Government has announced the long awaited CLICO Rescue Plan if we go by a Nation report. Unfortunately up to the time of writing the blog intimate details of the plan had not reached the public domain. There is a reasonable expectation among Barbadians given the number of policyholders et al who are affected that full disclosure of the rescue plan should not be an issue. In 2010 all* Barbadians should be able to logon to a website and read for themselves the details of the CLICO Rescue Plan.
BU’s position has been articulated in several blogs. Unfortunately the CLICO mess has become political football. No doubt mistakes were made in this matter, people who are learned in these matters have expressed opposing views to support the point. Looking back, the Office of Supervisor of Insurance has been found to be most incompetent. By extension the government both former and current must bear some responsibility by not being proactive dealing with CLICO matters. To the Leader of the Opposition who has been preaching that CLICO should be placed under judicial management, she knows that this does not represent the silver bullet which she has stridently represented on the political platform. How does she explain selling CLICO assets in an economy which is in recession? Wouldn’t this mean that buyers in the market with cash would be in a position to exploit the situation? Bear in mind CLICO has been a financial contributor to both political parties albeit heavily weighted in the Democratic Labour Party’s corner.
Here is what we know from scrapping the Nation Newspaper:
- Government’s reported rescue plan for CLICO International Life will see it add about $314 million to the country’s national debt, this amount would increase the island’s total debt by 3.4 per cent
- There are two key aspects to the rescue plan. The first relates to the portfolio of traditional life, pension and annuity
- The second aspect of the rescue relates to the Executive Flexible Premium Annuities (EFPAs), which will be separated from the rest of CLICO’s portfolio. This therefore implies that the Government of Barbados will effectively take on $314 million in Government-guaranteed debt
- Dr. Winston Moore, President of the Barbados Economic Society opined, “over the long term it is hoped that earnings from the sale of CLICO’s portfolio of traditional life, pension and annuity would be enough to repay the remaining amounts”
- Moore said it was likely that Government would raise a bond issue or borrow on the local market to fulfil the initial $44 million it planned to pay initially to individual investors of CLICO Life
- Key aspects of Government’s rescue plan include:
- state takeover of CLICO assets, the sale of CLICO International Life Insurance; Government’s taking responsibility for the EFPAs;
- no Government financial assistance for related party investments (directors, staff, management, shareholders and affiliate companies that invested in the CLICO’s EFPAs which reportedly totals $6 million);
- no Government assistance or protection for companies and governments in Barbados and the Eastern Caribbean who bought EFPAs as the Supervisor of Insurance in Barbados had ordered that selling of EFPAs to anyone other than individual investors was illegal;
- initial maximum payment of $25 000 to individual investors in Barbados and the Eastern Caribbean which should total $44 million; the sale of CLICO Holdings’ assets beginning in 2015 over a ten-year period.
Former Prime Minister Owen Arthur’s response has been quick “SOME PENSIONERS could find themselves penniless as a result of a reported multimillion-dollar plan to salvage personal investments in CLICO International Life Insurance Company (CIL), says former Prime Minister Owen Arthur” – Read full report
Whether you agree or disagree with what is know about the CLICO Rescue Plan a decision has at last been made and it will up to the a Thompsonless government to explain the details. No doubt the job of explaining, no disrespect to Acting Prime Minster Fruendel Stuart, will be left to Senator Darcy Boyce who we suspect has been the architect of the CLICO Rescue Plan.
The Barbados government from the start of the CLICO mess had a preference to sell affected CLICO companies as going concerns. Under judicial management a select band of people will become very rich and the transaction of necessity will be protracted. For now individual investors will have to make do with good faith payments offered.
The blogmaster invites you to join the discussion.