British American Insurance: Full Liquidation

The Ministry of Finance/Registrar of Companies issued a release today [Sept 7] addressing matters relating to British American Insurance Company saying that “it has been determined that a full liquidation is in the best interests of policyholders and will be implemented with immediate effect.” The release went on to say that locals who are life insurance policyholders and creditors of British American will “receive a return of funds representing a percentage of the value of their policy”.

Full statement:

The Official Receiver (the OR) was appointed as provisional liquidator of British American on 3 August 2009 by the Supreme Court of Bermuda upon the application of the Bermuda Monetary Authority (BMA).

Since that time, the OR, together with his agents (KPMG Advisory Ltd. and Conyers Dill and Pearman Limited), the BMA, the Minister of Finance and the local insurance providers have explored a variety of options to enable the Bermuda resident life insurance policyholders to be provided with a continuation of their current insurance cover.

It was for this reason that life insurance policyholders were requested to continue paying their premiums following the OR’s appointment. However, despite the extensive efforts of everyone involved, and detailed consideration of a range of potential options, it has been determined that a full liquidation is in the best interests of policyholders and will be implemented with immediate effect. The OR would like to acknowledge and thank the BMA, Ministry of Finance and the local insurance industry for their support and hard work in seeking a solution to this difficult situation. The OR has requested, and the local insurers have agreed, that they will do everything they can to offer alternative insurance cover to policyholders where it is viable.

Sincere appreciation is also extended to the British American policyholders for their patience and cooperation during this time. British American in Bermuda is a branch of the British American Insurance Company Limited, a Bahamian company which has operations in many jurisdictions across the Caribbean. The company has suffered significant and widespread losses. Given the proactive steps previously taken by the BMA to secure, as far as possible, the interests of Bermuda-resident customers of the company, funds available to Bermuda policyholders are likely to be significantly greater than those available in most other jurisdictions in which the company operated.

It is intended that the life insurance policies be terminated and valued by way of a scheme of arrangement. In summary, this will mean that all life insurance policyholders and creditors of British American who are resident in Bermuda will participate in a process which will see them receive a return of funds representing a percentage of the value of their policy. All policyholders’ claims will be actuarially assessed and the relevant date for valuing the policies will be July 29, 2009, being the date the petition to wind up British American was presented to the Bermuda Court. Any valid death benefits that have fallen due subsequent to this date will represent the value of the claim upon which a percentage distribution will be paid.

The exact. percentage and payment amounts are currently being determined. In addition, those policyholders who have continued to pay premiums to British American will receive, in full, a return of all premiums paid since 29 July, 2009.

Policyholders should now cease paying premiums to British American. Therefore, all direct debits, standing orders and other means of payment that may have been arranged should now be cancelled. Policyholders should consider exploring with other Bermuda insurers alternate insurance arrangements to ensure they are adequately insured for the future.

The Official Receiver is committed to concluding this matter as quickly as possible in order to bring a final resolution to policyholders and creditors. More detailed information will be sent shortly to all policyholders and made available at www.kpmg.bm/ba.

Policyholders and creditors can obtain further information with regard to British

American at www.kpmg.bm/ba or by contacting KPMG Advisory Limited at infoba@kpmg.bm or by calling the British American hotline on 294-2651.

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