The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

CLICO (Bahamas) liquidation needs to be “accelerated”, the International Monetary Fund (IMF) urged yesterday, noting that the Government’s failure to-date to issue its promised $30 million guarantee was increasing policyholder liabilities.

The Fund’s assessment of the stability of the Bahamian financial sector, released yesterday, effectively called on the Christie administration to ‘get a move on’ with making good on the guarantee pledged by its predecessor, as this was holding up the transfer of CLICO (Bahamas) 14,000-strong policy portfolio to a new life and health underwriter.

“The liquidation of CLICO (Bahamas) needs to be accelerated,” the IMF said in a fairly blunt message to the Government.

“Once the Government guarantee is issued, immediate disposal of the life and annuities business should be started to avoid continuing to increase the liabilities as policyholders keep their policies in place due to the seemingly attractive returns.

“The disposal of the health insurance activity due to its shorter-term character and viability as an ongoing concern should be pursued independently of the life and annuities business.”

Tribune Business understands that discussions between liquidator Craig A. ‘Tony’ Gomez, the Baker Tilly Gomez accountant and partner, and the Ministry of Finance over the guarantee have taken place several times in recent weeks. The Government side is being headed by Prime Minister Perry Christie and Michael Halkitis, minister of state for finance.’

“The Government of the Bahamas has committed to issue a guarantee of $30 million to support policyholders,” the IMF report reiterated.

“The Government has encouraged policyholders of CLICO (Bahamas) to maintain their policies in place in the meantime and continue to pay premiums. Currently, CLICO (Bahamas) is paying all health insurance-related claims and the life claims up to $10,000 per policyholder, with any outstanding balance being accrued until the liquidation is finalised.”

The IMF also revealed that Mr Gomez is in discussions to “offset” a $52 million claim against CLICO (Bahamas) investment subsidiary, CLICO Enterprises, by a Trinidadian affiliate with the $58 million guarantee of the insurer’s loan.

Warning that “complex creditors’ claims need to be sorted out”, the IMF noted: “Policyholders, banks and two affiliated companies, CLICO Suriname and CLICO Guyana, have all filed claims against CLICO (Bahamas).

“In addition, CLICO Trinidad, a Trinidadian insurer fully owned by Colonial Life Financial (CLF), which is also the ultimate owner of CLICO (Bahamas), is alleging $52 million claim against CLICO Enterprises and [had tried] to stop the $10 million from going to CLICO (Bahamas) for the benefit of its policyholders and other creditors.

“At the same time, CLICO (Bahamas) holds a guarantee of $58 million for the loan made to CLICO Enterprises from CL Financial. Discussions are ongoing to offset such guarantee with the $52 million claim.”

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

CLICO (Bahamas) Bahamian balance sheet at the same date 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.