PHILIPSBURG:--- On April 11, 2024, the Governments of Sint Maarten and Curacao, alongside the Central Bank of Curacao and Sint Maarten, achieved a significant milestone with the signing of the Outline Agreement Resolution ENNIA. This resolution marks a pivotal step in safeguarding the futures of 30,000 policyholders facing the threat of substantial pension cuts.
The Resolution of ENNIA introduces a strategic solution termed a "Partial Restart", aimed at securing the interests of policyholders. Key components of the resolution include:
Separating the life insurance portfolio between ENNIA Life (old) and ENNIA Life (new). Through which:
- The rights and obligations accumulated from premiums paid before ENNIA was placed under the Emergency Regulation on July 4, 2018, belong to ENNIA Life (old); and
- the Rights and obligations accumulated from premiums paid (including interest) since July 4, 2018, belong to ENNIA Life (new).
After the split of ENNIA Life, ENNIA Life (old) will be part of a controlled runoff scenario, and ENNIA Life (new), together with the other healthy parts of ENNIA, being ENNIA “Schade”, ENNIA “Zorg”, will be restarted as a competitive insurer, fully capitalized, reorganized, and fully licensed.
This is the Resolution of ENNIA, which is established by the Governments of Sint Maarten, Curacao, and the Central Bank of Curacao and Sint Maarten.
Financial Implications:
Sint Maarten's share in the resolution amounts to 6.49%, committed to contributing NAf 2.08 million annually for 30 years as of 2027, totaling NAf 62.4 million. Curacao's share stands at 93.51%, with a yearly commitment of NAf 30 million for 30 years as of 2027.
The Central Bank pledges NAf 15 million annually for 50 years, derived from interest-generating long-term bonds. The income from these bonds will guarantee an annual distribution of dividends by the Central Bank in the amount of NAf 18.03 million, of which NAf 15 million will be transferred to the Resolution Fund and NAf 3.03 million to Sint Maarten over the coming 50 years, totaling NAf 151.5 million to the coffers of St. Maarten over the said period.
Approvals:
By its advice of January 24, 2024, the Board of Financial Supervision, the CFT, advised the Kingdom Council of Ministers that the proposed “resolution ENNIA” was acceptable. On March 22, 2024, in a press briefing, the State Secretary of the Interior and Kingdom Relations qualified the proposed Resolution for ENNIA to be financially solid and sustainable. This means that once the countries adopt the proposed resolution, the refinancing of the NAf 316.4 million can be agreed upon at a more favorable long-term interest rate. On April 9, 2024, the Council of Ministers of Sint Maarten approved the Resolution of ENNIA. It approved for the Prime Minister and the Minister of Finance to sign the Outline Agreement Resolution ENNIA on behalf of the country, under the reservation that the Parliament of Sint Maarten will approve the Resolution.
This reservation is part of article 14 of the Outline Agreement Resolution ENNIA and of the National Decree, which is signed by the Governor of Sint Maarten on April 9, 2024, based on which the Prime Minister and the Minister of Finance are authorized to sign the Outline Agreement Resolution ENNIA, as was executed on April 11, 2024.
As the agreement contains a long-lasting financial commitment, it is important for Parliament to approve this Resolution, taking into consideration our Constitution regulating the budget authority of the Parliament of Sint Maarten.
On September 27, 2023, Mr. Ardwell Irion, the Minister of Finance, presented in the first central committee meeting with Parliament. The meeting was centered around a former proposed Resolution for a complete restart of ENNIA, involving a capital injection that the Netherlands was willing to lend to Sint Maarten and Curacao. However, this proposal was unsuccessful, particularly for Curacao. It would have led to the violation of the interest burden norm of the Kingdom Act for financial supervision, jeopardizing necessary future capital investments.
On March 18, 2024, the second central committee meeting took place, through which the current Resolution was discussed.
On April 2, 2024, the Minister of Finance provided the Parliament of Sint Maarten with the answers to the outstanding questions. On April 9, 2024, The Minister provided Parliament with the final version of the Outline Agreement Resolution ENNIA to be signed, which was eventually signed on April 11, 2024.
On, Monday, April 15, 2024, the Minister of Finance will be present in Parliament to continue the central committee meeting, after which hopefully, a public meeting will be scheduled on the Resolution of ENNIA. The Parliament of Sint Maarten will review and vote on the resolution, ensuring transparency and democratic oversight. This step underscores the nation's commitment to responsible governance and fiscal prudence.
The most important aspects of this Resolution for Sint Maarten are, firstly that no pensions will be cut from policyholders, which prevents social and economic damages.
Other important aspects are:
- The 50 years of dividend payments from the Central Bank of NAf 3.03 million per year, which over a period of 50 years amounts to NAf 151.5 million to the coffers of Sint Maarten.
- Sint Maarten pays an amount of NAf 2.08 million yearly through the national budget as of 2027, Sint Maarten will have no issues, with the interest burden norm of the Kingdom Act financial supervision, and so necessary future investments are not jeopardized.
- The Netherlands assessed the Resolution as financially solid and sustainable; this means that this year’s refinancing of the NAf 316.4 million will be against beneficial conditions with low interest rates. Without a Resolution ENNIA, an interest rate of 6.9% would likely be applied, like what happened to Aruba. This will inevitably mean an extra yearly interest cost of NAf 11 million (even more expensive than the Resolution of ENNIA).
The Minister of Finance concluded that "the Resolution ENNIA is financially beneficial for Sint Maarten, and it presents a challenge that the incoming Government doesn’t need to deal with. This is in addition to the outgoing Government leaving behind filled coffers for capital investments for projects such as road surfacing and other infrastructure improvements, including the upgrading of our sports facilities, to name a few. The outgoing government also leaves behind a surplus from the budget of 2023, estimated to be NAf 16 million. These were beyond my imagination when I entered office four years ago, dealing with the recovery of Hurricane Irma, managing the Covid-19 pandemic, balancing budgets, finalizing eleven years of financial statements, and accessing capital investments for the first time in over a decade just to name a few. I would like to once again thank the Ministry of Finance for their commitment to our shared vision for Sint Maarten and their continued support throughout the years."
