THE Financial Services Commission (FSC) yesterday confirmed the collapse of the combined efforts by GraceKennedy and Michael Lee Chin’s AIC Group to shore-up the tottering Dyoll Insurance Company and announced that it has taken temporary control of the troubled insurer.

Bryan Wynter, the FSC’s executive director, told reporters that his agency had received “expressions of interest” for Dyoll’s insurance portfolio, but declined to say from whom or when a deal would be struck.

In the meantime, Dyoll would be managed by Kenneth Tomlinson, who heads the consulting and credit and financial investigation firm, Business Recovery Services Ltd.

Wynter also disclosed that he has started investigations into possible insider trading of Dyoll Group shares between last September and February 15 of this year when the company’s stocks were suspended from trading in the Jamaica Stock Exchange after a precipitous tumble in its share price on news that the company was in trouble.

The FSC chief did not say which individuals or firms were being probed.

He is also investigating the provision of “misleading information” to the FSC, apparently by Dyoll executives, about the level of impairment of the company’s finances in the face of hurricane claims against Dyoll, Wynter disclosed.

But even as he moved to unravel the Dyoll debacle, Wynter sought to assure policyholders that their policies remained safe.

“Policyholders should fully understand that the temporary manager has been put in place to protect their best interest,” Wynter said.

“Policyholders should remain assured that their policies would still be in force and would be transferred to another insurance company given the success of the negotiations,” he added.

Dyoll was among the insurance companies that came close to the brink during the financial sector meltdown during the latter half of the 1990s, but made a spectacular recovery after its bailout by FINSAC, the agency that the government established to intervene in troubled financial sector firms.

Dyoll not only wiped out its FINSAC debts ahead of time, but at the end of September last year, the last period for which figures are available, was showing shareholders equity of $1.5 billion. It reported, at the time, a nine-month profit of $60 million.

However, Dyoll also at the time reported that it faced problems in the aftermath of Hurricane Ivan, which passed through the Caribbean in September, doing severe damage in Jamaica and the Cayman Islands, where the company has a heavy insurance portfolio of property and vehicles.

What was not clear then was the depth of impairment of Dyoll’s equity. This only began to emerge in mid-February when it seeped out that the company was seeking capital injection to save it from bankruptcy.

But even now what is required has not been disclosed and yesterday Wynter suggested that not even the FSC had the true figures, even though it had been facilitating talks between GraceKennedy and AIC for an acquisition.

Apparently, when the companies began to get behind the numbers, AIC, which, through its subsidiary National Commercial Bank (NCB) already held a big chunk of Dyoll’s stock, withdrew. At one point last week the National Insurance Fund also looked at Dyoll but quickly retreated, Observer sources said.

Yesterday, the FSC’s Wynter said that his agency first became aware, last December, that Dyoll was in difficulty because of its Cayman Islands exposure, and was in need of capital.

Wynter said, however, that the company’s level of exposure continued to expand and that the information being provided by Dyoll was eventually deemed to be misleading.

“Once it was ascertained that the information from Dyoll was unreliable, the FSC’s examiners went in,” Wynter said. “The matter is being investigated and appropriate action will be taken against those responsible.”