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Bahamas government must clarify CLICO guarantee, says IMF
Published on December 31, 2013 Email To Friend    Print Version

By Alison Lowe
Nassau Guardian Business Editor

NASSAU, Bahamas -- The International Monetary Fund (IMF) has called on the government of The Bahamas to "urgently address" the CLICO (Bahamas) situation, by outlining the terms of a government guarantee.

In the meantime, the Washington, DC-based multilateral organization has commended the government for its "strong commitment" to the matter.

In a statement sent to Guardian Business, IMF mission chief for The Bahamas Mbuyamu Matungulu noted that the fund is keeping a close eye on the matter, and added that it continues to maintain that the CLICO (Bahamas) matter must be swiftly dealt with.

In April the IMF called for the "acceleration" of efforts towards a resolution of the CLICO matter in The Bahamas.

Guardian Business understands that the outstanding matter of how to deal with the insolvent insurer, which was placed into liquidation in February 2009, was raised during a recent IMF meeting with government officials during an annual visit to The Bahamas during the latter part of this year.

In an interview with Guardian Business last week, former creditors committee member, and an outspoken advocate for CLICO (Bahamas) policyholders, Bishop Simeon Hall, called it a "tragedy" that the insurer was able to get into the financial straits that it had and that the government was yet to move on providing the guarantee. Hall is himself a policyholder.

Such a guarantee has been deemed critical to allowing the transfer of the remaining life and health insurance policies to another company. Policyholders were called upon to continue to pay their insurance premiums until a buyer could be found.

In his response to Guardian Business over the weekend, Matungulu said that the IMF has "urged the government to clarify the terms of its guarantee and develop and implement a viable plan for running off guaranteed policies, or transferring them within a short period to a third party."

"We commend the authorities for their strong commitment, and are monitoring the implementation of the government’s reforms in this important area. We look forward to early closure," said the IMF official.

In the mid part of last year, there were understood to be several potential purchasers of the CLICO policies. However, given the delay in the process, it is not clear how much interest remains on the part of these groups to date. There has not been an update to the court on the CLICO matter since 2012.

In June of this year, Minister of State for Finance Michael Halkitis said it was the government's hope that a resolution would be brought to the CLICO (Bahamas) situation before the end of 2013. He said the Christie administration would honor the commitment made by the former government to protect policyholders via a government guarantee of $30 million.

Craig Gomez, of Baker Tilly Gomez, liquidator for CLICO (Bahamas), has stated in a report to the court that any government funds utilized could be reimbursed to the government from the sale of CLICO's assets and "from funds otherwise recovered". Guardian Business understands that the liquidator has been seeking to meet with the government on the issue of the guarantee.

At the end of June 2012, the portfolio of CLICO (Bahamas) contained 13,835 policies with a total surrender value of $20.07 million and a cumulative sum assured of $1.093 billion.

The Bahamian balance sheet showed a solvency deficiency of $22.162 million.

Halkitis declined to comment on the matter when contacted last week by Guardian Business.

Republished with permission of the Nassau Guardian
 
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