In an official statement dated December 31, 2003, the Ministry of Financial Services & Investment cautioned the insurance companies involved in the proposed takeovers “against premature action pending the lawful consideration of the regulators.”
The statement specifically targets Imperial Life, Canada Life, Life of Barbados and Capital Life, which are presently involved in mergers or are being taken over by Colina.
It also said that government officials are especially concerned considering that in similar mergers in other parts of the world the actual results fell far short of projections to the detriment of policyholders and shareholders.
The statement added that regulators must be satisfied about Colina’s alternative plans in the event of downsizing, especially as it relates to Bahamian jobs.
It also pointed out that no approval has been given by the government for the insurance companies’ actions and further warned “that there should be no premature actions, notices or measures that would pre-empt the lawful determination of the regulators or confuse or adversely impact the affected policyholders or other stakeholders.”
The parties have been specifically cautioned to cease and desist forthwith from all actions which would be contrary to the aforementioned warning.
The government has said that it supports the expansion of business and commercial opportunities, but it has also said it will do the proper research and consideration of all interests and not simply rubberstamp a deal that is seemingly being presented to the public as a “fait accompli” or “done deal”.”
Last November, Minister of Financial Services and Investments Allyson Maynard Gibson said in an interview with the Bahama Journal that Colina will have to convince regulators that its move would not adversely impact employees, shareholders, policyholders and the jurisdiction.
When asked about concerns that some insurance industry executives have that Colina may be creating a virtual monopoly, Minister Gibson said at the time that the requirements that Colina will have to meet will ensure that this is not the case.
She said that while there is no competition policy in The Bahamas, there is a need for it and the government is moving in that direction.
Colina CEO James Campbell told reporters at the time that once the deals in progress are finalized, his company will control about nearly 50 percent of the life and health insurance market.
Minister Gibson could not say whether controlling such a large portion of the market would be bad for competition, but she assured that regulators would not grant approval to any company that was attempting to create a monopoly.
It’s a situation one regulator told the Bahama Journal could be “dangerous”.
But Mr. Campbell has consistently dismissed such concerns, saying that competition would still remain keen in the insurance industry and that such consolidations are the way of the future.
He was unavailable this week to comment on the release from the Ministry because Colina’s offices were closed and remained closed up to Friday.
Julian Reid , The Bahama Journal
