By Alison Lowe
Nassau Guardian Business Editor
NASSAU, Bahamas -- The Bahamas government has been criticized for its silence on the issue of whether it will honour a $30 million promise to guarantee CLICO policies, after no mention of it was made in this year’s budget statement.
With no indication of an allocation having been made by the government with respect to the guarantee it promised most recently in June 2013, Guardian Business understands that court-appointed liquidator Craig Tony Gomez is seeking a meeting with officials on the matter.
On Friday, a prominent CLICO policyholder and shadow finance minister, K. Peter Turnquest, both said that, notwithstanding the government’s current financial straits, government “culpability” in the situation given acknowledged regulatory failings makes it all the more important that it steps up to honour the commitment to guarantee the 13,000 Bahamian policies, which have been in limbo since the insurer’s February 2009 liquidation order.
The government 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. Today, it is not clear if any would purchase the portfolio with the guarantee, as any prior active interest that may have existed would likely have withered on the vine given the government’s extended inaction over the matter.
“I get a call almost every week from persons lamenting, asking if there is any answer to this problem,” said Bishop Simeon Hall, himself a policyholder.
“I understand money is tight all around, but both political parties are culpable to a degree in that they fell asleep at the wheel. This is capital gone awry. We should try to protect the poor in our midst.”
Turnquest added: “It’s obviously a concern for those involved, those persons with annuities in particular who have invested their life savings in CLICO and the government ought to bring some resolution to the matter. Promises were made with respect to issuing a guarantee so the portfolio could be transferred to a buyer and nothing has ever happened and that’s not fair to the annuity holders.
“We have to acknowledge that there was a breach in the regulatory oversight of CLICO and so in that regard there is some responsibility on behalf of the government to do everything it can to make the situation whole for its citizens.”
Gomez himself is under a gag order from the court that stops him from being able to comment on the matter. However, this newspaper was told by sources with knowledge of the matter that the liquidator himself was on the lookout in regard to whether the government would address the matter in the budget and to date has heard nothing.
It is understood that a meeting is being sought that would give the government an opportunity to point out where such an allocation was made, or what plans it has with respect to the matter if an allocation was not made. The government had held meetings with the liquidator prior to the budget over the guarantee, suggesting it has not dropped the plan to provide the guarantee altogether.
The government has also indicated to international agencies that it intends to honour the guarantee.
In late December 2013, the International Monetary Fund (IMF), which monitors the stability of this 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.
Following meetings with Bahamian officials, the IMF also commended the government for what it described as its “strong commitment” to the matter.
In a statement sent to Guardian Business, IMF Mission Chief for The Bahamas Mbuyamu Matungulu noted that the IDB is keeping a close eye on the matter and continues to maintain that it should be swiftly dealt with.
If nothing is ultimately allocated by the government in terms of a guarantee, sources suggest it would be impossible to sell the portfolio.
“If there is no guarantee, the liquidator will have no choice but to let the policies run off. When they run off, that’s it. To sell it or to maintain it they need funding and without that they can’t operate.”
At present the liquidator continues to cover claims and administrative costs based on premium collections.
A source close to the matter said: “It’s a little difficult to project futuristically. You could have a regular claim or two or three cancer cases that wipe everything out.”
Contacted for comment, Minister of State for Finance Michael Halkitis did not respond.
However, sources close to the matter conceded that nothing was in the budget.
“You are not missing anything. We are still discussing a solution with the liquidators and the Insurance Commission of The Bahamas.”
In his twelfth report to the court on the liquidation, in February 2014, Gomez said that he was continuing to attempt to move the liquidation forward, primarily to realize the fair values on the sale of real estate and other properties for the benefit of creditors.
As of June 2013, CLICO (Bahamas) has $38.5 million in assets and $126.9 million in liabilities -- an $88.4 million shortfall.
Republished with permission of the Nassau Guardian