Wehby
Dennise Williams, Staff Reporter
THE FINANCIAL Gleaner understands that executives at Dyoll Insurance Company are now facing a new worry - the possibility of a lawsuit by the National Commercial Bank (NCB) for misrepresentation. However, executives at NCB have been very quiet on the issue and are not making comments.
Yet, on Monday, the Financial Services Commission (FSC) announced that, "In February, it became evident that the information being provided by Dyoll to the FSC was misleading in terms of the level of exposure and the level of capital injection that was supposedly carried out in December."
IT IS WORSE
However, it could be that the problems facing Dyoll were deeper than what the FSC has revealed. In fact, one high level executive stated, "Dyoll is a black hole. Whatever you think the problems are, it is worse."
And so, according to sources within the offices of Dyoll, several meetings of executives have been held to discuss the possibility of NCB taking legal action against the company, its executives and directors.
Legal sources explain to the Financial Gleaner that, "Misrepresentation occurs when you make a certain representation as fact. And as a result of that representation, the person or company relied on that fact to their detriment and experienced a loss." However, if NCB merely made an investment that went bad, then there will be no cause to take legal action.
Looking back, it seemed as if NCB had geared up to make a long term play.
In February 2004, NCB paid approximately $562 million for 46 per cent of Dyoll at between $17.80 to $20.00 per share. By February 2005, Dyoll's shares were suspended from trading by the Jamaica Stock Exchange at $14.50. Financial analyst say that once the suspension is lifted the share price will drop to cents.
Back in February 2004, at the time of the purchase, Leo Williams, managing director of JMMB Securities, commented, "Dyoll is not one of the cheapest stocks on the market. That would imply that it is a long-term buy because they could have got cheaper stocks. Or this purchase could, because NCB has other strategic intentions. Perhaps they want exposure to the general insurance sector of the economy and this stock purchase would be one way to go about it."
Seven months later, in September 2004, Hurricane Ivan bludgeoned the Cayman Islands, exposing Dyoll to massive claims by the policyholders on that island for nearly US$26 million. And since the Financial Services Commission (FSC), the temporary managers of Dyoll - have approved GraceKennedy's purchase of the Jamaican portfolio of Dyoll - all that is left of Dyoll is debts and coffee. Dyoll is the owner of Dyoll Wateru Coffee Company.
But the problems don't end there. Dyoll's debts arise from the claims made by their clients in the Cayman Islands who were hit hard by Hurricane Ivan. Sources say that the hurricane, similar in force to a tsunami, also wiped out many Cayman based insurance companies.
And according to a source, "Things are heating up over there. Policyholders in Cayman have not been paid and they are talking about taking legal action against Dyoll." Another source told us that the limited number of claims adjusters meant that all of the Dyoll claims had not been paid out.
A SIGH OF RELIEF
No doubt, Jamaican clients of Dyoll breathed a sigh of relief to news that GraceKennedy will be buying that portfolio with the blessing of the Financial Services Commission (FSC).
According to Don Wehby, chief financial officer of GraceKennedy, "We are buying the Jamaican portfolio of Dyoll; specifically the policyholders without claims. Those clients will now be a part of Jamaican International Insurance Company (JIIC). The deal will be finalised next week but I can't disclose the amount of the transaction."
And Dyoll's problem doesn't end there. For while Jamaican policyholders (without claims) have been protected, minority shareholders have another story to tell.
It appears that no one saw this train wreck coming and Dyoll shareholders have been left holding the bag. Interestingly, Dyoll had been touted as a turn around story and a solid company with some analysts projecting that the stock would grow by 129 to 305 per cent over the next 12 months.
