Published On: Thu, Jan 31st, 2019

Ennia gets access to Merill Lynch accounts

ENNIA - Photo Extra

WILLEMSTAD – Insurance company Ennia will get access to the approximately $124 million held in accounts at Merrill Lynch in New York, United States Bankruptcy Judge Martin Glenn ruled this week.

Hushang Ansary, the major shareholder of Parman International, the company that controlled Ennia until the Central bank of Curacao and St. Maarten issued emergency measures last year, fought in vain against the release of these funds in the United States Bankruptcy Court in the Southern District of New York.

Judge Glenn ruled this week that “the potential harm to Parman is far outweighed by the harm that would be suffered by the Debtors, and most importantly, to the Debtors’ creditors, particularly pension and insurance policy holders that depend on the Debtors for payment of their benefits, if the relief is denied.”

Ennia is the largest insurance company in Curacao. Especially Ennia Caribe Life, the company’s life insurance branch, was facing cash shortfalls by the end of January. According to the court ruling, Ennia Life’s shortfall would amount to $40 million by the end of March.

The ruling provides an interesting insight in the financials of Ennia. Its entity ECI (Ennia Caribe Investments) has only one objective: the investment of assets from other Ennia entities. Since 2016, ECI owes more than 96 percent of its liabilities to other Ennia-entities. This includes intercompany customer deposits to ECL for $227.5 million, $7 million to ECS (general insurance) and $10 million to Banco di Caribe.

The investment vehicle also had an outstanding loan facility of more than $61 million to ECH – the holding company. The funds for this loan came from intercompany loans: $57.9 million from Ennia Life and $3.7 million from ECS.

ECI furthermore owes $65.3 million in accounts payable to ECH and ECL and another $10.6 million to Banco di Caribe.

Interestingly, investment vehicle ECI invested its funds in four stocks: Twitter Inc. (micro-blogging internet service), Kirby Corporation (the largest tank barge operator in the United States), Nabors Industries (an oil, natural gas and geothermal drilling contractor) and Snap Inc. (technology and social media company). “These investments performed poorly in 2018,” Judge Glenn notes in his ruling. Indeed: in July 2018 the account was worth $175 million but its value has since dipped below $124 million – a decrease of more than 29 percent.

ECH, the central holding in Ennia’s corporate structure owed $438.4 million to ECL per December 2016. The ECH account at Merrill Lynch held just 390,000 in cash and cash equivalents per July 2018.

The Central Bank reacted in a press release to the court ruling. “With this decision of the court in the United States a new milestone has been reached for the restructuring of Ennia. The Central Bank will do everything within its power to restore Ennia’s solvency, with the objective that Ennia will be able to meet its obligations towards its claimholders also in the long term.”