CLICO policy holders to be paid within three weeks - Jagdeo

CLICO policy holders to be paid within three weeks – Jagdeo

Sep 17, 2010 News

By Gary Eleazar

A total of 11,290 policyholders with deposits and policies in the failed insurance giant Colonial Life Insurance Company (CLICO) Guyana, will within the next three weeks receive all their money.
President Bharrat Jagdeo made this announcement when he addressed the Clico shareholders at the National Cultural Centre yesterday. The meeting, which he summoned in the wake of the ruling by Chief Justice Ian Chang, that Clico be liquidated, saw several hundred policyholders and interested parties attending the forum.
There was the initial fear that the National Cultural Centre would have been inadequate for the policyholders with its seating capacity for 2,000 people. It turned out that those fears were exaggerated. Just over 1,000 policyholders turned up, the others choosing to follow the event on radio, television and in the press.
Jagdeo told the attendance that the company has immediate access to just over $600M cash and of that, $100M will be set aside for the liquidation process.
The president said that the remaining $500M will be set aside to ensure that the liabilities associated with long term insurance business are adequately covered.
These are the life insurance and other policies. He explained that the long term insurance portfolio will be separated and sold to other licenced insurance companies.
The president said that soon there will be invitations for Expressions of Interest from these companies.
He explained that the $500M will ensure that the policies of 6,924 active policy holders in that class of business will be able to access and benefit from their policies unimpaired.
A further 4,366 policyholders will share some $3.6B made available by the CARICOM Petroleum Stabilistation Fund. The government actually collected some US$15M (G$3 billion) from the petroleum fund.
Jagdeo said that of that money, $2.7B will be used to pay the 4,366 investment annuity policies and other insurance liabilities which are not in dispute. These are the people with savings and other deposits in the company.
President Jagdeo said that in this group all persons with investments and deposits of $30 million and less in the failed insurance company will be paid in full.
This group represents the persons that hold Executive Flexible Premium Annuities (EFPA) and Flexible Premium Annuities (FPA) with the company as well as six pension funds.
He said that the Pension funds include Grace Kennedy, Davis Memorial Hospital, New GMC, CGIA, GoInvest and GAWU. These have substantial investments in Clico. They will be among those who may have to wait a while before they could receive all their investments.
The payouts would be at the value of the deposits as at February 2009 when the company was placed under judicial management, said President Jagdeo.
The president said that following the full payment to the 11,290 policyholders, there will be 39 remaining policies which will have to be dealt with. These will receive up to $30M from some $900M.
The liquidator will also seek to increase the liability of the failed insurance company by raising more money from activities such as the sale of the company assets as well as from taking legal action against BOSAI, CLICO (Bahamas) and Caribbean Resources Limited. These companies owe Clico (Guyana) some US$50 million with Clico (Bahamas) owing Guyana US$34 million.
The sale of assets at book value should realize $2.7 billion.
The president stressed that some time in the future, the government and the liquidators will meet and decide on how to treat with related parties transactions.
Two such issues were raised by stakeholders, one such being the ‘clawback’ commission that the agents lost on and the issue of the payment of the security guards which worked with the company that CLICO (Guyana) had a falling out with.
He stressed that a lot of the liabilities for CLICO was with entities such as the NIS, GFC, GuyOil, and the Dependants’ Pension Fund.
The President in response to critics said that he is not apologizing for meeting with the affected policyholders.

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CLICO policy holders to be paid within three weeks – Jagdeo

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