SIC cuts debts

The State Insurance Company (SIC) says it has managed to reduce the company's total debt liabilities of ¢12.450bn incurred between 1994 and 2000 to about ¢67bn by 2001.

The debt, resulting from a default of 86 credit guarantees issued to other institutions during that period was reduced when the new management took office through a negotiation mechanism established with financial institutions, the board and management, explained at a press conference in Accra.

The Managing Director of SIC, Peter Osei Duah, told the journalists that in some cases the arrangement resulted in terminating interest charged on the guarantees. He therefore rebuffed recent media publications that, he said, tended to portray the company in bad light.

According to him, the publications, which bordered on the underwriting of credit guarantees by the previous management, were full of misinformation and inaccuracies, which needed to be clarified. “It is unfortunate that the publications concerned did not ascertain from proper sources, the status of the debts owed by the companies listed before publishing the list of defaulters,” Duah said.

Out of the 86 credit guarantees issued at the time, he said, 57 claims were made with the exception of three cases of which two were nearly discharged. In this respect, the SIC management said it had discharged all of its obligations arising out of the “mal-administration and the reckless underwriting of these guarantees” and was ready to deal with its repercussions.

Expatiating on the transactions undertaken by the former management, Duah noted that some of the business entities, which were issued with the credit guarantees honoured their obligations whiles other beneficiaries defaulted in their payment because laid-down procedures were not followed.

As a result of the high rate of default, which ran to about 60% of the credit guarantee portfolio, the new management discontinued the issuance of credit guarantees, the MD said. He said the SIC had been keen in making recoveries from defaulting companies.

Stanberry Realty Ghana Ltd had fully settled its indebtedness together with cost and legal fees resulting from a legal suit while other defaulters were either in the process of paying by installments or negotiating terms of payment.

Duah said management was of the view that there had been problems with recoveries from judgement debtors because of the difficulties in tracing the defaulting companies since a number of the transactions were not collateralized and where there were collaterals, the properties were either inadequate or could not be traced.

SIC he said, had introduced efficiency into its operations throughout the country to enhance a smooth transaction by its clients. Meanwhile the company paid ¢40bn as claims settlement for policymakers and other third party claimants in 2002, which further increased to ¢60bn last year.