By NEIL HARTNELL
Tribune Business Editor
A prominent CLICO (Bahamas) policyholder yesterday said he was “willing to take crumbs from the table”, after the Government restructured planned payouts to fully compensate 70 per cent of ‘surrender’ victims by November 2017.
Bishop Simeon Hall told Tribune Business he was unsure whether all victims of the insolvent insurer would accept the revised resolution, which now involves a mixture of cash and bonds.
The Government had initially planned to finance the second phase of CLICO (Bahamas) payouts through a $45 million bond issue, with the monies raised designed to compensate former Executive Flexible Premium Annuity (EFPA) holders and those who had surrendered their pension policies.
However, the Ministry of Finance yesterday said in a statement that compensation will now be paid in cash via three separate instalments, due to be issued in April, July and November 2017.
These payments, it added, will total $5,000 per policyholder, and be enough to payout 70 per cent or 1,595 claims from ‘surrendered’ policyholders.
The 30 per cent not fully paid out will receive promissory notes (bonds) carrying a 4.25 per cent interest rate, equivalent to Bahamian Prime, which will distribute the balance owed over a four-year period.
Acknowledging the Government’s fiscal limitations, Bishop Hall yesterday praised the Christie administration for fulfilling the promise to compensate CLICO (Bahamas) policyholders that was made by its predecessor.
“To be honest, at this late stage in the game, a little something is better than nothing at all,” Bishop Hall told Tribune Business.
“I live at a middle class economic standard, so I can imagine how those in the lower class must feel. But I’m happy that some resolution has been reached.”
Recalling that it was former prime minister, Hubert Ingraham, who urged CLICO (Bahamas) policyholders to continue paying following the insurer’s 2009 collapse into court-supervised liquidation, Bishop Hall praised his successor for finally delivering on pledges to make victims whole.
“It is to Mr Christie’s credit that he has led it towards some resolution,” he added. “I’m not sure the resolution will be accepted by everyone, but I’m 70 years old this week and willing to take crumbs off the table.
“It must be appreciated that this government doesn’t have the money it would like to have, and the only way to do that is through taxing the people. The other perspective is that this was a private business, which we were victims of, and it’s to government’s credit that it took it on, both the Ingraham and Christie administrations.”
Bishop Hall acknowledged that there were no laws or other mandates requiring the Government to compensate CLICO (Bahamas) victims, although some may say it had a moral obligation to do so given the regulatory failings that led to the insurer’s insolvency.
“The only thing I hold them culpable for is allowing the money to go out of the country,” Bishop Hall said, referring to the Central Bank and then-Registrar of Insurance’s failure to prevent $73 million being transferred to Florida for investment in a real estate project.
“They failed by not regulating it as they should. The point I must underscore is it should not happen again. Whoever makes the decision at government level must not let this happen again. Government is culpable by not regulating this thing more strictly and allowing it to happen.”
The first of three payments to CLICO (Bahamas) policyholders will be made between April 24-26 in New Providence, and on April 28 in Grand Bahama.
Bishop Hall acknowledged the timing just weeks prior to the May 10 general election, and said: “Some say it’s an election ploy, but I couldn’t care less. It’s never too late.
“I wanted this money four years ago for my retirement. Whatever the motivation is, I’m grateful something has happened.”
The Ministry of Finance confirmed yesterday that the Government has “decided to continue making direct interim payments to all qualified policyholders of CLICO in a series of three tranches during 2017”.
The payments will be limited to qualified policyholders of record as of December 31, 2016, with the restructured payouts designed “to enable the Government to more expeditiously render much-needed relief to CLICO’s policyholders”.
The Ministry of Finance added: “Qualified policyholders will receive up to $5,000 with respect to their outstanding claim balances. This exercise is expected to fully address some 1,595 claims or 70 per cent of outstanding surrendered accounts.
“Policyholders are advised that any balances outstanding at the end of 2016, and not fully settled in the 2017 tranches, will be covered by promissory notes to be issued by the Government and paid out over a period of four years in equal instalments. These notes will bear interest at 4.25 per cent per annum.”
The Ministry of Finance urged CLICO (Bahamas)policyholders whose contracts are still in effect to continue making premium payments.
The second phase payout to former CLICO (Bahamas) clients was initially supposed to be triggered by the creation of a new insurance entity, a special purpose vehicle (SPV) to be called Coral Insurance Company. This will hold CLICO (Bahamas) insurance policies that remain in effect.
The SPV, which will be licensed and regulated by the Insurance Commission of the Bahamas (ICB), was supposed to be created by the second week of November 2016, and hold the remaining insurance portfolio until it is purchased by another insurer.
Tribune Business sources have suggested that CLICO (Bahamas) liquidator, Craig A. ‘Tony’ Gomez, the Baker Tilly Gomez managing partner, and others have been working to develop a feasible business plan for Coral Insurance Company.
However, before the plan and Coral’s formation can proceed any further, Tribune Business understands that the Government has to determine how to structure the financial support it will provide to Coral.
Several sources familiar with developments suggested that progress on this issue had slowed down recently on the Government side.
The Government has agreed to provide “capital support” to plug the holes in Coral’s original balance sheet, and cover the ‘gap’ between its asset and policy liabilities that will be inherited from CLICO (Bahamas) and the liquidator.
This will likely take the form of a promissory note, and the Government (taxpayer) will also cover any annual operating deficits incurred by Coral. It is the structuring of these requirements that now needs to be concluded.