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"You know Ashan Astvar in Miami does not like risk but he is flexible and issues policies"
I knew what he meant by these cryptic remarks as I have met Astvar several times and placed part of his Reinsurance Treaty. Astvar was a risk avoider and I wondered what James plan was. Then James continued:
"Since1987 President Samuel Doe and his accomplices are getting more and more unpopular and there was is talk of a looming civil war and an invasion from the Ivory Coast supported by a certain Charles Taylor and Prince Johnson. But there may be an upside to this: Despite the tense situation in Liberia there were insurers who were prepared to cover certain risks and offer a contract timespan of 36 months. The policies offered were limited to losses through confiscation, nationalization, and other such things on the part of the Liberian government, exclusive of terrorism. On that basis Astvar may be ready to sign the contract, not least in the expectation that it would not be long before there was no longer a legitimate government in Liberia, and so the policy would be de facto suspended as long as the threatening civil war continued. Probably it was expected that before the end of the turmoil the policy would have run out. Premium without risk – every underwriters dream. A cold calculation, just like Astvar likes it. Let us take a flyer - I go out to Miami anyway next week, do you want to come?"
I denied, as I had other plans, but I whole-heartedly agreed on the concept. Here was in deed a wicked deal to be made. A week later James returned from Miami with a Binding Offer in his hand. The Insured was named "Yona" and the policy was for a sum of USD 23 Mio. limited to losses sustained by acts of nationalization, confiscation and nationalization by the legitimate Liberian Government, excluding Terrorism and war, against an annual premium of USD 350.000 per annum. This document I presented to the Major a day later and after much haggling about the premium and the absence of cover for Terrorism and civil war. The major accepted and the policy was issued. I was sure however, that they had something in mind but I could not wrap my mind around it. Something they relied on - maybe a change in the policy wording at a later stage, when the premium was rolling in.
I passed the documentation to James, who was the "flag broker" on the deal. The files were archived and the premium was paid surprisingly fast through Ramon Insurance Brokers. That was the way to do a deal I though at the time.
But John Gibbs remarked:
“You will see there will be trouble coming out of this"
As it should turn out: He was damn right, as so often.
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