Earl Jarrett, general manager of Jamaica National Building Society group, had no comment on the Blue Cross bid

The Jamaica National group, the large mortgage lender that has been aggressively diversifying into other financial services, is in advanced talks for the acquisition of the health insurance company, Blue Cross of Jamaica, authoritative financial sector sources say.

JN's general manager, Earl Jarrett, this week declined to confirm or deny the discussions and Blue Cross' chairman, Dr Henry Lowe, who is travelling abroad was unavailable for comment. But a financial sector source said: "The talks are well down the road. An agreement is highly likely."

Regulatory hurdles

Jamaica National became a suitor for Blue Cross of Jamaica after Michael Lee Chin's National Commercial Bank's bid to acquire the company ran into regulatory hurdles - in part because of the central bank's efforts to get commercial banks, including NCB, to structure their operations so that they are more firmly under its purview.

Lee Chin controls NCB through a Barbados-registered subsidiary of his Canadian-based AIC Limited.

It was not immediately clear what proportion of Blue Cross, which is wholly controlled by the ostensibly not-for-profit Environmental Health Foundation - of which Lowe is also chairman - would be acquired by Jamaica National.

Derailment

However, before the derailment of their October 2005 purchase agreement, Lee Chin had planned to take over 75 per cent of the health insurer, which was to have fallen under the umbrella of NCB Insurance Company Limited.

With premium income estimated at around $2.5 billion, Blue Cross is a major player in the health insurance market, but a relative minnow to the Jamaica National group, a mutual, with assets, at March 2007, of approximately $74 billion.

But most of JN's muscle is from Jamaica National Building Society, the island's largest mortgage company, with assets of $67 billion at March 2008.

In fact, in the financial year to March 2007, the building society accounted for approximately 73 per cent of the group's net surplus of $1.68 billion.

However, JN has in recent years been feverishly building out a network of companies to create a financial services conglomerate with the strength to expand in Jamaica's increasingly competitive market.

"JN is already a player in the general insurance market though its subsidiary NEM," said the Financial Gleaner source.

"Having Blue Cross would be a nice fit. You could come in, get your mortgage, insure your home and get your health insurance. JN would have a real opportunity to leverage its branch network."

business@gleanerjm.com

Eye testing being conducted by a Blue Cross staff member. - File