September 25, 2016

CLICO Bahamas moves to pay out policyholders

– no consideration as yet for Guyana

By Alexis Rodney

Even as it moves to clear its debt with policyholders in The Bahamas, the Colonial Life Insurance Company Limited (CLICO) Bahamas is yet to take up Guyana’s case before the courts there, so that policyholders in Guyana could also be paid.

Bank Governor,  Dr  Gobin Ganga

Bank Governor,
Dr Gobin Ganga

Before the massive financial collapse in 2008, CLICO Guyana had transferred some US$36 million to CLICO Bahamas. However, while the investments were said to be “liquid on paper”, investigations carried out, revealed that the sum had been tied up in several investments, including real estate which CLICO Bahamas had in Florida through subsidiaries.
When CLICO Bahamas was ordered liquidated on February 24, 2009, the local company was subsequently placed under judicial management.
Guyana was then forced to retain lawyers to help recover its money, some 53 per cent of the assets of CLICO Guyana. That matter was filed in the Bahamas court after the CLICO Bahamas’ liquidator “rejected” Guyana’s claims.
On Monday, more than seven years after CLICO Bahamas went into liquidation, the country’s Prime Minister Perry Christie announced that policyholders there, who are still current, would begin to receive payouts before the end of the month.
The cash payouts, he said, are estimated at some $16 million.
“The liquidator of CLICO has proposed and the Government has agreed to a plan to make all existing policyholders whole. This plan involves the creation of a special purpose vehicle to assume the insurance operations of CLICO and to pay out the policyholders who have been unable to receive the full payout of their benefit, subject to the policy not lapsing during the period of liquidation,” the Prime Minister said.
Christie said under the plan, surrendered policies, death benefits, medical claims and staff pensions will be paid in full.
According to him, the policyholders have been waiting to cash in on their policies since 2009.
He acknowledged that many Bahamians have “grown impatient waiting for a resolution”.
There were approximately 13,000 Bahamian policies when CLICO was liquidated.
However, while policyholders there will be made “whole”, Guyanese policyholders remain in uncertainty over their payouts.
The consensus among officials here is that Guyana may not benefit from this payout since this country is not seen as a policyholder, but rather a “related party”. Central Bank Governor, Dr Gobin Ganga told Guyana Times on Wednesday that while there has been no word from CLICO Bahamas in this regard, Guyana remains at Class D, “a position where it is highly impossible for anything to come in its favor at this time.”
He said nothing has been forthcoming and would expect that considerations for Guyana will only be had long after payments have been made to policyholders in The Bahamas.
Ganga had said previously that it was obvious that Guyana’s case has been “put for last”, on the list of cases filed by other Caribbean countries against the group. Suriname is one such country, claiming US$15.5 million from CLICO Bahamas. Guyana’s case is being represented by an esteemed lawyer, John Wilson of McKinney Bancroft and Hughes.
CL Financial collapsed in January 2009, following the global financial crisis in 2008. The global recession exposed the company’s inability to meet its commitments to pay maturing investments at CLICO and CLICO Investment Bank (CIB).
Zooming in on the gravity of the situation, it was pointed out that only late last year, Bahamian policyholders held a massive protest, demanding from Government there their US$30 million payout.
The insolvent insurer’s policyholders and pensioners have been left in ‘financial limbo’ since early 2009, unable to access their life savings and long-term investments until they are acquired by another underwriter.
But the transfer/acquisition of CLICO Bahamas policy portfolio will not happen until the Government there delivers on its long-promised US$30 million guarantee to underwrite such a deal, as all potential buyers have said they will not conclude a purchase without it. As a result, the 13,000-plus long-suffering policyholders are unable to move on with their lives.
The CLICO Bahamas situation was becoming a threatening political liability for the Christie Administration, especially given the families and votes bound up with the 13,000 policyholders.
The issue received additional publicity from Dr Andre Rollins, the maverick Progressive Liberal Party (PLP) Member of Parliament, while Bishop Simeon Hall, a CLICO Bahamas policyholder and former member of its creditors committee, had been leading the call for the Government to provide the long-awaited guarantee.
At the end of June 2012, CLICO Bahamas’s portfolio contained 13,835 policies with a total surrender value of US$20.074 million and cumulative sum assured of US$1.093 billion.
Its balance sheet showed a solvency deficiency of US$22.162 million at June 30, 2012, with total assets worth US$44.794 million outmatched by liabilities totaling US$66.956 million.

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