Bahamas government silence on CLICO guarantee ‘a tragedy’

Bishop Simeon Hall
Bishop Simeon Hall

Nassau, Bahamas — Nine months after the International Monetary Fund (IMF) warned that The Bahamas government must “accelerate” the liquidation process, the government has been urged to bring a resolution to the CLICO (Bahamas) case as it said it would do before year-end 2013.

Bishop Simeon Hall, a CLICO (Bahamas) policyholder and a former member of the creditors committee, who resigned in protest in March of this year over the government’s failure to issue a guarantee of the liabilities of the insolvent insurer, said it is a “tragedy” that so many Bahamians continue to be “waylaid by this debacle”.

“I think the government should be held accountable, particularly given that there are 30,000 people who have been waylaid by this. The government should find some money,” said Hall, adding that even up until last Thursday he had received a call from a member of the public concerned over the status of the CLICO (Bahamas) liquidation.”

“I know a lady who said she was putting this money aside for when she died, because she didn’t want to be a burden on her children.

“She said she can’t die right now because she’s waiting for this thing to be fixed. The elderly and the poor are challenged. We should be more forthcoming.”

Bishop Hall reiterated his statement that the CLICO (Bahamas) situation was a result of major oversights in the part of authorities.

“I have money in there that I was putting aside for my retirement. I don’t know how to say it without blaming someone because I think the authorities that allowed this to go belly up are to be held accountable.”

While liquidator Craig Gomez is under a court-ordered gag order which restricts him from speaking to the media, Guardian Business understands that there has been little movement on the question of the guarantee this year.

Minister of State for Finance Michael Halkitis, who earlier this year told The Nassau Guardian that the government intended to bring a resolution to the CLICO (Bahamas) liquidation by the end of 2013, has not answered phone calls from Guardian Business in over a month and did not return texts and emails sent this week seeking comment on the government’s intentions with respect to the CLICO matter.

Earlier this year, he said the government had the funds to offer the guarantee. However, government finances have since come under significantly more scrutiny, with plans to implement value-added tax (VAT) having placed a microscope on the level of government expenditure.

CLICO (Bahamas) began experiencing cash flow problems in 2009, months prior to being placed into liquidation, as evidenced by its inability to pay US$2.6 million of claims in the Turks and Caicos Islands, where it operated a branch, in addition to those claims in The Bahamas and Belize.

As a result of various inter-company loans from the company to its subsidiaries, the company faced liquidity problems and was challenged to fund its daily operations.

The last official report from the liquidator, Craig Gomez of Baker Tilly Gomez, was published on December 12, 2012, on the website set up to provide information on the liquidation process just over a year ago, .

At that time, Gomez said he was continuing the company’s operations on a limited basis, attending to the existing policies.

“I continue to urge policyholders to continue making premium payments on their respective policies. Only policies currently in force will be assumed by the new insurance provider,” said Gomez.

Gomez said he was in discussion with three prospective buyers seeking to acquire CLICO’s life, health and pension policies.

The liquidator said that government had stated it would provide a guarantee of $30 million to CLICO to “assist in the anticipated shortfall in the liquidation”.

“The guarantee in its proposed state as communicated to me will provide the following: (a) Death coverage up to B$300,000.00 per person; (b) Executive Flexible Premium Annuity would receive up to B$100,000.00 per person; (c) Annuity holders (fixed deposits and pensioners) would receive up to B$100,000.00 per person; (d) Life insurance – full coverage; (e) Accident and sickness – full coverage.”

Gomez said the government would be reimbursed for any funds utilized under the guarantee from funds received by liquidator from the sale of CLICO’s assets and “from funds otherwise recovered”.

“The guarantee is being drafted by the Office of the Attorney General and as at the date of this report the document has not been completed. I am preparing to meet with Prime Minister Perry Christie’s administration to continue my discussion on the guarantee. A meeting with the Ministry of Finance is tentatively scheduled for July 30, 2012,” said Gomez.

He added that he had directed Trinidadian attorneys to “actively pursue the enforceability” of the US$58 million guarantee from CLICO (Bahamas) Limited’s Trinidadian parent company, CL Financial.

At end of June 2012, the portfolio of CLICO (Bahamas) contained 13,835 policies with a total surrender value of $20.074 million and cumulative sum assured of $1.093 billion.

The Bahamian balance sheet of CLICO (Bahamas) showed a solvency deficiency of $22.162 million at June 30, 2012, with total assets worth $44.794 million outmatched by liabilities totalling $66.956 million.

In April 2013, the International Monetary Fund in its assessment of the stability of the Bahamian financial sector called on the government to “accelerate” the resolution of the CLICO (Bahamas) liquidation.

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