Resolution Committee on Ennia reaches two devastating scenarios for Curaçao

Decision: Council of Ministers must make a decision on two alternatives for the Ennia problem. 

 

WILLEMSTAD - The Council of Ministers must make a decision regarding the future of Ennia's pensioners. According to a suggestion from the Resolution Committee on Ennia, there are two scenarios on the table to address Ennia's issues. 

 

The installed committee has international experts supported by Deloitte & Touche together with international actuary Phenox. They have arrived at two scenarios. One is to "run off" Ennia Caribe Leven, and the other is to create a New Continuation to safeguard the largest insurance company in the Dutch Caribbean. The decision is in the hands of the Pisas Cabinet. As known, in the coming months, the Court of Appeals will have to make a decision on one of the two options in the Ennia case, regarding a claim of nearly 1.1 billion guilders that Ennia and the Central Bank imposed on the Ansary group. Despite the court's attempts to reach an agreement between the parties outside of court, they have not been successful. Pending the court's decision, the Resolution Commission on Ennia has reached two recommendations, both of which involve the people of Curaçao having to pay, whether through their own pockets or through regulations. 

 

It concerns two proposed scenarios. The first scenario advises a "run-off" for Ennia Caribe Leven. Practically, this means closing the pension fund and seeking an alternative solution. While fulfilling the obligations, the current policies will continue to be managed. The solution is only aimed at fulfilling the short-term obligations of policyholders in life insurance. Ennia is currently paying over 4 million guilders per month to policyholders based on their monthly pension premiums. Both the "run-off" scenario and the continuation scenario did not take into account the court's decision on whether Ansary should pay or not. It is likely that the case will take more than 2 additional years to resolve if the direction of the case is pending the decision in June. 

 

In the "run-off" scenario, policyholders are estimated to lose more than 80% of their pension rights. The discount is based on Ennia's current financial situation. In the run-off scenario, one must also consider the discount that would need to be applied if the option to sell the assets (valued in the pension market) is chosen and at what price it would be negotiated. The commission explains that the higher the discount on the asset's value, the more attractive it becomes for buyers, but the policyholder's value decreases significantly. In the run-off scenario, the contribution from the government of Curaçao would amount to at least 1.2 billion guilders distributed over 25 years. Experts estimate a minimum annual liquidity burden of 50 million guilders. It is not specified if this includes interest. 

 

The continuation scenario is more complex but has fewer consequences, although the community would still have to contribute to this scenario as well. To continue with Ennia and address the negative developments, experts estimate a need for a 700 million guilders investment (excluding the 1.1 billion claim against the Ansary group). The continuation scenario, as mentioned before, is better but also more complicated to execute. It involves a combination of factors to achieve feasibility in continuing and under what conditions new capital can be invested in Ennia. 

 

Experts recommend introducing an Ennia Solidarity Fund (Leven). The Solidarity Fund functions as an emergency guarantee fund in case Ennia needs a standby fund. The Fund protects the community of Curaçao from bearing the costs and consequences. To establish the fund, it would be necessary to borrow from the capital market, generate more income in the financial sector (paid by consumers), utilize part of the national reserves deposited at the Central Bank, and deposit dividends from the Central Bank into the fund. 

 

Both scenarios mentioned are on the table and proposed to the Council of Ministers to make a decision. 




Share