The way is now clear for thousands of policyholders and investors of CLICO International Life Insurance to start getting compensation, five years after the company’s financial collapse.
Deloitte Consulting Ltd tonight announced it had received confirmation that Cabinet had approved the terms, conditions and actions to be taken, as set out in the restructuring of CLICO’s operations.
In response, the Barbados Investors And Policyholders Alliance (BIPA) said it was “relieved” but still cautious until all the details were revealed.
“The devil is in the details,” BIPA chairperson June Fowler told Barbados TODAY.
According to Deloitte, the formal approval enables the judicial manager to start the process of implementing the final recommendations contained in the report and addendum presented to the Barbados High Court in June 2013, with the aim of having a regional solution,” Deloitte stated, noting that the Barbados solution would be the first step of the overall restructuring of CLICO.
Under those recommendations all policyholders with traditional insurance policies, such as life, health and pension plans, will receive the full value of their policies with the support of the Government.
“All holders of individual Executive Premium Annuity (EFPA) policies will receive the value of their principal investment. These types of policies will be converted into annuity products payable over a period of up to ten years,” it said.
The plan envisages the creation of a new insurance company (NEWCO) – by the end of this year – to take over the insurance business and the creation of separate entities that will own the real estate and other illiquid assets.
These property-holding entities will issue bonds to the new insurance company, which will be guaranteed by the Barbados Government.
Holders of EFPA policies, other than individuals, will receive shares in the property holding entities.
Key elements of the agreed approach include Government being guarantor of the bonds issued by the property company to NEWCO; Government issuing a demand note for the amount of any statutory fund shortfall. The Government or its assignee will also own the common shares of NEWCO.
Deloitte said the demand note would also pay interest to NEWCO at a good enough rate to fund the expected monthly shortfall from the new company’s operations, including the monthly payments on the restructured individual EFPA obligations.
The judicial manager noted that throughout the restructuring, the participation of the ministry of finance and economic affairs, the Central Bank of Barbados and the Financial Services Commission as part of the CIL Advisory Committee, will be essential to the successful financing and implementation of this agreed approach in the interest of policyholders.