ColinaImperial Insurance Company said it had satisfied only a “majority” of the 21 conditions imposed on the company and its parent, the then-Colina Financial Group (CFG), in return for the Government’s approval of its Imperial Life purchase.
Montgomery Braithwaite; ColinaImperial’s president, did not state in the 2005 annual report for its parent, BISX-listed Colina Holdings (Bahamas), which of the 21 conditions the company had not met and how many it was in compliance with.
The company’s compliance with the 21 conditions set by the Government was one of the issues assessed by KPMG, the auditing firm appointed to act as the ‘eyes and ears’ of the financial services regulators in their monitoring of ColinaImperial and its activities.
The Tribune understands that the final KPMG report has been presented to the regulators, headed by the Securities Commission of the Bahamas and the Registrar of Insurance, and the ball is now in their hands – and those of the Government – to decide what, if any, action to take.
The report and its contents will not be made public, though, which many capital markets observers consider a strange move, given that Colina Holdings (Bahamas) is a publicly-listed company.
Given that the company, and by extension its shareholders, paid $642,810 for the KPMG review, this would appear to violate the very basic right of shareholders to know how their money has been spent.
Moreover, it is unclear whether Colina Holdings and its 63 per cent majority shareholder, the now-renamed AF Holdings, will see the full KPMG report or be given a chance to respond to it. So far, The Tribune understands that the best that can be hoped for is that the Government may make some statement on the 21 conditions in the House of Assembly.
Meanwhile, Mr Braithwaite said ColinaImperial’s year-todate premium income for 2006 was “trending positively” in comparison to 2005, and the company was planning to launch “a new and improved line of products”.
Meanwhile, Colina Imperial said it had reached an agreement with Bank of the Bahamas International that will see the latter accept payment from its insurance policyholders at all its branches.
Mr Braithwaite added that some 42,000 Imperial Life policies had been converted to ColinaImperial’s technology platform by January 2006, the $1.5 million project coming in on time and below budget.
ColinaImperial’s Minimum Continuing Capital and Surplus Requirement (MCCSR) also improved slightly during 2005, closing the year at 161.1 per cent, a rise of 8 per cent over the position at December 31, 2004. The minimum recommended MCCSR is 150 per cent.
The annual report showed that AF Holdings, Colina Holdings parent and majority shareholder, had settled the $1.532 million it owed to it by handing part of its stake – some 901,386 shares – to ColinaImperial, which placed them into its Treasury.
After December 31, 2005, 600,000 of the shares returned by AF Holdings were “sold to certain directors, key management personnel and other related parties at a price equal to their cost of $1.70 per share”.
The Tribune reported previously how More than $3.6 million flowed out of ColinaImperial Insurance Company to related parties and entities within the Colina financial group during fiscal 2005, even though its BISXlisted parent did not declare a dividend payment to ordinary shareholders.
The fiscal 2005 outflows to related parties from Colina Holdings are less than the $4.472 million recorded in 2004, the latter year having seen the payment of $921,000 in “brokerage fees” to CFG for services in negotiating the Canada Life and Imperial Life purchases.
And the 2005 financial results for Colina Holdings received a clean bill of health from external auditors PricewaterhouseCoopers (PwC).
The 2004 accounts had been qualified by the same firm, after PwC “were not able to satisfy” themselves that all related party transactions had been disclosed.
At the 2005 annual general meeting, Colina Holdings (Bahamas) shareholders will be asked to approve a change in the company’s external auditor from PricewaterhouseCoopers (PwC) to Ernst & Young.
The company said this was part of normal policy to rotate the external auditors after several years.
By NEIL HARTNELL Tribune Business Editor
