One local regulator told the Bahama Journal that the company’s move to “gobble up” 45 percent of the life and health insurance market was “dangerous”.
However at a press conference announcing the latest acquisition, Colina Chief Executive Officer James Campbell dismissed claims that his company is attempting to monopolize the industry.
“We’ve been hearing a lot of commentary as it relates to the competitiveness in the market,” said Mr. Campbell, who was speaking at a press conference at Colina’s Village Road Office. “The competition we are now faced with is actually changing. We are no longer competing with Bahamian companies, but with regional and international companies.
“We are already faced with the competition from the Internet and credit card companies and we know it’s just a matter of time before we face more significant competition from companies now operating abroad.”
Insurance executives have for months been pointing to what they perceive to be an unhealthy situation in the insurance industry.
In an earlier interview with the Bahama Journal, Keith Major, vice president of Imperial Life Assurance said, “For our small economy, I think this could cause a huge loss of jobs because a purchasing company which has bought a number of other companies certainly won’t need a whole bunch of people. They would only need one person where there were four persons in each of those companies.”
One executive of British American Insurance, who asked not to be named, said what Colina is doing is “bad for competition and bad for clients.”
Competition causes prices to stay down,” he said. “Competition causes prices to be honest. I suspect there will be uproar from industry executives.”
Colina recently acquired Canada Life, Global Life and Sagicor, formerly Life of Barbados.
This latest acquisition, which is subject to regulatory approval, would result in Colina having an asset base of $350 million and more than 70,000 life and health policies.
The total premium in the local life and health industry at the end of 2002 was $232 million and $225 million in 2001, according to insurance executives who attended yesterday’s press conference.
Mr. Campbell said consolidations are becoming commonplace, taking place worldwide, including in Barbados and in Jamaica.
“One of the significant changes in the proposed Insurance Act, speaks to the amount of capital that companies operating in The Bahamas must have and as a result of that, you will see more and more companies forming alliances in order to have the level of required capital and to reduce operating costs,” Mr. Campbell said.
Notwithstanding Colina’s dominant market position, Mr. Campbell believes that there will be keen competition from other companies such as Family Guardian, British American, British Fidelity, Atlantic Medical, Commonwealth General and Travelers Insurance.
Colina is purchasing Imperial Life from its parent company, ‘Desjardins Financial Security’, based in Canada.
Mr. Campbell and Executive Vice President of Imperial Life Financial Guy Richard will spearhead the integration of the companies.
“In view of the arrival of the Caribbean Single Market and Economy and the Free Trade Area of the Americas Agreement, the amalgamation of Imperial Life Financial with Colina, is a sensible solution for the future,” Mr. Richard said.
Adding that the sale of an organization he has led for many years is an emotional one for him, Mr. Richard said a meeting was held with the 140 employees on Monday.
“We explained the objective of the merger, why we are selling the Bahamian operations and why we are selling to Colina,” he said. “We realize that Colina is a financial diversified operation with vision and it is a company that has a capital base to do that kind of acquisition.”
Senior Executive Vice President of Desjardins Financial Robert St-Denis admitted that although the parent company was not looking to sell Imperial Life Financial at this time, Colina’s offer was “interesting in many ways.”
Mr. St-Denis said that with only 3 percent of the company’s business being in The Bahamas – including Nassau, Freeport and Abaco – it was only a matter of time before the parent company sold out.
“Colina made us a good offer,” Mr. St-Denis said. “We feel also that it was the right company to make the offer…there is plenty of room for growth for the company in Canada. And so, this is where we believe we must put our efforts.”
Mr. Campbell, meanwhile, said there are usually redundancies when acquisitions take place, but he added that it is too early to comment on the matter at this time.
According to Mr. Campbell, all of the services offered by Imperial Life, which were previously executed overseas, will now be done here in The Bahamas, providing more
By Hadassah Hall, The Bahama Journal
