Barbados Mutual will merge LoJ, Island Life McPherse Thompson and George Jude, Gleaner Reporters Jamaica's largest insurance company, Life of Jamaica (LoJ), which is now in the process of being acquired by the Barbados Mutual Life Assurance Society, is to be merged with Island Life Insurance Company, according to president and chief executive officer of the Barbadian firm, Arthur Bethell. At the same time, Mr. Bethell said they did not expect a major management and staff shake-up at LoJ, largely because the company has already undergone major restructuring in recent times. Mr. Bethell was speaking at a press briefing at the Hilton Kingston Hotel yesterday, against the background of a recent decision by the Financial Sector Adjustment Company (FINSAC) to sell its majority stake in LoJ to a consortium led by Barbados Mutual. Two weeks ago, FINSAC said that it has accepted a bid of $2.047 billion from a consortium led by Barbados Mutual and including Life of Barbados and Colina Insurance Company of the Bahamas, for the purchase of its 76 per cent stake in LoJ. Mr. Bethell said they had no intention of buying out the minority share holdings in LoJ. However, in addition to the proposed merger of LoJ and Island Life, Life of Barbados and Barbados Mutual were also being merged as part of the move to consolidate their insurance holdings in the Caribbean. Due diligence He said they were in the process of conducting a due diligence of LoJ, which was expected to be completed in another 30 to 45 days after which they would sign the agreement to purchase FINSAC's share holding. According to Mr. Bethell, both Barbados Mutual and Life of Barbados would be able to acquire LoJ without impairing their financial standing. He also emphasised that with the financial strength of both companies customers of LoJ would be better protected. Mr. Bethell also said that once acquired, LoJ would be capitalised at 150 per cent of minimum continuing capital and surplus requirement (MCCSR), which is 50 per cent above the requirement under Jamaican law. Although he said there would be no major shake up in personnel currently employed by LoJ, the president said there might be redundancies when the company is merged with Island Life. Mr. Bethell said it is too early and close to say who will be the president of the merged entity. Conclude the deal "We want to go through this diligently with FINSAC (the Financial Sector Adjustment Company) to conclude the deal and look at who we have," said Mr. Bethell in an interview with The Sunday Gleaner. Mr. Bethell said, "Right now we have the president of Island Life, Mike Fraser and Milverton Reynolds who is president of Life of Jamaica but we have not gotten into that area yet as I don't see the two entities being brought together immediately. We will be in a better position to say in three weeks' time." Mr. Bethell added, "We are facing a similar situation with Life of Barbados and ourselves (Barbados Mutual). "We have committed to becoming one entity so we are currently facing that same situation at home." He said he understood the concerns and anxiety of staff members but unfortunately at this time, the answers were not there. "I would be wrong to even surmise what will happen," he said. Mr. Bethell said, the criteria they will be using to choose the new president for the merged entity are: "The individual's ability and what they bring to the table to be the executive officer of the company and what is in the interest of the company." Mr. Bethell said he was pleased with the track record of the two leading candidates and knew of no factors in their track record that might mitigate against their candidacy. "Not at all", he said. "As you know when Mutual purchased the interest in Island Life we recruited Mike Fraser from Life of Jamaica and appointed him as chief executive officer at Island Life and Mike has done a good job. He has gotten our business moving again and he is from a marketing background." "I don't think Mr. Reynolds's background is marketing but obviously he brings other skills to the table. He must have, otherwise he wouldn't be in the position he is in," Mr. Bethell said. On Mr. Reynolds's track record, Mr. Bethell said, "Life of Jamaica seems to be performing quite well. I have met with Mr. Reynolds and he is obviously a knowledgeable person in the industry. He has been with Life of Jamaica for a number of years." However, Mr. Bethell did not rule out bringing in someone from outside Jamaica as president of the new entity. "It's possible we could bring in someone from outside but this is not definitive at this time. Let's look at Island Life, where we have one person in the accounts area from outside Jamaica... but don't forget Jamaica is a leader in the industry and all the requisite skills are available here." The acquisition of majority stake in Island Life in December 1999 was Barbados Mutual's first foray into the Jamaican life insurance market since it was forced to pull out in the 1970s. Under its management, the money-losing Island Life was recapitalised and returned to profitability last year. Chief operating officer of Barbados Mutual Life, Dodridge Miller, who also attended the press briefing and who is expected to play a major role in the management of LoJ, said the extent of the capitalisation of the new acquisition would be dependent on the findings of the due diligence. "We are now in the process of going through the records of LoJ," he said. However, before the result of the bid was announced, Barbados Mutual had indicated that it intended to pump between US$25 million and US$35 million into capitalising LoJ.
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