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CLICO (Guyana) policyholders to know fate in two weeks

Mar 01, 2009 News

The Office of the Commissioner of Insurance yesterday issued a statement to the media which stated that that it will be communicating with policyholders of Colonial Life Insurance Company (CLICO) within two weeks.
This is in light of the uncertainty that abounds among the policyholders who, since news of the judicial-ordered takeover, rushed to withdraw their investment from the embattled company, only to be told that retrieval would not be possible at that time.
As such the Office of the Commissioner is urging all interested parties to allow the processes provided for under the Insurance Act and mandated by the Courts to be executed efficiently, and without the distraction and unhelpful consequences of reckless, uninformed and irresponsible pronouncements on this matter.
The statement also sought to point out that, as the regulator of the insurance sector, the Commissioner has a responsibility to regulate in the interest of the long-term stability and strength of the insurance sector and, in particular, of policyholders and the public.
The statement explained that, having ascertained the extent of CLICO (Guyana)’s exposure to overseas investments, the Commissioner immediately instructed the company to correct this deficiency.
The company undertook to do that in a manner that would be orderly and that would avoid undue dislocation to its operations, which would in any case have been harmful to the interests of policyholders.
The statement emphasised that it would not have been appropriate for the Commissioner to opt for judicial proceedings at that stage, because any attempt to obtain the intervention of the Courts would have required a demonstration that the company is unable meet its local liabilities, a condition that was not threatened until very recently.
“Indeed, a move to the Court or any other public pronouncement on this matter at that stage could very well have precipitated the demise of the company to the immediate detriment of policyholders.”
The Commissioner therefore continued to urge the company to repatriate a greater share of its investment portfolio, and commenced discussions on other options that might be available, including that of having the real-estate holding in Florida owned by another member of the CLICO Group assigned to the local company.
“While these options were being explored, because of difficulties being experienced by CLICO (Bahamas), the Bahamian regulators moved to that country’s courts and obtained an order for the winding up of that company on 24th February, 2009….On the very next day, 25th February 2009, given the investments held by CLICO (Guyana) in CLICO (Bahamas), the Commissioner moved to the Guyana courts and obtained an order to place CLICO (Guyana) under judicial management.”
In other words, the move by the Bahamian regulator to wind up CLICO (Bahamas) was the critical external development that triggered the need for judicial protection of policyholders in Guyana, and the Commissioner sought and obtained this protection within one day.
The statement added that it must be made very clear, therefore, that the Commissioner has been closely engaged with the company for an extended period in an effort to resolve any imminent difficulties, and this was done in a manner that placed the interests of policyholders and the public above all other considerations throughout the process.

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