– denies scheme on verge of collapse
Chairman of the National Insurance Scheme (NIS) Board, Dr Roger Luncheon yesterday defended its investment of almost $6 billion in Clico (Guyana) and denied suggestions that it faced imminent collapse.
At his post Cabinet press briefing yesterday, the Head of the Presidential Secretariat said that the decision to invest in the local insurance firm was pursued by the NIS board based on advice provided by the institution’s Investment Committee. He suggested that one of the main attractions of pursuing this particular investment was the high returns.
In addressing the riskiness of this particular transaction, Luncheon stated that this would need to be determined via comparative analysis. Without providing any statistics, Luncheon said that it would be useful to compare the returns of this particular investment with other simultaneous investments. He, meanwhile, pointed out that the bulk of the NIS investments was not made in Clico.
On March 12, Finance Minister Dr Ashni Singh told the National Assembly that over the years the money NIS invested in Clico (Guyana) had seen a decline. He said that at the end of 2004, the NIS had invested over $9 billion in the insurance company which represented over 40 per cent of the company’s assets at that time. He stated that at the end of last year this investment had been reduced to $5.6 billion which represented about 20 per cent of the assets of the NIS. “These investments were made at rates of interest higher than the NIS was earning elsewhere at the time,” Singh said.
At a recent press conference, President Bharrat Jagdeo had criticized the NIS for making the investment; calling it a “bad investment”. He said the scheme pursued high returns instead of taking into proper consideration the risks involved. Jagdeo emphasized that whenever there was the promise of high returns there was always great risk involved.
Meanwhile, Luncheon further stated that suggestions that the collapse of the NIS was imminent were not based on factual information. When asked to respond to statements reportedly attributed to the AFC, that the institution was about to collapse, Luncheon said the party should be encouraged to provide proof of this. He said that based on the most up-to-date information available this was certainly not the case. He said such a statement, “flies in the face of information that is currently available, information with regard to the trend of operations financially of the scheme.”
Luncheon pointed out that the 2007 Annual Report of the scheme had already been laid in Parliament and the one for last year was currently being prepared.
The NIS investment in Clico (Guyana) has come under intense scrutiny ever since the financial woes of the insurance company were publicized. On February 25, Commissioner of Insurance Maria van Beek had moved to the high court to have Clico Guyana placed under judicial management. This was done following an order issued by the Supreme Court in Nassau to send Clico (Bahamas) into liquidation on February, 24. Investigations regarding Guyana’s $6.9 billion or US$34 million investment revealed that although this sum was liquid on paper, it had been tied up in real estate investments that Clico (Bahamas) had in Florida via subsidiaries.
