WILLEMSTAD – In the past few days there have been several reports in various media which paint an incorrect picture of ENNIA's situation. These are based on information that has come out as a result of the public treatment of summary proceedings that Parman International B.V. (Parman) has filed against the Central Bank of Curaçao and Sint Maarten (CBCS). To date is the CBCS has been reluctant to bring out detailed information about ENNIA to keep the process of restructuring as orderly as possible. The CBCS is now obligated to clarify facts about ENNIA, given the media reports.
Solvency deficit
Under the shareholder Parman, the holding company (ECH) and the investment company (ECI) have withdrawn funds from policyholders from insurers (ECL, ECS and ECZ), up to a total of over NAf 1.5 billion. In this way, insurers run a major risk because they depend on the reimbursement by ECH and ECI. A bad sign is that the interest that ECI and ECH should pay to the insurers has not or has hardly been paid.
The CBCS has found that ECI and ECH are unable to fully pay these funds. ECI has an important share of the policyholders' money invested in a barely developed parcel on Sint Maarten, that does not generate any income. The value of this plot turns out to be substantially lower than what it registered in ENNIA’s books. ENNIA has a value of NAf 771 million. Independent valuer Cushman & Wakefield (one of the largest and most renowned appraisers in the world) values the plot at only NAf 89 million. There is an overvaluation by ENNIA of NAf 682 million. ENNIA has hired in 2016, the world's largest appraiser, CBRE, which presented a valuation with an almost equal low value.
In addition, ECI has invested policy funds in shares, the sale proceeds of which only to a limited extent came to the insurers. That went as follows. In 2005 the majority shareholder of Parman, Mr Ansary, established Stewart & Stevenson LLC (S & S) with the aim of acquiring Stewart & Stevenson Inc. Funds from the insurers were invested in shares of Stewart & Stevenson Inc. through ECI. In 2017, all Stewart & Stevenson Inc. shares were sold for NAf 1.36 billion sold. From this, the insurers were supposed to receive about NAf 1 billion, since over 74% of this investment was financed with policy funds. They have received only NAf 516 million: a disadvantage of the insurers of NAf 489 million.
It is certain that at the end of June 2018 there was a solvency shortage at ECL of almost NAf 1.4 billion, at ECS of over NAf 35 million and at ECZ of over NAf 11 million. ENNIA itself has calculated the solvency deficit of the insurers in its 2016 financial statements at almost NAf 1.5 billion.
A solvency deficit does not mean that there is also a liquidity shortage; the insurers have access to the accounts at the American bank Merrill Lynch (ML), provisionally enough liquidity to meet their obligations. A solvency deficit means that the fulfillment of the obligations could have problems in the long term.
