Government Suspends Payments to Former CLICO EFPA Policyholders

The decision by the government of Barbados to default on the the New Life Investment Preservation Bond should not have come as a surprise to those with a finger on the pulse of current affairs. Prime Minister Mia Mottley indicated on winning the government that with the country in debt 15 billion dollars with a GDP of 171%- third highest in the world-  a priority of her administration is to restructure/reprofile the debt. The country was given notice that in government’s Phase I and II economic program to be rolled out in the coming weeks government guarantee of all bond issues will be on the table for review.

The decision to suspend payment to former CLICO Executive Flexible Premium Annuity (EFPA) policyholders will be a blow after the matter was ensnared in litigation for almost a decade. Many of the policyholders are retirees – those not dead – and the investment in the EFPA represents savings to support living in the golden years.  The blogmaster will make bold to suggest there was political interference in the process. The symbiotic relationship between the DLP and CLICO brands loom large.

The BU intelligentsia recently engaged in a sidebar conversation – an example of a comment, with Actuary Walter Blackman where the the viability of New Life Investment Company (NLICO)– the parent company of New Life Investment Company- was questioned if there is no premium income. The conclusion is that to maintain payment of pension and other financial commitments this is just another state owned company that will be sucking the very sore nipples.

To discuss insurance related matters the role of the newly minted Board of the Financial Services Commission (FSC) to be chaired by Avinash Persaud must play an important role. Barbados Underground posted in 2017 on a report that dropped off the back of a truck prepared by the IMF which reviewed the robustness of the operations of the Financial Services Commission (FSC)- specifically as it pertains to the supervision of Sagicor.

Middleclass Caught Between the FSC and Sagicor

A report prepared by the International Monetary Fund (IMF) that reviewed the robustness of the operations of the Financial Services Commission (FSC)- specifically as it pertains to the supervision of Sagicor-  has triggered alarm bells in the local and regional financial market.   Although there is no evidence based on any public reporting Sagicor is not a well run company, the

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The blogmaster over the years can measure the efficiency and culture of most organizations by the relevance and ‘vibrancy’ of its website.   A review of the Financial Services Commission (FSC) shows there is an opportunity to improve content management. Have a view of the Management Team Page, the Manager Insurance position is vacant? Surely not! Have a look of Resolution Life Assurance page, the decision to suspend annuity payments is still to be updated to the News & Updates page.

How difficult is it to update a page? Some will suggest the blogmaster is being captious.

In all seriousness.

What the last decade of DLP government has taught us is that a fractious contentious climate is not conducive to moving the country forward. It does not matter if the policy prescriptions of the former government were correct, if the leadership – both political and NGO –  is unable to persuade the majority of the population to get on board, to borrow from the lexicon of the street people, the dog dead. We can continue down the path of the last lost decade or we can dig deep, suppress politically partisan and uneducated position for the good of country.

The country is broke.

#MBGA

 

 

82 comments

  • Hal Austin August 20, 2018 11:55 AM

    “Nearly all these points are regulatory failures.”

    Hal,
    I defined the overall regulatory process as STARTING from the actuary and ENDING at the PM. So in essence, your observation is fair.

    However, what BU readers should detect from my defined regulatory process is that, the way the CLICO raid was designed and packaged, the process had to be reversed. Given the evidence revealed by the published cheque, instead of being the last person to defend the interests of CLICO policyholders, the PM became the first person to breach the process.

    Once the process was breached, the Minister of Finance was compromised (same person as PM), the regulators operate under the control of the Minister of Finance so no independent or contrary action on their part was allowed, the Auditors ought to have known about the cheques and ought to have followed the money trail (Did they? If they did, what happened? If they did not, why not?), the management of CLICO was wrapped up in the raid and robbery with the politicians from the start, and the actuary?………

    You were rather sharp when you said that NEARLY ALL of these points are regulatory failures.
    Other contributing factors to the CLICO raid point to the darkest side of human nature – greed, corruption, collusion with evil intent, the belief by some “criminals” that they are above the laws of Barbados, and the betrayal of the public’s trust by individuals who turned out to be unfit to hold public office.

    Like

  • Hi Hal, is Mandarin a fruit like the orange, the citrus family? lol

    Like

  • Walter,

    You make the point that the insurance regulator reports to the minister of finance. This is one of the structural problems. The regulator should be independent reporting annually to parliament. The minister’s responsibility should begin and end at hiring and firing.
    The Clico debacle has become party political, with nonsense about $3m cheques, which should have been sorted out by good auditing and by the judicial review. As you are aware, globally auditors are in serious trouble. Again, the executive team at Clico should have been approved by the regulator, this seems not to have been the case, a regulatory failure.
    You talk about human frailties, greed etc, good regulation provides the checks and balances to individualised weaknesses. Part of it is also cultural; we live in a society that tolerates such unethical behaviour, especially when it comes to friends and relatives. Just look at the make-up of our Senate and you see signs of what someone on BU once called heritage.
    @Walter, we still have not had a proper account of the legacy business at Clico (nor, for that matter, the Mutual), which is treated as something in the past.
    Until we accept that having the offices and officers, the institutions and laws, do not in themselves mean that we are well governed things will not improve. Outcomes are important. We have a limited talent pool; if we do not have the right people locally, then import them on limited contracts.
    I divert for a minute, but back in the 1970s I was offered a job by the government of Bermuda on a three-year contract. I accepted on condition that the position be made permanent. They refused; the rest is history. There are experienced people in Canada, the UK, Australia, etc who would work on limited contracts.
    Our financial sector is badly regulated and all the problems we experienced go right back to poor regulation. Political interference only clouds matters.

    Liked by 1 person

  • @Walter Blackman

    Now, this is the real Walter Blackman posting on August 20, 2018. 11:32 AM.

    Like

  • All directors appointed to the boards of insurance companies have to be disclosed for vetting by rhe regulator.

    Like

  • What does vetting mean? I am talking about being qualified and experienced to do the specific job. A retired banker running an insurance company is not ‘vetting’.

    Like

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