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New CLICO proposal an ‘exit strategy’

May 09, 2011 News

(Trinidad Express) Almost a year after it inherited an agreement to repay thousands of CLICO policyholders more than $1 billion they invested in the failed insurance giant, the People’s Partnership Government is now close to a decision about ending its commitment.
Sources close to Government, CLICO and its parent CL Financial, Saturday described a new proposal as an “exit strategy” from the commitment to pay back policyholders entered into by the former PNM government.
The proposal was presented to the Government and a Cabinet note has been forwarded which outlines a framework for the Kamla Persad-Bissessar administration for a “re-organisation” of the Government’s involvement in the CLICO collapse and repayment plan to policyholders.
Sources close to the Cabinet told the Sunday Express a decision is expected to be made when the Cabinet meets this week.
“It is a way of bringing closure to Government’s intervention into CL Financial and an exit strategy for CLICO,” a source familiar with the proposal said.
The plan involves a “number of steps” to ultimately take Government out of its intervention in CLICO and was designed to “bring closure to the financial mess” it inherited after CLICO collapsed at the end of 2008 with $23 billion in liabilities.
More than $7 billion has been injected into the company to shore up the company and keep creditors at bay and policyholders at bay.
“One would expect that the matter will be decided by Cabinet soon. Now the Cabinet will examine the proposal laid out in the presentation and decide what they want to do with it, if they plan to go ahead with it,” a source said.
The proposal comes at time when two groups of policyholders have commenced legal actions in the High Court in an effort to ensure they get hundreds of millions of dollars back in Executive Flexible Premium Annuity short term deposit instruments offered by CLICO and CL subsidiary British American to thousands of investors.
The CLICO Policyholders Group has its matter to join another group of EFPA policyholders coming up in the Port of Spain High Court on Tuesday.
Another group of policyholders represented by former Attorney General Ramesh Lawrence Maharaj has also written to the government with the threat of legal action shortly.
In the meantime the government continues to pay back policyholders who invested less than $75,000 in EFPA instruments.
More than 1,000 policyholders who invested less than $75,000 have been repaid.
Finance Minister Winston Dookeran said previously there were more than 25,000 investors with EFPAs who invested about $12 billion in the deposit instruments.
Neither Dookeran nor CL Financial directors could be immediately reached for comment.
Last week , questioned by reporters on what was discussed at Cabinet, Prime Minister Kamla Persad-Bissessar said:
“We spent quite some time discussing a framework for the restructuring of CLICO. There was a presentation from the Board and that took up a lot of time and discussion.” She did not elaborate.

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