PHILIPSBURG — Finance Minister Marinka Gumbs made clear during a meeting of Parliament in June that the Outline Agreement as a solution for troubled insurance company ENNIA is not the best solution for St. Maarten. In a reaction to the letter she received from the Central Bank, the minister stated that she is waiting for Parliament to tell her what to do.
Related link: CoM Press Briefing August 7th 2024
That remark seems to fly in the face of a suggestion by former Finance Minister Ardwell Irion during the June-meeting: “If you say that this is not the best solution, then take your time and present a better one.”
While the minister is prepared to return to Parliament to answer the questions that were posed about ENNIA in June, she does not seem to have anything up her sleeve that comes close to an alternative solution.
Looking at the numbers, any solution that saves ENNIA from bankruptcy would benefit Curacao much more than it would St. Maarten. The life insurance branch of the company had 27,450 policy holders when the Central Bank put it under the rules of the emergency measure in 2018. Of that number, 3,084 policy holders live in St. Maarten. This makes clear that almost 90 percent of the consequences of a potential ENNIA-bankruptcy would play out in Curacao, while St. Maarten would be confronted with a bit more than 11 percent.
Against this background the Outline Agreement saddles St. Maarten with serious financial consequences for the next thirty years. The agreement states that St. Maarten would have to contribute 2,082,000 guilders (a bit more than $1.1 million) per year for a period of thirty years: a price tag of $33 million.
If the 3,084 policy holders in St. Maarten receive the average pension-payment of 1,000 guilders per month, they would cash 37,008,000 guilders per year. From that point of view, the contribution of a bit over 2 million guilders per year looks rather cheap.
We are not financial experts and we have no idea how long those policy holders would stay alive to claim their pensions. Ten years? Twenty years? It is impossible to provide a clear answer to those questions.
The question that bothers a lot of people is: what happens if St. Maarten refuses to approve the Outline Agreement and ENNIA goes bankrupt? What does this mean for the policy holders? Former Finance Minister Richard Gibson Sr. has stated that the policyholders were never at risk. And in case of bankruptcy, the local pension fund APS could take over the 3,084 policy holders from the ENNIA-estate, together with what remains of their funds.
The sentiment in St. Maarten is that the Central Bank of Curacao and St. Maarten (CBCS) has failed in its oversight duties and that part of the price for it now lands at the treasury in Philipsburg.
St. Maarten would not really have to pay for the ENNIA-solution. Instead, the Central bank would withhold its share from the annual dividend it pays to the government. According to the presentation by Finance Minister Gumbs in June, that annual dividend hovers around 4 million guilders or $2.2 million. After the deduction for ENNIA, St. Maarten would receive for the next thirty years only 951,655 guilders or $531,651. That’s a serious setback for a country that is already strapped for cash.
Finance Minister Gumbs now seems to have put the ball in the Parliament’s park: she wants to hear what the parliamentarians want her to do. This indicates that she is currently unable to present a viable alternative solution of her own.
The Netherlands plays a rather dubious role in this controversy by promising St. Maarten a lower interest rate on its Covid-loans if it approves the Outline Agreement. Minister Gumbs has labeled this approach as modern slavery and while that label comes across as a bit overcharged, she does have a point, given that there is no relationship whatsoever between the Covid-loans and the troubles at ENNIA.
Another question is who will become the ENNIA-shareholders, assuming that there will be a solution. In 2006, Delta Loyd sold all its ENNIA-shares to Hushang Ansari’s investment vehicle Parman International.
When the CBCS established the emergency measure in 2018, Parman was sidelined and since that time Ansary has no say in any business decisions anymore, even though he formally still owns the shares.
The CBCS has so far not provided any information about the future ownership of the ENNIA Group of Companies and it remains unclear how it intends to untangle the relationship between ENNIA and Ansary.
The Parliament will have to take a decision about this issue sooner rather than later. The choice is between paying a heavy price to save the insurance company and to leave more than 3,000 policy holders out in the cold.
We figure that such a decision will not be taken lightly and that it is unlikely that politicians are looking forward to taking that decision before the elections on August 19.
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Related news:CBCS sounds the alarm over lack of parliamentary approval for ENNIA-solutionCBCS Letter to the Minister Sint Maarten
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