The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government and its financial advisers are racing to implement the second phase of the CLICO (Bahamas)payout by the promised end-September deadline, even though some policyholders are reluctant to accept the bonds that will be offered.

Tribune Business can reveal that Leno Corporate Services has been hired to structure and advise on the placement of around $30 million worth of government bonds, which are designed to compensate clients of the insolvent insurer who are owed more than $10,000.

The bonds, which are to carry an interest rate equivalent to Bahamian Prime (4.75 per cent), are likely to carry a seven-year maturity and will be issued to CLICO (Bahamas) former Executive Flexible Premium Annuity (EFPA) holders and those who surrendered their pension policies.

This represents the second stage of the CLICO (Bahamas) process, following the cash portion payouts in March this year. However, Tribune Business understands that the Ministry of Finance, Leno and the insurer’s liquidators are now in ‘a race against time’ to meet the end-month issuance deadline.

Khalil Braithwaite, a senior Leno executive, said he was in a meeting when Tribune Business called seeking comment and an update on the bond issue’s progress on Friday. Despite promising to call back, no call was received before press time.

Apart from being issued to CLICO (Bahamas) former policyholders, Tribune Business understands that a portion of the bonds will also be used to raise financing that will capitalise a special purpose vehicle (SPV).

This is the entity that the insurer’s remaining life and other policyholders will be transferred to, until CLICO (Bahamas) liquidator is able to find a purchaser for the portfolio.

Craig A. ‘Tony’ Gomez, the Baker Tilly Gomez accountant and partner, is gagged by the Supreme Court from commenting on the CLICO (Bahamas) liquidation and its progress.

However, Tribune Business sources close to developments have revealed that both Family Guardian and BAF Financial are conducting due diligence to determine whether they wish to take over management of the SPV, once the policies are transferred to it. It is understood that both insurers may also be seeking an option to acquire the CLICO (Bahamas) portfolio, should it prove attractive in the future.

Meanwhile, a prominent CLICO (Bahamas) policyholder expressed disquiet about having to accept the remainder of his compensation in bonds, suggesting that most would prefer a straight cash payout.

That is likely to prove an impossible request, given how cash-strapped the Public Treasury is, but Bishop Simeon Hall said he would be “less aggressive” in his public statements if he knew more about how CLICO (Bahamas) liquidation was progressing.

He added that the bonds were less attractive to persons like himself, who were debt free, because while they could be pledged as security for loans this meant taking on interest and debt servicing costs again.

Bishop Hall also told Tribune Business that himself, and his four fellow pastors who publicly pushed for more progress earlier this month, would “take strong social action”if nothing happened by end-September.

“I was told that some progress was made. I don’t know how much, and in the absence of information, people make their own conclusions,” Bishop Hall said.

“I think it would be better if CLICO and the Government were to give the policyholders the relevant information. People are still in the dark as to what’s going to happen.”

Bishop Hall said that three of his four fellow pastors had also been personally impacted by CLICO (Bahamas) collapse into insolvency in early 2009.

“I know that we don’t have what we were promised from March,” he added. “If someone put $55,000 into this thing, and then almost seven-and-a-half years later, all you get is less than $10,000 and you are promised the rest in government bonds........”

Bishop Hall said he had been informed by a commercial bank that he could pledge his government bonds as security to obtain a loan, and be ‘made whole’ that way.

However, the well-known churchman said this was of little benefit to himself as he wanted to remain debt-free.

“There are a few of us who are debt free, and don’t want to get back into debt,” Bishop Hall told Tribune Business. “Those persons like me wouldn’t want to go to a bank and get a loan.

“At 69, I was told I can’t go to the bank for a loan, yet you’re now telling me to get back my money I have to get a loan?

“I, as a policyholder, don’t want bonds. If it’s a bond that I can take to the bank and cash it, fine, but I don’t want to go to the bank where I have to take out a loan with interest and all that foolishness. I don’t want to go back into debt.”

Bishop Hall added that he “would be less aggressive” if policyholders were provided with more information, and complained that nothing was forthcoming from the Ministry of Finance. He added that policyholders had to physically visit Vaughn Culmer, CLICO (Bahamas) operations manager, to glean any details

“The five pastors who met are thinking, and planning, that if nothing concrete is done by the end of the month then we’re going to have to take some strong social action if we don’t get the payments,” Bishop Hall told Tribune Business.