The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A prominent pastor yesterday urged the Government not to forget the promised payout to CLICO (Bahamas) long-suffering policyholders, saying: “We don’t want to get lost in the storm.”

Bishop Simeon Hall, one of the insolvent insurer’s victims himself, told Tribune Business he had been informed pre-Hurricane Matthew that the Christie administration planned to implement the second phase of its ‘resolution’ plan by November.

But, with the Government and wider Bahamas still grappling with the devastation produced by the Category Three/Four storm, Bishop Hall expressed fears that the CLICO (Bahamas) situation would quickly be forgotten as policymakers focused on other priorities.

“I don’t want it to get lost in the storm,” Bishop Hall told Tribune Business. “Matthew is a double whammy for some people who might have been waylaid by the Government and, at the same time, adversely affected by the storm.

“I’m very concerned that we don’t allow the storm to blow away the promises made to CLICO policyholders. CLICO is a storm in itself.

“The Government needs to be progressive and innovative, and come up with ways to fix these things.”

Pointing out that it has been almost eight years since CLICO (Bahamas) was placed into court-supervised liquidation in February 2009, Bishop Hall said the damage and loss inflicted by Matthew would have exacerbated the impact suffered by the life and health insurer’s collapse into insolvency.

“I can appreciate that the Government is challenged with finances, but if they borrowed $150 million, some of that could certainly be used to remediate CLICO,” he told Tribune Business.

That is unlikely, given that the Government has said the $150 million is only to be used for hurricane relief and restoration purposes.

However, Bishop Hall’s concerns that CLICO (Bahamas) policyholders will again be ignored and forgotten about are not without merit, given the length of time - spread across two administrations - that it has taken to devise and implement a solution to their plight.

The Government is already late on one part of the payout’s second phase, as the $45 million bond issue was initially supposed to occur on September 30.

It was forced, pre-Matthew, so confirm interest would start to accrue as of October 1, with the first payment due on March 2017.

The second phase is to be triggered by the creation of a new insurance entity, a special purpose vehicle (SPV) to be called Coral Insurance Company. This is being formed to hold CLICO (Bahamas) insurance policies that remain in effect.

The SPV, which will be licensed and regulated by the Insurance Commission of the Bahamas (ICB), is supposed to be set up by the second week of November and hold the remaining insurance portfolio until it is purchased by another insurer.

However, it appears that the taxpayer has some exposure to Coral Insurance, as the Government has agreed to provide “capital support” to cover the ‘gap’ between its assets and policy liabilities.

Coral Insurance’s creation will then lead to the $45 million bond issue, which will be used to compensate CLICO (Bahamas) former Executive Flexible Premium Annuity (EFPA) holders and those who surrendered their pension policies.

The bond issue, as previously revealed by Tribune Business, will be handled by Leno Corporate Services. The bonds will be issued in exchange for, and replace, the pledges issued to former CLICO (Bahamas) clients owed more than $10,000, and who received their first cash payments in February 2016. That collective payment totalled some $13.1 million.

Most CLICO (Bahamas)policyholders, though, would prefer to receive a cash payout rather than then seven-year bonds, which will carry an interest rate carry equivalent to Bahamian Prime (4.75 per cent) and pay dividends semi-annually.

Bishop Hall added yesterday: “A progressive Government must find the financial wherewithal and the political will to finally resolve the CLICO debacle, in spite of the pressing and ongoing challenges the country now faces, most recently compounded by the devastating and costly passage of Hurricane Matthew.”