BRITISH Caribbean Insurance Company (BCIC) is poised to finalise its acquisition of JN General Insurance (JNGI) imminently, a move that will significantly reshape Jamaica’s general insurance market. JN has, however, indicated that it is still interested in the insurance market and will set up an insurance agency by mid-year.

The transaction, which has been in the works for several months, is expected to position the combined entity as a dominant force, accounting for approximately one-third of the market share in Jamaica’s general insurance sector.

Earl Jarrett, CEO of the Jamaica National Group (JN Group), made the disclosure to staff earlier this week.

“The JN Financial Group will sign an agreement today for British Caribbean Insurance Company (BCIC) to purchase its shares in JN General Insurance (JNGI),” Jarrett wrote in a note circulated to staff on Monday. The company is a 99.64 per cent subsidiary of JN Financial Group Limited, its parent company, which itself is 100 per cent owned by JN Group.

Jarrett, in that disclosure, said the deal should be completed “within the coming weeks” and is subject to regulatory approval.

The JN Group did not immediately reply to requests for comments on the transaction when contacted by
Jamaica Observer.

However, the disclosure of the sale to staff indicated that “all JNGI branches will continue to operate as usual” leading up to the finalisation of sale.

Peter Levy, managing director of BCIC told BusinessWeek on Thursday that his company is expected to complete the agreement “in days, not weeks”.

“We’re close to negotiating the final terms. But those negotiations are continuing,” Levy added.

JNGI will continue to renew motor and property insurance through its branches and brokers as well as honour insurance claims until the sale is finalised.

“Once the sale is finalised, the JNGI portfolio, business, and locations will be fully managed by BCIC. All positions within JNGI will be made redundant; however, some JNGI employees will be invited to explore opportunities within BCIC,” Jarrett’s e-mail said.

It noted that JNGI employees and the National Workers’ Union, the bargaining entity that represents the workers, have been kept informed of the planned sale, adding that dialogue is ongoing regarding the future of the employees.

Levy said he didn’t know how many of the JNGI staff will be given positions at BCIC.

“Well, a lot of the work we’ll be doing once we sign the deal will be around filling out those details. So, at the current time, we don’t really know,” Levy said when asked about the number of JNGI staff he is expecting to take on at BCIC.

He, however, acknowledged that the combined entity will create the biggest general insurer in Jamaica.

“The analysis that we’ve done show that while our market share would increase, the overall competitiveness of the industry is not likely to be affected,” Levy said. “Insurance brokers and agents make sure that their customers get the best deals. So I don’t think it will have a negative effect, and there are some benefits from size that our policyholders will derive.”

The acquisition will consolidate BCIC’s position as one of the leading players in Jamaica’s general insurance market. BCIC and JNGI are both prominent insurers, and their merger will likely enhance operational efficiencies and expand their market reach.

A price has not been disclosed for the acquisition. JNGI, however, had $10.95-billion worth of assets at the end of 2023. In that year, it recorded a loss of $527 million.

But the JN Group divesting its insurance company is not likely to be the end of the entity’s participation in the insurance market.

“JN is also actively pursuing the establishment of an insurance agency, which should be operational in six months,” Jarrett added in his note to staff, telling them that more details will be shared on the development in the coming weeks.

JN Financial Group, the parent company of JNGI, initiated the sale as part of a broader strategy to divest non-core assets and bolster its capital base. The decision was partly driven by financial pressures stemming from losses incurred by its UK-based subsidiary, JN Bank (UK). The bank that was set up in 2020 to help JN Financial Group navigate the continued loss of correspondent banking relationships critical for its operations overseas was divested last year to Step One Money UK, a specialist consumer lending business. That deal raised £20 million Tier 1 (core) capital for JN Financial Group.

JN Financial Group is also looking to divest a portion of its wealth management arm, JN Fund Managers. People familiar with the deal tell BusinessWeek that JN Fund Managers is now evaluating bids received with assistance from an advisory firm to ensure favourable outcomes for the JN Group.

The divestments are part of an ongoing transformation the organisation is undergoing that was initiated by its board of directors and approved by regulators.

BusinessWeek understands the transformation could affect the number of branches and automated banking machines (ABMs) operated by the JN Financial Group in the coming months.

The people who spoke to BusinessWeek said the move is part of JN Bank’s push to manage its costs, and it has been reviewing the performance of its branches, ABMs, and staff. JN operates about 144 ABMs across Jamaica and close to 20 branches.

“The divestment of subsidiaries could have an impact on staff and the functions of the group. It is to be seen how the changes will manifest at the group level,” the people said.

The company is also looking to raise about $10 billion on the bond market before the end of this quarter to help boost its capital base, a requirement from its regulator, the Bank of Jamaica. The group has about $311 billion in assets as of September 30, 2024.