Prime Minister Perry Christie reads the mid-year budget communication in the House of Assembly on Monday. Photo: Torrell Glinton
By Royston Jones Jr.
Nassau Guardian Staff Reporter
NASSAU, Bahamas -- More than seven years after CLICO (Bahamas) Limited went into liquidation, Prime Minister Perry Christie announced on Monday that policyholders who are still current will begin to receive payouts before the end of the month.
During his mid-year budget communication, Christie said cash payouts are estimated at $16 million.
“The liquidator of CLICO has proposed and the government has agreed to a plan to make all existing policyholders whole,” he said.
“This plan involves the creation of a special purpose vehicle to assume the insurance operations of CLICO and to pay out the policyholders who have been unable to receive the full payout of their benefit, subject to the policy not lapsing during the period of liquidation.”
Christie said under the plan, surrendered policies, death benefits, medical claims and staff pensions will be paid in full.
He added, “Executive flexible premium annuities holders and surrendered pension policies will be settled in cash to a maximum of $10,000 per person, and the balance will be supported by seven-year promissory notes with interest at prime payable quarterly.”
The prime minister said this represents another demonstration of a caring and compassionate government.
During a press conference, opposition deputy leader and shadow minister of finance Peter Turnquest said the payouts are welcomed.
“We are very happy for those long-suffering Bahamians disadvantaged through no fault of their own,” he said.
“We are concerned, however, as to where the $16 million immediate cash will come from.
“Will it be drawn from value-added tax (VAT) collection again as an unplanned and unbudgeted expense?”
The policyholders have been waiting to cash in on their policies since 2009.
Christie acknowledged that many Bahamians have “grown impatient waiting for a resolution”.
There were approximately 13,000 Bahamian policies when CLICO was liquidated.
Shortly after, then Prime Minister Hubert Ingraham advised policyholders to continue to pay on their policies.
Ingraham said the government would provide a $30 million guarantee to any entity that purchased CLICO.
The guarantee was intended to allow for the transfer of the CLICO (Bahamas) policy portfolio to another life and health insurer, as no other underwriter would purchase the portfolio without it.
But Christie said on Monday that plan did not guarantee that the policyholders would be made whole, but rather was to “serve as comfort to a potential purchaser”.
“In any event it proved academic, as the sale of the portfolio never materialized,” Christie said.
Bishop Simeon Hall, a CLICO policyholder who has agitated for a resolution of behalf of thousands of policyholders, on Monday thanked God for some resolution.
“As a preacher, I said hallelujah, praise the Lord,” Hall said.
“It ought not to have happened in the first place and I pray it does not happen again.
“I think the Insurance Commission [of The Bahamas] should be more vigilant than ever before.”
As it relates to the promissory notes, Hall questioned how the payments would be drawn out.
“In this case a little something will be better than nothing,” he added.
Over the years, CLICO policyholders have held several demonstrations as they agitated for government action.
In late December 2013, the International Monetary Fund (IMF), which monitors the stability of the country’s financial sector and economy overall, called on the government to “urgently address” the CLICO (Bahamas) situation by outlining the terms of a government guarantee.
In June 2013, minister of state for finance Michael Halkitis said the government intended to bring a resolution to the CLICO liquidation by the end of that year.
However, that did not happen.
Republished with permission of the Nassau Guardian