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Clyde Mascoll

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THE RECENTLY MADE public rescue plan for CLICO International Life Insurance Company (CIL) in Barbados and the Eastern Caribbean identifies only individual investors; it states an initial payment up to a maximum of $25 000; it proposes a judicial manager but is still giving CIL approval to sell assets beginning in 2015.
While the Cabinet of Barbados may make a political decision to protect individual investors, it is impossible for the judicial manager to proceed other than along legal lines.
In the circumstances, the Government is suggesting that “the assets of CIL, supplemented by the assets of CLICO Holdings Barbados Limited (CHBL), which are left after the transfer to and sale of the traditional life insurance business should be assigned to the Government of Barbados as collateral for the government guarantee” of the cost of the rescue plan.
In other jurisdictions, following the appointment of the judicial manager, the legal advisors were requested to advise all policyholders and other claimants who have commenced formal action against the troubled company to explain the consequences of the appointment of a judicial manager on their actions.
Companies and institutions which invested millions of dollars in these failed companies were apparently not expected to bring any legal action against them.
The parent company of all the branches in the Eastern Caribbean is Barbadian owned. And immediately following the developments in Trinidad and Tobago, the Central Bank of Barbados issued a Press statement assuring the public that CLICO Mortgage & Finance is a well-run organisation with assets to support its liabilities.
It further stated that the uncertainty in the Trinidad market should not be translated into uncertainty in the Barbados market.
Exactly a month later on March 2, 2009, another Press release was issued which stated that the Minister of Finance and Economic Affairs, the Governor of the Central Bank of Barbados, the Supervisor of Insurance, and the management of CLICO Holdings Barbados Limited have made public statements over the last few days.
“Generally, it was emphasised that CLICO Holdings is a well-run company and that the domestic financial system is well regulated and capitalised.”
By November 02, 2009, a Press statement was issued by the Governments of the Eastern Caribbean Currency Unit (ECCU) in which a proposed new company was to be established to assume the traditional life insurance, medical insurance and annuity business of British American branches in the Eastern Caribbean.
It was recognised that CLICO Holdings (Barbados) is the parent company of all CLICO branches in the Eastern Caribbean.
The Press release went on to state that “consistent with the principle of crafting a solution which is regional in nature, the new company will be capitalised by ECCU Governments,
the Government of Trinidad and Tobago, the Government of Barbados, and one or more strategic investors”.
At the same time, the impression was being conveyed by the Government and the Governor of the Central Bank of Barbados that it was possible to cover the principal of all investments in the troubled company; and that indeed it was the stated policy of the Government going forward.
Given the contents of the recent rescue plan, it is likely that the stated policy to cover the principal of all investments must have taken into consideration only the Barbadian investors or investments in locally-based companies. It is now being reported that the Cabinet has approved a plan only for thousands of individual investors in CLICO International Life Insurance in Barbados and the Eastern Caribbean.
The rescue act was obviously hurriedly voted on in Cabinet, but it will be truly tested in public, especially in the law courts.