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$16m Clico Payout To Launch Next Week

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A prominent CLICO (Bahamas) policyholder yesterday pledged he would “continue to challenge” the authorities to ensure such a debacle is never repeated, with the $16 million cash payout to former clients set to begin next week.

Bishop Simeon Hall urged CLICO (Bahamas) clients to be “grateful” that the Government was delivering on its recent promise to help end “a seven-year ordeal”, which was sparked when the life and health insurer collapsed into insolvency in February 2009.

“It’s a positive move,” Bishop Hall said of the upcoming payout. “I pray that those who have been waylaid by this debacle can be remunerated for they have invested in the company. I also pray it does not happen again. We must pay these 13,000 people and ensure it does not happen again.”

Praising Prime Minister Perry Christie for meeting his promise that payouts would begin before end-March, Bishop Hall urged him - and financial services regulators - to ensure the industry did not suffer a similar insolvency in the future.

“I commend Mr Christie on one hand, but on the other hand I continue to challenge him to ensure it doesn’t happen again,” he told Tribune Business.

“I’m happy not only for myself, but also the poor people who invested in this company and have been waylaid for seven years.

“I think of a 78 year-old woman who took out insurance in her prime to ensure she would not become an expense to her children when she died. She said: ‘I cannot die until this is fixed’. That’s the kind of situation we face.”

Now, with the imminent prospect of recovering at least a portion of their life savings and long-term investments, Bishop Hall said of CLICO (Bahamas): “We have more to be grateful for than we do not.

“I want to encourage all those Bahamians to be grateful, and let’s see how this is going to work out.”

Newspaper advertisements taken out yesterday by Craig A.’Tony’ Gomez, CLICO (Bahamas) liquidator, confirmed that the first interim payments would be made over a three-day period, beginning next Wednesday, to New Providence-based clients.

Once that process concludes on Friday, April 1, the liquidator will head to Freeport to make the same interim payment to Grand Bahama-based customers on Monday, April 4.

Mr Gomez, the Baker Tilly Gomez accountant and partner, is still ‘gagged’ from speaking publicly about the CLICO (Bahamas) liquidation by the Supreme Court.

However, sources close to the liquidation process emphasised that the upcoming payments were merely a ‘first instalment’ on what was due, and did not represent a full pay-out.

They also reiterated that the pay-outs did not apply to CLICO (Bahamas) clients whose insurance and pension policies were still in force.

These will instead be transferred to the proposed special purpose vehicle (SPV) that will be created to absorb what is left of CLICO (Bahamas) existing remaining operations, until they are purchased by another life and health insurance company.

Tribune Business understands that Mr Gomez and his team are keen to avoid a situation where there is a mass cancellation of coverage by remaining policy and pension holders next week, so that they can claim the cash surrender value.

They believe this will not be in the interests of those who have maintained their coverage for the past seven years, and the Government has also been explicit in stating just who will be eligible to receive the allocated $16 million.

Unveiling the plan during the mid-year Budget debate, the Prime Minister Perry Christie said the insolvent insurer’s Executive Flexible Premium Annuity (EFPA) holders, and surrendered pension policies, will receive a cash payment capped at $10,000.

Anything owed above this sum will be paid off via the issuance to former clients of seven-year promissory notes (government bonds), which will provide them with quarterly insurance payments at the Prime rate (4.75 per cent).

Surrendered insurance policies, death benefits, medical claims and staff pensions will also ultimately be paid in full, with next week’s payments representing the first tranche.

Tribune Business was told that the New Providence payouts will take place at the Holy Cross Anglican Church in Highbury Park, with those in Freeport being handed out at CLICO (Bahamas) former office.

This newspaper’s sources, speaking on condition of anonymity, added that Mr Gomez and his team were now racing to ensure the sums owed to each former CLICO (Bahamas) client are calculated correctly. They are also drafting assignee letters where necessary, and preparing the due cheques.

Tribune Business also understands that the liquidator is yet to obtain Supreme Court approval for the payout scheme, but this should be forthcoming before next week.

This newspaper also understands that most of the $16 million payout sum will be coming from the Government’s monies.

Bishop Hall also urged Bahamian insurance companies to “reevaluate the role they play in society”.

He explained: “I am 68 years of age, and every year my insurance goes up when I need it most - just this morning, for example, and my church is dealing with it now. It’s a necessary evil.”

Bishop Hall said elderly Bahamians were trapped between ever-increasing premiums and the inability to find insurance coverage elsewhere, which left them beholden to existing carriers.

Comments

Mimi 3 years, 8 months ago

I hope this story is not real because if Mr. Christie thinks for one minute that any of the policy holders who have been paying for the past seven years will be happy to hear that they will not be paid out he is mistaken. So we were sold a lie from the beginning? Now some one needs to tell me if I do not receive a cheque on Wednesday does this mean I can use this CLICO card when I go to the doctor? Because as far as am concerned this card is garbage. This article totally contradicts what the prime minister said in the HOA. I am ready to be done with this situation, I don't want to put another penny into something I haven't been able to use for years. So if this is what the prime Minister is proposing then he must be out of his mind. We've been scammed for too long and now you want us to continue paying even beyond this? This policy does not benefit none of us. They tried for years to have another insurance company purchase these policies and did not succeed, the prime minister admitted to that himself in the HOA.

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Well_mudda_take_sic 3 years, 7 months ago

The moral hazard behind this wrongful bail out of private stakeholders in CLICO by the Bahamian Government using funds in the form of high interest paying government bonds/obligations of Bahamian taxpayers will undoubtedly have serious unintended consequences. Why should we, Bahamian taxpayers, be bailing out the losses incurred by the holders of insurance policies and investment annuities issued by any insurance enterprise that was privately owned and controlled prior to its bankruptcy? Whether the regulatory apparatus failed to protect the stakeholders in CLICO from the losses incurred by this public interest entity is completely irrelevant ......our government simply has no right to pick winners and losers among us when it comes to the outcome of our own personal investments, period! It is this same warped mentality by our government that has allowed the corrupt lending practices at Bank of The Bahamas to occur, costing all honest hard working Bahamian taxpayers mega millions of dollars in the form of investment losses incurred by National Insurance and added debt/bonds issued by the government in order to fund and/or prop up the now seriously impaired and deficient capital structure of BoB. The corrupt Christie-led PLP government thinks it has the right to take from Peter to pay Paul whenever it thinks its is politically expedient to "buy" votes. Doing so is outright theft from Bahamian taxpayers and from National Insurance fund contributors for the purpose of paying bribes for votes and for other political favours!

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