THE DAYS of Prime Life Assurance Com-pany being a minnow among life insurance giants appears to be numbered as the Matalon-controlled operation looks to build all-important critical mass.
The life insurer, which is currently part of the restructured ICD Group run by Joseph M. Matalon, is in talks to buy the Financial Sector Adjustment Company (FINSAC) 76 per cent stake in Life of Jamaica (LoJ) or, if that fails, sell its portfolio to Trinidadian giant Guardian Life.
Mr. Matalon declined to comment on events yesterday. But sources close to the group said that it was among several life insurance players currently vying for control of LoJ.
Prime Life president Herbert Hall pointed queries to Mr. Matalon yesterday. He said that if a deal was finalised, it would happen at Group level.
As well as expressing an interest in LoJ, Prime Life is also thought to be holding parallel discussions with Guardian Life to sell its life insurance portfolio to the rapidly expanding Trinidadian-owned operation, if a bid for LoJ fails.
Prime Life would set up a new insurance agency to retain its existing sales agents, which would be contracted to sell policies for Guardian Life and possibly sell other group products such as Sigma Investment policies and units in Sigma's Unit Trust.
Prime Life is a relatively new player in the life insurance scene, starting operations in June 1994.
The latest news appears part of a detailed restructuring of family interests by Joseph M. Matalon. After divesting a number of smaller operations, Mr. Matalon now appears focused on reorganising several of the larger operations under his control.
In December Industrial Commercial Developments (ICD) officially replaced Mechala Group Jamaica, incorporated five years ago, as the operating holding company for all the subsidiaries, previously owned directly or indirectly by the Matalon family.
At the same time, Joseph A. Matalon gave up the post of president and chief executive officer as of January 2, 2001. Joseph A. Matalon remained as West Indies Home Contractors (WIHCON) non-executive chairman.
Incumbent chairman of ICD, Joseph M. Matalon, assumed the position of chief executive as of that date.
A deal that will see his Sigma Investment Management Systems (SIMS) merge with Manufacturers Merchant Bank (MMB), as part of efforts to compete more efficiently both locally and overseas, is still to get approval from the Bank of Jamaica and Ministry of Finance.
The new entity, to be called Manufacturers Sigma Merchant Bank, will be headed by Mechala's chairman, Joseph M. Matalon, with MMB's incumbent president and chief executive officer, Peter Melhado, as chief executive officer.
Mr. Matalon's recently restructured Sigma Interests will control 57 per cent of the new company, Manufacturers Interest, including its former owners O.K. Melhado and Cliff Cameron, will control 43 per cent.
At the end of last year it was also rumoured that a deal that would have seen British Caribbean Insurance Company (BCIC) merge with the local arm of Legal & General was under discussion. Preliminary talks had taken place but an agreement failed to materialise.
Prime Life's Hall has made no secret of his desire to grow in order to gain the critical mass needed to make his operation more cost effective. He was quick off the draw when news emerged two years ago that FINSAC wanted to sell a merged portfolio of Crown Eagle, Dyoll Life, Jamaica Mutual Life Assurance Society.
But, Prime Life was pipped at the post by Guardian Life which, in 1999, acquired the individual life and pensions portfolios of three failed local insurance firms.
Pan Jamaican Investment Trusts' First Life arm, another potential LoJ bidder, acquired the group health policies of the failed insurance firms.
While Prime Life, First Life, Lincoln Benefits, the life arm of US giant Allstate, and Blue Cross of Jamaica have all expressed an interest in bidding for LoJ, Guardian Life may in fact sit this one out.
Privately, it has expressed interest but said it might not actually bid, preferring instead to hold a passive equity interest in LoJ. Guardian recently acquired about 15 per cent of Pan Jam when it took over Mutual Life's 22.7 million holding during the take-over from FINSAC.
At the end of September Guardian underwrote Pan Jam's rights issue, which raised approximately $150 million for investments through the issue of a new class of preference shares. Guardian ended up with another 10 million of the 10.72 million in preference shares, after existing shareholders decided not to take up their rights. Guardian's preference shares can be converted to ordinary shares and would thus give the Trinidad powerhouse close to 20 per cent of Pan Jam.
The battle to control LoJ, the largest pension fund holder and life insurer in the island, is likely to begin in earnest in a few weeks time.
Interested parties have been asked to sign a confidentiality clause before detailed actuarial valuations of LoJ are released.
But, FINSAC appears set to plug the $2 billion deficit in LoJ's life portfolio and is expected to want the new owner to pump in about $1 billion of fresh equity.
