Sunday, April 21, 2024

$314m CLICO bail-out


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12:00 MIDNIGHT UPDATE – Government’s reported rescue plan for CLICO International Life will see it add about $314 million to the country’s national debt.
And former Central Bank of Barbados economist Dr Winston Moore told the SUNDAY SUN that this amount would increase the island’s total debt by 3.4 per cent.
 At the same time, Moore who is also president of the Barbados Economics Society (BES), said the plan appeared to create an orderly settlement to the CLICO debacle for individual clients of the insurance company.
He, however, said it was “difficult to say what would be the implications for businesses” that had invested in the company unless he could be provided with more details of the rescue plan.
“There are two key aspects to the rescue plan. The first relates to the portfolio of traditional life, pension and annuity.
“That aspect of the portfolio will be sold with little or no noticeable impact on these individuals,” Moore said.
He added: “The second aspect of the rescue relates to the Executive Flexible Premium Annuities (EFPAs), which will be separated from the rest of CLICO’s portfolio. This therefore implies that the Government of Barbados will effectively take on $314 million in Government-guaranteed debt.”
The BES president who is also an economics lecturer at the Cave Hill Campus of the University of the West Indies added: “Over the long term it is hoped that earnings from the sale of CLICO’s portfolio of traditional life, pension and annuity would be enough to repay the remaining amounts.”
Bond issue
Moore said it was likely that Government would raise a bond issue or borrow on the local market to fulfil the initial $44 million it planned to pay initially to individual investors of CLICO Life.
Some of the key aspects of Government’s rescue plan include: state takeover of CLICO assets, the sale of CLICO International Life Insurance; Government’s taking responsibility for the EFPAs; no Government financial assistance for related party investments (directors, staff, management, shareholders and affiliate companies that invested in the CLICO’s EFPAs which reportedly totals $6 million); no Government assistance or protection for companies and governments in Barbados and the Eastern Caribbean who bought EFPAs as the Supervisor of Insurance in Barbados had ordered that selling of EFPAs to anyone other than individual investors was illega; initial maximum payment of $25 000 to individual investors in Barbados and the Eastern Caribbean which should total $44 million; the sale of CLICO Holdings’ assets beginning in 2015 over a ten-year period. 


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