$314m CLICO bail-out

Government plans to take over CLICO assets and to sell CLICO International Life Insurance.

By Geralyn Edward | Sun, September 12, 2010 - 12:00 AM

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. geralynedward@nationnews.com

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Posted by bajanfishermen 1 year, 5 months ago: This is what i had been preaching, from the get go. Now it is incumnbent on the government of Barbados to come clean. They have been hiding this dirty deal, from the public.The election bill has come due, and we the general public have to pay. This is a disgrace, because the public treasury should not be made to pay the election bill of any political party.
This deal does exactly that. Shame on this administration, for it has now stooped to the lowest of lows in political history.
We need an independent prosecution of this deal.