Reactions to the State Insurance Fact Sheet.


There is no evidence that State Insurance is competing for public resources and that it is creating an administrative and financial burden to the Government.  This is a “plagiarised text book reason” to privatise that clearly does not apply to State Insurance.

The argument that divestment will bring an immediate injection of cash to the treasury is extremely myopic.  This view fails to consider the sustainable revenues that could be achieved and maintained by the Government’s ownership for years to come. This is a senseless case of divesting of a star asset to fund consumption. The assertion that there is a need to downsize or right size to increase efficiency is unfounded. State has less than 40 individuals working there and it controls 20 percent market share.  It has one of the most efficient outputs in the industry as represented by its employee/Market share ratio.  Clearly, there is no excess staffing to justify any form of retrenchment, right sizing or downsizing.

There is no empirical evidence to support the assertion that State is unproductive.  To the contrary, State Insurance enjoys a consistent and healthy return on capital employed, it enjoys the largest profitability in the industry and it has the highest profits per employee ratios in the industry.  The capital injection for business expansion could come from States profits if the corporation is allowed to retain all its profits instead of paying tens of millions of dollars into the treasury to support the UPP Government excesses and wastage.

The assumption that privatisation will encourage wider individual share ownership is extremely flawed.  Wide share ownership is already in place through the communal ownership by the Government on behalf of the people. Privatisation, for various reasons will see a concentration of ownership primarily in the hands of a few corporations and the elite few or perhaps by single foreign entity.

Barring a contractual dispute with Dr. Ralston Barthley, there is no historical precedent to support the claim that successive governments have politicised the management of State Insurance.  There were only about three General Managers who served State Insurance in 25 years under the ALP.  Two of whom (Ralston Barthley & Robert Josiah) were founding members of the corporation.

Only one new Manager has served under the UPP after the retirement of Robert Josiah and that person was promoted from within the ranks of State Insurance.  Management turnover locally in the non-family held insurance companies has been much higher. The evidence is that, there is little governmental intervention in the running of State Insurance which is almost limited to the appointment of the Board.

Globalisation and Trade Liberalisation and the resultant economic reality of  consolidation in the sub-region bring with them opportunities for State Insurance as the largest player in the sub-region to pursue a market penetration or expansion programme so that it could enjoy economies of scale and increased profitability, further empowering the institution to make an even more significant contribution to national development.

The saturation of the domestic  insurance market supports the recommendation for State Insurance to enter new markets in the OECS to facilitate organic or, inorganic growth through acquisitions.  State generates sufficient profits to facilitate this expansion.  The restrictions in the charter as stated, assuming this is true, could be easily resolved by simply corporatising the institution.

The speculation that State Insurance would collapse from the passage of a natural disaster is unfounded.  State Insurance has sustained claims from seven hurricanes, in five years including Hurricane Luis. The corporation has an excellent re-insurance charter that mitigates against this type of fundamental risk. Historically, State would have settled over EC$100 million in claims, EC$50 million of which were settled in one year, after the passage of Hurricane Luis. Re-insurance will mitigate the risk of collapse and payment default. If their speculation of collapse is correct, why then would they want to transfer this risk to the working class people who in turn would lose their life savings in the event of any such catastrophe?  The individual impact on the working class would be far greater than any such impact on the government whose liability would be limited to the capital invested in the newly corporatised State Insurance.

The fact sheet stated that the initial review of State Insurance highlighted the importance of technical expertise, economies of scale and significant cash injection and that in the absence of these factors the sale of SIC shares to the general public is not likely to guarantee the long term sustainability of the company.If State insurance lacks technical expertise that could add value to the corporation, State Insurance generates sufficient profits to acquire the necessary expertise. The sale of state to a foreign entity will see the repatriation of our profits to enrich another country when the UPP Government should be seeking to position the corporation to earn profits from abroad. Is this the type of sustainability the UPP Government is seeking, sustainable repatriation of our profits to another country? The government should cease from bleeding State Insurance of its profits and allow it to re-invest to acquire technical expertise as appropriate and to pursue an expansionary strategy in the other  OECS countries.

The fact sheet is contradictory and does not support the conclusion for divestment.  They argue that state is profitable contributing EC$18million for the past two years to the Consolidated Fund to support development.  That State offers high quality service and that it has the single largest market share, approximately 20 percent.

No evidence was provided suggesting that State has any debts that are contributing to the national debt stock or that State Insurance is competing for public resources.  To the contrary, the evidence is that State Insurance operates like a “stand alone business unit” with little governmental intervention. The irony about this, is that now that the UPP Government has decided to intervene they are about to make a fatalistic decision.  State Insurance is an efficiently run and highly profitable state owned organization  that is contributing millions of dollars annually to national development and  the corporation could become bigger and more profitable if it is allowed to pursue an expansionary strategy utilizing all of its present profits.

Evidently, the Government has failed to provide any compelling reason to support the proposed divestment and obviously is pursuing a “Spectacular IMF Failure”  by allowing the IMF to insist on the sale of State Insurance as an undisclosed condition precedent to its funding.

This divestment is indicative of the UPP’s developmental myopia, it is a violation of our pride as a people who have owned and operated a successful insurance business for several decades and it represents the destruction of one of our socio-economic safety nets.

Instead of divesting, an ALP Government would have looked beyond the challenges and the constraints and would have utilized its creativity and its dynamism to develop strategies to reposition State Insurance as a major regional and ultimately a globally competitive Insurance Company. 

Where there is no vision the people perish.


Hon. Gaston Browne

Chairman & Deputy Leader

Antigua Labour Party

36 Bay Street, Villa Area

St. John’s


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