By NICO SCAVELLA
Tribune Staff Reporter
CLICO (Bahamas) policyholders will receive their compensatory government bonds by mid-November plus accrued interest, with the government primed to “earmark” over $40 million to facilitate the payout process.
However, the government, in a statement, said this will happen once the insurance license for Coral Insurance Company, the government’s special purpose vehicle (SPV) for this process, is processed and completed, which is expected to be no later than the second week in November.
The statement said once “duly licensed with regulatory approval in hand”, Coral’s “first order of business” will be to undertake a bond offering of approximately $45m, the proceeds of which will be “earmarked” for issuance to qualified CLICO (Bahamas) policyholders in exchange for the promissory note letters issued by the government “reflecting residual claim balances owing” following the partial claims payout exercise earlier this year.
The statement said Coral, through its issuing agents Leno Corporate Services Limited, will make available for exchange the relevant book stocks during the second week of November 2016. A separate notice regarding the swop/exchange exercise will be issued at a late date, the statement said.
Meanwhile, the statement said the government will provide “capital support” to Coral to cover “the liabilities with assets” which are admitted by the Insurance Commission of the Bahamas (ICB) for “solvency purposes.”
The statement advised policyholders with “active/in-force” policies to therefore continue making their premium payments in accordance with their policy contracts “to ensure that they continue to receive coverage and benefits under their policies.”
The bonds in question are designed to compensate clients of the insolvent life and health insurer who are owed more than $10,000. The bonds can be obtained via the exchange of promissory notes issued by the government at the end of March.
The announcement signals a potential end to the eight-year-long debacle.
Additionally, the statement, which came roughly two days after the government’s September 30 deadline for the second phase of the CLICO (Bahamas) payout, said given the bonds attracting an interest rate of prime (4.75 per cent) plus payable semi-annually, and the government’s commitment to undertaking the note exchange by September 30, interest will “start to accrue on the promissory note obligations as of October 1, 2016, based on the proposed bond terms.”
“Payment of this initial accrued interest will be made along with the first semi-annual interest instalment due on the bonds in March 2017,” the statement said. “Policyholders of CLICO (Bahamas) should note that the government continues to work assiduously to bring some relief to those affected by the closure of CLICO (Bahamas).”
In March, Prime Minister Perry Christie promised that a collective $16m cash payout would be issued to victims of the CLICO situation before the end of that month.
In announcing the payout plan during the mid-year budget debate, Mr Christie said the insolvent insurer’s executive flexible premium annuity (EPPA) holders, and surrendered pension policies, would receive a cash payment capped at $10,000.
Anything owed above that sum would 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).
Vaughn Culmer, CLICO (Bahamas) operations manager, told The Tribune in April that the issuance of government bonds would “hopefully” take place “within the next few months.”
The payout process began in March as promised, with some policyholders recovering at least some of their life savings and long-term investments, all of which were lost when the life and health insurer collapsed into insolvency in 2009.
Since then, however, policyholders claimed they hadn’t heard anything about the issuance of the government bonds. Additionally, some policyholders reportedly still hadn’t recovered any lost funds.
Last month, however, prominent CLICO (Bahamas) policyholder Bishop Simeon Hall said he was “very optimistic” over a potential resolution to the situation. He said during the last week in September that CLICO (Bahamas) was due to make an “announcement” about a potential resolution to the debacle in another week or two.