The BMA announced it had applied to the Supreme Court to wind up BAICO's Bermuda branch — which was opened more than 50 years ago - so as to protect customers in light of "the continuing severe financial difficulties" faced by BAICO and its parent company, CL Financial Group of Trinidad and Tobago.

"It is apparent that as a result of the financial difficulties faced by BAICO, policyholders, particularly those with investment or savings products, will very likely face a potential shortfall," a BMA statement said.

Claims facilitated

The "liquidity facility" provided by the Bermuda government will enable all claims for periodic and ongoing medical care to be paid in the short term under the existing terms of the policies, the statement added.

But BAICO's health insurance policyholders will continue to receive medical cover after the receiver moves in to liquidate the company.

The Argus Group has agreed in principle to take on BAICO's health insurance clients, who in the short term will have their claims met by the Bermuda government.

"The BMA and the government of Bermuda are very grateful to the domestic insurance companies who have worked hard to find this solution and in particular to the Argus Group for their efforts to assist BAICO Bermuda branch's health policyholders during this difficult time," said Deputy Premier and Finance Minister Paula Cox.

"It is our hope that solutions for the non-health policyholders also will be identified as we work through the transition for the health insurance policies."

Minimise impact

BMA chief executive officer Matthew Elderfield said the financial problems of British American were affecting a significant number of policyholders across numerous jurisdictions.

"The actions being taken today to secure local assets will help minimise the impact on local policyholders, but it will take some time to assess the financial position and the options for the future before the exact size of any shortfall for non-health policy-holders can be determined."

- CMC