Challenge finding funds

Oliver Jordan may have something to smile about, but 25,000 CLICO policyholders certainly don’t! BIPA is staggered by what can only be described as one of the most clandestine assaults in the recent history of Barbados on 12% of the country’s population. The so-called proposal, which was quietly filed on Friday 19th October and mysteriously slipped through the Court system and sanctioned within 7 days without consultation or discussion with stakeholders, would result in a substantial loss for all CLICO policyholders which is not only completely unacceptable, but also unconscionable in the extreme. BIPA cannot believe that after taking 18 months and charging millions of dollars, this ‘fire sale’ is all the Judicial Manager could come up with.

Article from page 6 – Barbados Today 26/10/12

Resolving the CLICO debacle appears to have gotten more difficult.

Deloitte Consulting Limited, the Judicial Manager for CLICO International Life Insurance LImited, announced today that the Barbados High Court had given it permission to restructure the company, which owes millions of dollars to 35,000 policyholders and investors.

The bad news for these individuals is that the plan to be pursued “will result in a write down in value of all policyholders’ liabilities”.

Additionally, after Barbados and other Eastern Caribbean Governments said no to the issuance of a bond to meet the cost of a CIL solution, finding the necessary funding has become a larger problem.

These latest developments came with a warning from Deloitte, which is represented by Oliver Jordan and Patrick Toppin, that “further delay in the implementation of a restructuring plan may lead to further loss of confidence by policyholders and likely reduction in premium income”.

“The judicial manager reported that it had examined and explored several funding options with regional governments,

including most recently the possibility of issuing of a bond backed by sovereign guarantees from Barbados and Eastern Caribbean governments,” today’s update from Deloitte stated.

“However, after further consultations with regional governments and potential investors, this option was deemed not to be viable

given current market conditions.”

The judicial manager also said that, in view of the financing challenges, it believed “the proposed restructuring plan is the best option available for policyholders at this time”.

“The judicial manager will now be seeking the support of regional regulators and other court-appointed judicial managers to implement the proposed restructuring plan. Further details on the implications for all policyholders will be provided as soon as possible,” it said.

“In addition, the judicial manager will continue to explore with the Barbados and Eastern Caribbean governments, any other possible source of funding that would improve recovery by CIL’s policyholders.”

Deloitte said the high court’s recent sanctioning of a restructuring plan “will result in a write down in value of all policyholders’ liabilities (traditional policies and Executive Flexible Premium Annuities) to match the estimated value of the company’s net available assets”.

“The restructured policyholder liabilities and all the assets of CIL will be transferred to a new company which will be separately governed and managed. All such activities will be subject to regulatory approval in Barbados and the Eastern Caribbean,” it added.

Officials also reported that the court had approved completion of the CIL Forensic Audit “with a focus on related party transactions and balances”.

Deloitte said “such further investigation will assist the JM in assessing the feasibility of possible additional recovery actions for the benefit of policyholders of CIL”. (SC)