MARK THWAITES - FILE
Al Edwards, Financial Editor
As the Dyoll saga continues, a number of questions still require answers. First, Guardian General Insurance Limited, paid out a total of US$172 million in claims in the Caribbean region resulting from Hurricanes Charley, Frances, Jeanne and Ivan. Of that amount, nearly US$150 million went to property owners in the Cayman Islands. So why can't or shouldn't Dyoll make good on those claims and isn't it obliged to do so?
Secondly, by what law or authority can the Financial Services Commission (FSC) accept a recommendation by the temporary manager of Dyoll Insurance Company, Mr. Kenneth Tomlinson, to take up an offer from GraceKennedy, through its wholly-owned subsidiary, Jamaica International Insurance Company Limited (JIIC), for the purchase of the Jamaican portfolio of Dyoll? Why weren't other insurance companies invited to bid, and should there not have been an auctions of soughts?
Thirdly, it is still not clear what the situation is with someone who has a claim in Cayman looking for redress. Who is the point man at Dyoll and who deals with those claims?
Finally, with a 46 per cent stake in Dyoll, isn't NCB obliged to come to the rescue of the beleagued company?
Until now, both Stephen and Mark Thwaites have been silent on the Dyoll debacle and there are those that think that their silence has not helped their cause. Indeed, the Dyoll board maintains it was misled and says: "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 officer of Dyoll resigned."
The former chief operating officer of Dyoll Group, Mark Thwaites, has now broken his silence and reveals that the appropriate information was relayed to the chairman of Dyoll Insurance Company and that the Chief Financial Officer (CFO) inadvertently overstated the amount of reinsurance recovery. This mistake and the impact of the error were then reported to the acting Dyoll Group chairman. Below is Mr. Mark Thwaites' account of the events.
"Over the last three weeks, there has been much in the public newspapers about the losses at Dyoll Insurance culminating with the press release by the board of Dyoll Group Limited incorporated in an article in The Gleaner on Wednesday, March 9, 2005.
estimates not
always precise
"The article and release allege that the boards of Dyoll Group Limited and Dyoll Insurance Company were misled. The facts are as follows:
In general insurance claims, estimates are not precise and clients sometimes overestimate or underestimate the cost of damage to their properties. Insurance companies therefore send out independent assessors to look at the claim and adjudicate. Due to the magnitude of damage in Cayman, this process was protracted.
"The executive of Dyoll Insurance comprising the chief executive officer, the chief
financial officer and the chief operating officer had provided the board with more than one estimate of the losses as soon as information became available from the territory. The first set of projected management accounts were presented to both boards on November 24, 2004. It was based on these projected financial statements that both boards decided that Dyoll Insurance should immediately seek capital.
financial loss understated
"A further revision of the
financial estimates was done in December. These claims
estimates were arrived at after a review of the latest claims
listings in December 2004 from Cayman by the following
persons: the chairman of Dyoll Insurance Company, the chief financial officer, the chief
operating officer, the senior risk officer and a director of Dyoll Insurance Company.
In preparing the financial
projections, the CFO inadvertently overstated the amount of reinsurance recovery. This understated the level of financial loss to Dyoll Insurance Company.
In preparing the actual un-audited financial statements, as at December 31, 2004, the over-statement of the reinsurance recovery was detected on January 24, 2005, by the CFO.
This information was immediately relayed to the chairman of Dyoll Insurance Company by the
executive. At his request, a full review of the financial statements was not completed in time for the board meeting of January 27, 2005. Not withstanding this, the acting Dyoll Group chairman was advised of the error and the financial impact of this error.
in-depth reviews undertaken
"The review was completed by January 31, 2005, and the FSC quarterly return was prepared using the corrected accounts and the CEO and CFO signed the FSC return and had it delivered on the same day.
"The financial teams referred to by the Dyoll Group press release, which the board dispatched to Cayman to conduct an in-depth review and audit of the insurance claims comprised the chief operating officer, the chief financial officer, a senior finance officer, the senior claims officer and a claims officer. They were also assisted by a team from KPMG Cayman.
"Having completed the review a report was given to the board of Dyoll Insurance Company on February 18, 2005. This in-depth review confirmed the estimates used in the financial statements to date were still not accurate and the accounts of Dyoll Insurance were adjusted again, further eroding the capital.
"The executive at all times provided the boards with claims information as best as they were able to review, audit and agree the data from Cayman. The CEO and COO both gave in their
resignation on February 21, 2005, as requested by the chairman.
