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The Gleaner - August 31, 2000

 

LoJ up for Sale

THE FINANCIAL Sector Adjustment Company (FINSAC) is actively seeking a buyer for Life of Jamaica (LoJ), it was confirmed yesterday.

Speaking at yesterday's Grace, Kennedy & Company investor briefing chairman Douglas Orane said he might be interested in parts of LoJ if they became available but FINSAC was "negotiating" to sell off the business as a whole, which did not interest his business.

LoJ boss Dennis Lalor was unavailable and was said to be overseas late yesterday.

It has been rumoured for some time that Grace has expressed an interest in buying LoJ's pension portfolio.

In June The Gleaner revealed that Finance Minister Dr. Omar Davies was reviewing various options regarding the life insurer after a valuation showed the need for FINSAC to fill a $1.9 billion shortfall in LoJ's individual life portfolio.

At the start of July the Financial Gleaner reported that Manhattan Life Insurance Co., a New York-based life insurer owned by the Texas giant Central United Insurance Corporation, had expressed an interest in buying LoJ.

The four options Dr. Davies has been reviewing since June 23 are:

Option 1: A rights issue, which would see existing shareholders such as Dennis Lalor, a 37 per cent stake holder, and LoJ founder Danny Williams, with a 9 per cent holding, kick in around $180 million. FINSAC would subscribe and issue new preference shares to add another $2 billion.

Option 2: Ring-fence the troubled individual life portfolio. LoJ would manage the portfolio for a fee under the direction of FINSAC or until a buyer was found.

Option 3: Sale of the company to a third party, with LoJ managing it in the interim.

Option 4: FINSAC would take a 75 per cent stake in LoJ in return for putting up the $2 billion.

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