BYLES. the acquisition will allow Sagicor to deliver more cost-efficient services

Sagicor Life Jamaica Limited yesterday announced that it had secured an agreement to acquire the group health insurance portfolio of Blue Cross Jamaica Limited, a deal that will bring to an end a contentious battle between both firms for management of the $2-billion Government Employees' Administrative Services Only (GEASO) Health Insurance Scheme.

The agreement, apparently reached late last Friday and communicated to Blue Cross staff today, left many people in corporate Jamaica wide-eyed as Blue Cross, up to last month, was reported to be in acquisition talks with Jamaica National Building Society (JNBS).

Just how much Sagicor would pay for the Blue Cross portfolio was not immediately clear. However, Insurance Association of Jamaica data show that Blue Cross manages $2.57 billion in premiums under the GEASO and $1.86 billion in commercial premiums.

A Sagicor news release yesterday reported the company's president and CEO Richard Byles as saying that the acquisition will allow Sagicor to deliver health insurance services to current Blue Cross and Sagicor customers even more cost efficiently in the future.

LOWE. acquisition will create new possibilities with access to a much wider range of products and services

The release also reported Blue Cross chairman, Dr Henry Lowe, as saying that the acquisition, when completed, will not only allow former Blue Cross clients to continue to enjoy the benefits previously held, but will create new possibilities with access to a much wider range of products and services from a company with established regional and global links and an 'A' excellent rating from AM Best.

The transaction is subject to due diligence and the approval of the Financial Services Commission.

Blue Cross had, since the mid-1980s, managed the health scheme which it won through a tender process up until 1997. Since then, however, the contract had not been put to tender and Blue Cross had been bankrolling the scheme.

Last year, when the scheme was put to tender, Blue Cross, LOJ - which was this year renamed Sagicor Life Jamaica - and Guardian Life all submitted bids.

However, the process was plunged into controversy after it emerged that the Government appeared set to award the health scheme to LOJ despite a recommendation from an actuary that the contract should remain with Blue Cross.

Unions representing the island's public sector workers argued that Blue Cross had won the tender "fair and square". They also complained that the GEASO Monitoring Committee, which represents the interests of the beneficiaries of the scheme, was sidelined in the selection process.

The matter was eventually investigated by the contractor general who ruled that the scheme should be awarded to LOJ.

However, a review of the tender process obtained by the Observer at the time showed that the finance ministry ascribed to LOJ and Guardian Life the sum submitted by Blue Cross for reimbursable direct expenses after all three firms had tendered their bids.

"For reimbursable direct expenses, Life of Jamaica and Guardian Life did not indicate any specific sum, whereas Blue Cross of Jamaica specified $33.6 million," the confidential review said.

"Ordinarily, this would disqualify those bidders from consideration in at least that specific area," the document added. "Instead, the Ministry of Finance and Planning ascribed the Blue Cross figure to these bidders, a clearly untenable position."

The controversy caused the Government to re-open the tender process. However, under the new Request for Proposal issued in June this year, the Monitoring Committee was excluded from the evaluation process.

Yesterday, the National Workers Union's Granville Valentine described the exclusion of the committee as "total madness" and expressed disappointment with the members of the committee for remaining silent on the issue.

"In this instance the unions are sleeping," said Valentine. "The principle should be challenged as it is a weakening of the position of the workers."

Trousers in Denim

Cream of the 'Crop'

Cheeky's World