Almost eight out of ten CLICO life insurance policyholders are to be paid out by Government for their investments and claims in the collapsed insurance company, the Prime Minister Mia Mottley announced tonight.
She outlined in the Budget speech a payment plan for the 8,944 policyholders.
An additional 1,394 policyholders, or 12 per cent of the company’s portfolio, are to receive at least half of their claims in cash.
Saying it was time to “bring an end to the CLICO debacle” which stretched through the ten-year term of the Democratic Labour Party Government, Mottley said the conglomerate’s collapse in 2009 had saddled Government with a $500 million burden.
The proposed payment plan would help Government save $315 million in interest payments alone, she said.
And while she acknowledged that Government would be unable to repay all policyholders the entire amounts owed to them, the Prime Minister said an effort was being made to ensure that these individuals received at least some of those monies.
She disclosed that two weeks ago, Cabinet approved the winding up of Resolution Life, the court-sanctioned successor of CLICO.
Mottley said: “It is now time to bring to an end this sordid chapter…we still can’t work magic, but we can start to bring order.
“The Government will offer the liquidator (Financial Services Commission) enough cash that will enable it to pay a maximum of $20,000 to life insurance policyholders of ResLife. This would allow 8, 944 persons, or 77 per cent of the company’s portfolio to be paid out in full.
“In addition, a further 1,394 persons who will receive at least 50 per cent of what they were owed. There is then another 697 people, or six per cent, who the $20 000 would at least represent 20 per cent of what they were owed. So in truth and in fact, 95 per cent of the people will get a significant sum if not all of what they were owed when we pay out this $20 000.”
But the Prime Minister said while there were a few people who are owed more than that amount, Government did not have the cash to make those payments right now.
In those cases, she said, Government is to issue them with Series B 15-year bonds to allow the FSC to eventually provide payment in full for their life insurance policies.
“We can do no better because we simply do not have it,” Mottley explained.
But the news was disappointing for holders of the controversial, high-yield, high-risk Executive Flexible Premium Annuities (EFPAs).
Mottley said they would be paid back their principle in special 15-year bonds, but only at an interest rate of 0.25 per cent over the 15-year duration.
The Prime Minister said: “For those who bought the fanciful and high-yielding EFPAs, an instrument that sounded too good to be true, we’re not leaving you at the side of the road and we will provide the FSC with a special 15-year bond to cover your original principle.
“The accrued interest that was previously proposed by the last Government, I regret we cannot afford it . . . . You are at least going to receive your principle if not your interest, but might I remind the people of Barbados that you received nothing effectively the last 10 years.”
But Mottley said Government still had to resolve issues surrounding CLICO’s Eastern Caribbean claims and investment instruments, totalling $49 million. [email protected]
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