies, so the judge is just going to go with that.

      The manager of British American lacked faith in the company herself, which is why she chose to keep her health insurance elsewhere and didn’t personally invest any of HER hard-earned cash in the company-i.e. she didn’t buy any of their policies! If the manager didn’t have faith in the very company she was running, that should tell the rest of us a lot! If nobody believes it, I suggest the Press just ask her-it’s true!

      Anyway, the first batch of staff made redundant are seeking legal action over how this drawn-out affair was handled. The staff who stayed were put at a mass advantage over us including being employed for two years and receiving bonuses-a fact that Stephen Lowe never denied! We would like to know how these people were selected to stay, including a temp. worker and two employees who had passed British American’s own MANDATORY retirement age.

      Also, for any KPMG/BMA/ROC people reading this, remember the correspondence we gave you-these ‘retired’ staff are NOT due to be paid any severance packages. If it is discovered that they have been paid this benefit to which they are not entitled-money that could be going to policyholders-there is going to be trouble. We WILL be asking the Ombudsman to look into this-you have been notified of the facts concerning retired employees and the fact that they are NOT entitled to severance so you cannot claim that you do not know. If they get paid a severance package, it WILL come back to bite you.