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Pm Promises $16m Clico Cash Payout

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Prime Minister yesterday said a collective $16 million cash payout to victims of the CLICO (Bahamas) debacle would begin before month’s end, amid warnings little has been done to prevent similar financial collapses from occurring in the future.

Mr Christie’s announcement, during the mid-year Budget debate, that the seven-year wait for resolution is near to ending, was greeted with a mixture of optimism and wariness by CLICO (Bahamas) clients and their advisers.

Bishop Simeon Hall, who has been waiting since February 2009 to access his pension monies, told Tribune Business that while clients should welcome the Prime Minister’s statement, the Bahamas had “got to make sure it never happens again”.

His warning was echoed by attorney Paul Moss, who yesterday said the Bahamas’ failure to hold a public inquiry into CLICO (Bahamas) collapse meant “there’s room for it to happen again”.

Mr Moss, who represents several former CLICO (Bahamas) staff members, told this newspaper that the Government and financial services regulators had shown they were unwilling to learn any lessons from the insurer’s insolvency through the failure to investigate its demise.

And Branville McCartney, the Democratic National Alliance’s (DNA) leader, questioned where the Government would find the promised $16 million, given that it had not been included in the original 2015-2016 Budget.

Mr Christie, in his House of Assembly address, confirmed that the ‘rescue plan’ will be structured along lines first revealed by Tribune Business in late June 2015.

Asserting that all former CLICO (Bahamas) clients will be made “whole”, the Prime Minister explained that all remaining life and health insurance policyholders, who are current with their premium payments, will be transferred to a newly-created special purpose vehicle (SPV).

The SPV will effectively assume CLICO (Bahamas) insurance operations until a purchaser for the remaining policy portfolio can be found.

The insolvent insurer’s Executive Flexible Premium Annuity (EFPA) holders, and surrendered pension policies, will receive a cash payment capped at $10,000.

Anything else will be paid off via the issuance of seven-year promissory notes (government bonds), which will provide these clients with quarterly insurance payments at the Prime rate (4.75 per cent).

Finally, Mr Christie said surrendered policies, death benefits, medical claims and staff pensions will be paid in full.

Pegging the total cash payout at $16 million, Mr Christie acknowledged the “impatience” of former CLICO (Bahamas) clients, who have been waiting for seven years to gain access to their long-term investments and life savings.

“A solution is now at hand,” Mr Christie pledged. “The liquidator of CLICO has proposed, and the Government has agreed, 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 pay-out of their benefit, subject to the policy not lapsing during the period of liquidation.

“I can advise that the Ministry of Finance has formally requested the liquidator to commence payments before the end of this month.”

CLICO (Bahamas) liquidator, Craig A. ‘Tony’ Gomez, the Baker Tilly Gomez accountant and partner, is ‘gagged’ by the Supreme Court from speaking publicly about the case.

However, Tribune Business sources familiar with the situation said that the ‘guarantee’ required to underwrite the CLICO (Bahamas) restructuring has increased from the $30 million initially proposed by the former Ingraham administration to a sum in the ‘mid-$40 millions’

Mr Christie, however, argued that the solution offered by his government was markedly different from that of its predecessor, since it sought to “guarantee that the policyholders would be made whole”.

The Ingraham administration’s $30 million guarantee, he argued, was instead designed to underwrite the sale of CLICO (Bahamas) policy portfolio to another insurer, a development that has not occurred.

Still, Mr McCartney questioned yesterday: “The liquidator has agreed to make all policyholders whole, and they will have an estimated $16 million cash payout.

“But they [the Government] have not said where this money is coming from. I am ecstatic that the policyholders are getting straight, but who’s paying it? Where’s it coming from?”

Similar sentiments were echoed by the Free National Movement’s (FNM) deputy leader, K P Turnquest.

CLICO (Bahamas) policyholders, meanwhile, were taking the view that they will ‘only believe it when they see it’ in terms of the Government’s promised resolution.

Bishop Hall, while urging his fellow victims to “receive the news gladly”, told Tribune Business: “I have three responses.

“My first response, as a pastor, is: ‘Praise the Lord, Hallelujah’. The second response is that it {CLICO Bahamas’ collapse] ought never to have happened. The third response is that we’ve got to make sure it never happens again.”

Referring to the “deep despair”s that many CLICO (Bahamas) policyholders have endured, Bishop Hall added: “When money is involved, your blood pressure goes up and you’re not sure where this thing is going. It was supposed to be my retirement money, and I retired three years ago.

“While I call for this not to happen again, it’s a feather in Mr Christie’s political cap that he’s been able to pull this off after seven years. Anything is better than nothing.”

Bishop Hall said he would be watching carefully over the next several weeks to ensure the promised resolution was delivered, adding that the debacle has undermined people’s trust in government.

“It causes people to mistrust the authorities when they don’t feel protected by the Government,” he told Tribune Business.

“A lot of people, in the meetings we’ve held, talked about their disappointment in the Government and its failure to protect their interests. Both political parties have to share the blame for this debacle. Someone fell asleep when CLICO was moving dollars in and out of the country.”

Mr Moss said he “hopes and prays” the Government will finally make a CLICO (Bahamas) resolution reality, given that the solution reiterated by Mr Christie yesterday had been promised since late June 2015.

He added, though, that it was unclear whether the Bahamas had learned the relevant lessons from the insurer’s collapse.

“They [the Government] have never investigated this matter, never had an inquiry into it, and the room for it to happen again is there,” Mr Moss told Tribune Business.

“It was a failure on multiple levels. It was a failure of the Registrar of Insurance, now the Insurance Commission; it was a failure of the Central Bank with respect to exchange control; and a failure at the executive level to not be aware of the regulatory deficiencies and to tighten them.”

Comments

SP 4 years, 7 months ago

.......... PM Christie Officially Kick Off Smoke And Mirror Re-election Campaign ........

Let's not forget Perry Christie's words to Andre Rollins, "I have five years to get things done."

After four years of holding back progress, how convenient is it that going into 2017 election campaign mode crafty Christie suddenly announce's solutions to the Clico and mortgage relief issues?

As suggested by Dr. Rollins, this dithering geriatric double-dealing dinosaur could have resolved these issues long ago. Instead unscrupulous Christie choose to hold back to use these important issues as political currency going into the 2017 general election!

We can expect to see several more "marvels and wonderful feats of accomplishment" in coming Months as this duplicitous, disingenuous, sorry excuse for a Bahamian attempt to persuade the electorate that he is "the man" to lead the country.

This feeble transparent smoke and mirror Christie shuffle will backfire, as Bahamians are not as stupid as Christie have led himself to believe.

He will be condemned for playing political games with peoples lives!

Too little too late and too obvious!

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sheeprunner12 4 years, 7 months ago

This will be the trend of the PLP government for the next year or so as they massage the poor people's hopes to win another election ....... at the citizen's Treasury's expense

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Well_mudda_take_sic 4 years, 7 months ago

Bahamians should ask how much of the CLICO funds recovered and bailout money paid at the expense of Bahamian taxpayers has already gone and remains to go into the pockets of Clement Maynard's children.

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