By Al Edwards, Business Editor
Stephen Thwaites, Catherine Thwaites and Mark Thwaites
AS THE Dyoll debacle unravels, questions are being asked as to who is culpable. Should the appropriate regulatory body have been more vigilant and protected the interests of shareholders? Was Dyoll adequately capitalised? Should not Dyoll executive managers have informed the Jamaica Stock Exchange as soon as possible that it had got itself into a pickle in Cayman? Once it found itself in trouble and needed a white knight, was it not duty bound to inform potential rescuers of the true financial picture of the Group?
The Financial Services Com-mission has declared that policy holders have nothing to fear. But what if a Caymanian body sued Dyoll for substantial sums, would not shareholders feel the pinch?
LEE CHIN PULL OUT
Now that Michael Lee Chin
has pulled out, where does that leave the beleaguered insurance company? It was mooted that the NIS could come to the rescue but really, should the government be using citizens' money to bail out wealthy shareholders?
At present there is a great deal of talk of corporate governance and transparency in Jamaica and this Dyoll incident is the perfect test case of whether such a notion exists in corporate Jamaica.
Interestingly, Cathy Parke-Thwaites (who is now at Life of Jamaica) recently resigned from Dyoll's finance committee and no explanation has been furnished.
The Dyoll Board has endeavoured to set the record straight and claims it was misled by senior management. Below, sources close to the board give an account of the events.
"The Financial Services Commission has appointed a temporary manager for Dyoll Insurance Company Limited. The board of Dyoll Group Limited, the
parent company of Dyoll Insurance Company Limited, supports the decision of the Financial Services Commission.
"Over the past few weeks, the Financial Services Commission, Dyoll Group Limited and a
number of companies in the
general insurance and broader financial services sector have been working together to inject new capital into Dyoll Insurance Company Limited. This need for additional capital emerged as a result of claims stemming from the devastating impact of Hurricane Ivan on the Cayman Islands. The type of storm surge experienced in the Cayman Islands is estimated to occur once every 500-1000 years, according to experts in the reinsurance sector.
"General insurance companies normally reinsure a percentage of their risk and maintain adequate capital, which, combined with the reinsurance proceeds, cover their overall liability on the risk. Dyoll Insurance Company Limited had adequate cover in terms of the reinsurance treaties in place for the Cayman Islands.
IMPACT OF HURRICANE IVAN
"From the time when Hurricane Ivan impacted the Cayman Islands in September 2004, through January 2005, information reported to the board of Dyoll Group Limited by the executive management of Dyoll Insurance Company Limited did not reflect the extent of the liability being faced by Dyoll Insurance Company Limited. In fact, the board sought to obtain an injection of new capital based on the information given to the board by the executive management.
"On January 31, the board discovered that the extent of the liability was potentially significantly higher than had been previously presented by the executive management. This new information was included in the quarterly returns filed with the Financial Services Commission by Dyoll Insurance Company Limited on the same day. At the same time when the quarterly returns were filed, a meeting was requested with the executive director of the Financial Services Commission by the chairman of Dyoll Group Limited. That meeting was held on February 1, 2005 and included the chairman of Dyoll Insurance Company Limited. The board wishes to emphasise that, as soon as it was in possession of the new information, that information was shared with the Financial Services Commission.
LIABILITIES IN THE CAYMAN ISLANDS WERE GREATER THAN PRESENTED
"Subsequent to discovering that the liabilities in the Cayman Islands were greater than presented, the board dispatched a financial team to conduct an in-depth review and audit of the insurance claims. The team confirmed that the extent of the anticipated liabilities exceeded what had previously been reported to the boards of Dyoll Group and Dyoll Insurance Company by the executive management. Subsequently, the chief executive officer and the chief operating office of Dyoll resigned.
"Once the board became aware of the true extent of the
liabilities, every effort was made, and continues to be made, to secure an adequate injection of funds for Dyoll Insurance Company Limited. The nature of the discussions surrounding that effort was highly sensitive and confidential and was so treated by the board."
