The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

A Cabinet Minister yesterday urged CLICO (Bahamas) 13,000 policyholders to “be patient” and promised the Government was working on “something” to end their six-year plight, even though it had not allocated any Budget funds to cover the necessary $30 million guarantee

The insolvent insurer’s policyholders and pensioners have been left in ‘financial limbo’ since early 2009, unable to access their life savings and long-term investments until they are acquired by another underwriter.

But the transfer/acquisition of CLICO (Bahamas) policy portfolio will not happen until the Government delivers on its long-promised $30 million guarantee to underwrite such a deal, as all potential buyers have said they will not conclude a purchase without it. As a result, the 13,000-plus long-suffering policyholders are unable to move on with their lives.

Michael Halkitis, minister of state for finance, said yesterday: “The guarantee was something that was articulated by the former Prime Minister. We are still looking at ways  to bring some form of resolution to it. Hopefully we can do it very soon.

“We have something in mind. It’s just a matter of sitting down and doing it. The fiscal situation prohibited a lot of what we could do. The most I can say is that we are still looking at it, and hopefully very soon we can come with some sort of resolution. I just ask the people to be patient.”

Tribune Business understands that persons close to the CLICO (Bahamas) situation had expected some allocation to be made in the 2015-2016 Budget for the guarantee, and huge disappointment followed when it did not happen.

Craig Gomez, the Baker Tilly Gomez accountant and partner who is CLICO (Bahamas) liquidator, is ‘gagged’ from speaking to the media.

However, Tribune Business understands that if the Government does not deliver on the $30 million guarantee soon, he may recommend that there is no alternative to ‘running off’ the remaining policies and winding-up the portfolio.

This newspaper previously revealed that Mr Gomez suggested a special purpose vehicle (SPV) solution for CLICO (Bahamas) insurance portfolio which would have worked in a similar manner to the Resolve Bahamas transaction that ‘bailed out’ Bank of the Bahamas. This would have seen the insurance portfolio transferred to the SPV.

Other observers yesterday questioned why the Government, flush with Value-Added Tax (VAT) revenues and projecting $2.047 billion in income for the 2015-2016 fiscal year, could not find room for the $30 million guarantee.

Especially given that spending is projected to jump by $100 million to $1.944 billion, with $60 million allocated to prepare for National Health Insurance (NHI) and $20 million for ‘youth unemployment’, rather than rescuing lower and middle income Bahamians.

“They could find $20 million for Urban Renewal and $60 million for NHI, but they couldn’t find $30 million for 20,000 people?” one observer asked.

The CLICO (Bahamas) situation is now threatening to become an ever-increasing political liability for the Christie administration, especially given the families and votes bound up with the 13,000 policyholders.

The issue received additional publicity from Dr Andre Rollins, the maverick PLP MP, recently, while Bishop Simeon Hall, a CLICO (Bahamas) policyholder and former member of its creditors committee, has been leading the call for the Government to provide the long-awaited guarantee. The senior clergyman held a meeting with policyholders on Tuesday over the issue.

Back in March, Mr Christie said his administration had not abandoned its efforts to bring relief to the thousands of Bahamian policyholders who lost millions due to CLICO (Bahamas) collapse.

At the time, he said that when the Government arrives to a “certain period over the next few months”, it would be able to “speak comprehensively” about what it proposes to do about the issue. Yet Mr Halkitis’s comments go no further than Mr Christie, and provide no specifics.

    At the end of 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.

Its Bahamian balance sheet showed a solvency deficiency of $22.162 million at June 30, 2012, with total assets worth $44.794 million out matched by liabilities totalling $66.956 million.