Canada and Cuba Reach Agreement in Principle on Assets of Canadian Insurance Companies

Prime Minister Jean Chrétien today announced that an agreement in principle has been reached with Cuba to resolve a long-standing dispute over the Cuban assets of Canadian insurance companies.

"I'm happy that our two countries have been able to resolve this dispute over Canadian investments which predate the Revolution," said the Prime Minister. "This augers well for our future commercial and investment relations."

All other Canadian claims arising out of the Cuban actions relating to the property of foreign nationals in the period following the 1959 Revolution were resolved in the 1981 Agreement Between Canada and Cuba Relating to the Settlement of Canadian Claims. However, the sequestered assets of the Canadian insurance companies were not covered by the 1981 Agreement.

Under the agreement in principle Confederation Life, which is in liquidation, will transfer its Cuban assets and liabilities to the Government of Cuba in return for $9 million US compensation. Confederation Life retains liability to policy holders resident outside Cuba. This agreement is subject to court approval.

The Cuban Government has also agreed to take no further action with respect to the assets of the other Canadian insurance companies, which have not sought a resolution at this time, but which may do so in the future.

PMO Press Office: (613) 957-5555

The agreement in principle announced today settles a dispute dating back to 1961 when the Revolutionary Government of Cuba adopted two decrees that, inter alia, sequestered the assets of five Canadian life insurance companies operating branch offices in Cuba: Confederation Life Insurance Company, Sun Life Assurance Company of Canada, Crown Life Insurance Company, Manulife Financial and Imperial Life Assurance Company of Canada. Subsequently the situation was exacerbated when the Cuban Government issued decrees nationalizing the assets, including life insurance policies of certain Cuban nationals, such as emigrés.

The 1981 Agreement between the Government of Canada and the Government of Cuba relating to the Settlement of Canadian Claims resolved the outstanding claims of all Canadian nationals, arising from the actions of the post-revolutionary Cuban Government, excepting those of the insurance companies.

Two earlier rounds of negotiations between the Government of Cuba, on the one side, and the Government of Canada and the Canadian insurance companies, on the other, in the late 1980s and early 1990s failed to resolve the dispute. The current round of negotiations (meetings in Havana in March 1996 and in Ottawa in September 1997) followed an agreement between Vice President Lage of Cuba and Minister of Foreign Affairs, Lloyd Axworthy, in October 1995 to make a further effort to resolve the issue. Both governments wished to clear up this long standing investment dispute in order to open the way for improved economic relations, including the negotiation of a Foreign Investment Protection Agreement (FIPA).

The fact that Confederation Life is in liquidation imposed a legal obligation on the liquidators (KPMG Inc) to wind up its Cuban operations. Confederation Life accounts for approximately one half of the Cuban assets of the Canadian insurance companies. Any questions regarding the agreement in principle with Confederation Life should be referred to the Confederation Life Media Centre at (416)-323-8147.

The other Canadian insurance companies chose not to engage in the latest round of negotiations. The Cuban Government has undertaken not to take further actions with respect to their assets and liabilities in Cuba pending agreement with these companies. Any questions concerning the Cuban operations of these companies should be directed to the companies themselves.