Thousands of life insurance policyholders with British American Insurance Company (BAICO) will get a percentage of the value of their policy back after attempts to find a third party to take them on failed.

The exact percentage and payment amounts are currently being worked out, while those policyholders who continued to pay premiums to BAICO will receive a return of all premiums paid since July 29, 2009 in full, after the company was put into full liquidation.

The Ministry of Finance announced the plans in a statement yesterday.

Millions of dollars invested by Bermudian families are tied up in BAICO, which wrote around 5,500 non-health policies on the Island, the majority of them Home Service Life policies.

The Royal Gazette reported last week that an announcement by the official receiver (OR) Stephen Lowe, who was appointed by the Bermuda Supreme Court to oversee the liquidation of BAICO's Bermuda branch last year, was imminent.

Policyholders have been advised to stop paying premiums to BAICO and should look at setting up alternate arrangements with other Bermuda insurers to ensure they are adequately covered.

The OR and his agents KPMG Advisory and Conyers Dill & Pearman Ltd., the BMA, the Finance Minister and local insurance providers looked at a number of options to enable Bermuda resident life insurance policyholders to be provided with a continuation of their existing insurance cover.

But after an unsuccessful effort the company was put into full liquidation yesterday. But the statement added that local insurers have agreed to offer alternative insurance cover to policyholders "where viable".

BAICO in Bermuda is a branch of British American Insurance Company Ltd., a Bahamian company with operations across the Caribbean. Given the steps taken by the BMA to secure the interests of the company's Bermuda-resident clients, funds available to those policyholders are likely to be significantly greater than those of most other jurisdictions.

"It is intended that the life insurance policies be terminated and valued by way of a scheme of arrangement," read the Ministry's statement.

"In summary, this will mean that all life insurance policyholders and creditors of British American who are resident in Bermuda will participate in a process which will see them receive a return of funds representing a percentage of the value of their policy.

"All policyholders' claims will be actuarially assessed and the relevant date for valuing the policies will be July 29, 2009, being the date the petition to wind up British American was presented to the Bermuda Court. Any valid death benefits that have fallen due subsequent to this date will represent the value of the claim upon which a percentage distribution will be paid."

Policyholders can contact the BAICO hotline on 294-2651, email KPMG Advisory Ltd. on infoba@kpmg.bm or visit the website at www.kpmg.bm/ba for more information