Minister of Financial Services and Investments Allyson Maynard Gibson said in an interview with the Bahama Journal yesterday 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 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 this week that once the deal is finalized, his company will control about 45 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.
His company also recently acquired Canada Life, Global Life and Sagicor, formerly Life of Barbados.
This latest acquisition would result in Colina having an asset base of $350 million and more than 70,000 in life and health policies.
In order to win regulatory approval, Colina will have to meet very strict criteria, Registrar of Insurance Rodger Brown told the Bahama Journal.
Mr. Campbell said at a press conference Monday that it is too early to reveal specifics regarding what impact the acquisition would have on employees. But Mr. Brown pointed out that the company would have to clearly state the impact in order to get approval.
Speaking generally about any company involved in such acquisitions, Mr. Brown said, "They will have to give us a plan of action, a business plan that would [show how they plan to] deal with the employees."
He said Colina would also have to prove that policyholders would not be adversely impacted by the deal.
"The policyholder has a right to decide whether or not he or she wants to have [his or her] policy changed to the new company," Mr. Brown pointed out.
He said, "The policyholder from the company that's being purchased could say that he doesn't want to go with the new company. In this case, using Imperial Life and Colina as an example, the persons who have been with Imperial Life for many years can decide 'we don't want to go with Colina; we want to remain with Imperial Life.'"
If this were to happen, he said Imperial Life "would have to make arrangements to continue to service those policyholders."
"They can't say 'because we are selling, you have to go onto the new company'," Mr. Brown said.
The company will also have to convince regulators that it has the capital base to support the purchase, he added.
Mr. Brown also pointed out that the government would have to clearly articulate what would constitute unfair competition.
"To say that we will only allow a company to acquire 50 percent or 70 percent of the market, that is not something for this office to decide," he said.
"That would be a political decision that the authorities will have to make because what is happening now, especially in the region, you have jurisdictions where there are only one or two large companies operating. I think the politicians would have to make that determination."
By Candia Dames, The Bahama Journal
