Gov’t to sell insurance shares

| 07/04/2011

(CNS): Government is currently looking at divesting the 24% share it holds in an insurance company it acquired in part payment of its Hurricane Ivan settlement in 2005. Premier McKeeva Bush told the Legislative Assembly on Thursday morning that his administration was looking into the possibility of selling the shares, which were originally in Cayman General Insurance. As a result of a number of sales and acquisitions over the past six years the shares held by government are now in Cayman First. The shares were given to government in lieu of the $20 million balance of its estimated $70 milllion claim after the 2004 hurricane. Bush said that government would like to get as much as possible for the shares but it would not be able to get back the full amount.

The revelation was part of the a government minute written in response to the Public Accounts Committee 2010 report on the auditor general’s findings, originally published back in 2007, on the government’s settlement with Cayman General.

The minute outlined government’s reasons for accepting the shares as part of the settlement, which stated that if the government not made the decision to accept the deal hundreds of Caymanians could have suffered.

“The committee ought to understand that had the government not assisted the company the disastrous result would have been that hundreds of Caymanians would have become bankrupt without homes and loss of investments. The then government saved the day,” Bush said, referring to the previous UDP administration, which he had led. “Currently the government is actively considering the possible divestment of the shares,” he added.

In the original report by the then auditor general, Dan Duguay, it was revealed that government had paid somewhere between $80 and $240 per share. He estimated that the shares in 2001 were worth around $3 milllion and said government had not received value for money.

Speaking to the assembly on Thursday, Bush said that he had been criticized for making the decision and people had tried to say there was something crooked but the settlement was made to help thewhole country because if the company had failed, not only would Caymanians not have had their claims met but Cayman National bank would also have been at risk.

He said he was not insured by Cayman General at the time but by “the other one which went down” (Dyoll) so he didn’t get anything from the deal. The premier said that at the time the government of the day had to look at the biggest one of the insurers if it was going to help and Cayman General was the firm which had the most local customers.

The shares which government wishes to sell are now in Cayman First, the insurance firm which only last month was ordered by the courts to pay $7 million to a local construction company for a disputed claim originally with Cayman General regarding Windsor Village.

The government response to the PAC report on the AG’s findings also acknowledged the need to diversify government’s future insurance coverage and the premier said that currently the government has multiple insurers, all of which have AM Best ratings of A- or higher, and it would continue to diversify the cover of government property.

Bush also told the Legislative Assembly that in light of recommendations in the reports, the Lands and Survey Department was undertaking the assessment of government’s property assets to ensure that the current insurance cover the CIG holds is adequate. He said it was government’s intention to do this every three years.

The Public Management and Finance Law requires that government regularly assess the value of its assets, though no valuation has been conducted since the PMFL was passed in 2003. In his report Duguay had warned that without a valuation government was running the risk of being significantly under insured.

See original audit report below.

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  1. Anonymous says:

     Thanks for posting the location. 

  2. Anonymous says:

    The photo is of houses in the vicinity of Linford Pierson Bypass/Silver Oaks development on Crewe Road, near the First Assembly Church/ Kings Gym area. This general area is where the North Sound & Sound Sound waters met for a short time, satellite photos show the area completely under water at one point.

    These houses were under construction at the time of the hurricane.

  3. Anonymous says:

    Mr. Bush’s decision to take an equity position in Cayman General after Hurricane Ivan was a pragmatic and absolutely correct & necessary course of action at what was a very difficult time for Cayman. Cayman General and by extension Cayman National Bank and it’s subsidiaries were too big to allow to fail. The consequences of this Group collapsing would have been disastrous to our economy, our reputation and our people. There are times when it becomes necessary to take a loss for the overall good. This was just such a time.

  4. Anonymous says:

    Does anyone know the location of the houses in the photo that accompanies the story?

  5. ALL SEEING says:

    Mac refused to have the negotiation recorded. Why? So there would be no record of what took place. That shows his state of mind. Mac has shown a pattern and practice of bad judgment when it comes to important decisions for these Islands. That is why his type of leadership, if you can call it that, should not continue. Many fail to realize that everything this man does, reminds people of these big mistakes he has committed over his political career. Need I say more? It is time to fish or cut bait and the fish have run out because the MANGROVES are slated to be destroyed alone with the NORTH SOUND. Anything left the Refinery will surely finish off form our Master of decisions.

  6. Freedom Man says:

    Since when has it been Goverment’s job to make a profit?

  7. Anonymous says:

    Praise be to Allah. They should never have had them in the first place.

  8. Anonymous says:

    That’s right – wait until AFTER the big purchase of Sagicor’s shares by Bahamas First, AFTER there is a $7m judgement against them and THEN try to sell the shares. Real smart.

  9. Jumbles says:

    So First Cayman say that the $10m Windsor Village order will not affect their finances one week, the Government wants to dump their large shareholding the very next week . . .


    Maybe First Cayman would like to take out a nice full page newspaper ad letting us all see their current financials. Either that or I am moving my insurer when renewal comes round.

    • SMH says:

      Smartest move by the Government I’ve seen so far.  This is a HUGE Red flag!! I don’t care about seeing their Financials — I’m jumping this sinking ship too.

      • Anonymous says:

        I agree except that it doesn’t show that govt. is smart, but that (1) it should never have owned the shares in the first place; and (2) having made the mistake of owning them, it is too late doing what it should have done a long time ago. This should have been the first asset up for sale rather than the GOAB. It could have included provisions in the Articles that any offer to sell shares must include the shares held by CIG. It would have got a reasonable price back then being included in the Bahamas First purchase.

  10. Anonymous says:

    This is a good move. Sell them instead of the Water Authority which is producing a good return for Government.

  11. Anonymous says:

    By stating on the floor of Parlaiment "that government would like to get as much as possible for the shares but it would not be able to get back the full amount" guarantees that they will not get the value of what McBungle’s own Government took in the aftermath of Ivan.Do not forget that it was him who negotiated this share deal in the first place!!!. XXXX

  12. McCarron McLaughlin says:

    Other one of the great leader McKeever accomplishments in helping put Cayman further in the hole.

  13. nauticalone says:

    It is truly amazing what this man (and a few others) have gotten away with and continues to get away with also.

  14. Anonymous says:

    They should never have taken the shares in the first place and were firmly advised against it (though not by our geniuses in the then Finance Portfolio). Now they may be liable for part of the Widsor Village costs. Idiots.

    • Anonymous says:

      Please explain how a shareholder can be come liable for a debt of a limited liability company.

  15. Anonymous says:

    How does this make sense?

    Hurricane Ivan took place in 2004.

    The Hurricane Ivan settlement was concluded in 2005.

    Yet a valuation estimate is based on the 2001 price???

    Am I missing something here or is this just more CI Govt accounting?