Efforts are being made for CLICO policyholders in St Vincent and the Grenadines (SVG) to receive settlements, as far as is possible, within the next 12 months, now that the government of Barbados has agreed to make available a BDS$37 million bond to assist in settling claims of policyholders in the Eastern Caribbean Currency Union (ECCU).
Finance minister Camillo Gonsalves gave an update on the CLICO situation in Parliament yesterday, while responding to a question posed by Opposition Leader Dr Godwin Friday on the status of efforts to recover investments of Vincentian policyholders who were hurt financially by the collapse of the insurance company.
Gonsalves noted that of the BDS$37 million bond allocated to settle claims of policyholders in the Currency Union, exactly $8.892 million will be allocated to service the claims from policyholders in SVG.
He said the terms of the bond will be issued under the Debt Holder Approval of Debt Restructuring Act of 2018 to 2024 under the laws of Barbados, which in simple terms, outlines that “the government of Barbados is providing a bond that is a long term instrument that will provide cash flows to settle the claims of Currency Union policyholders over a very long period, over a 15-year period”.
“It is not reasonable to ask policyholders who have waited for many years for a settlement to their claims, to collect now, that settlement over a 15-year period. So, the Eastern Caribbean Currency Union and the government of St Vincent and the Grenadines, and members of the Subcommittee on Insurance, have been working to find ways to monetise the bond to make the cash payments with as much dispatch as possible,” the finance minister said.
He added that the Ministerial Committee on Insurance is currently reviewing the various options to arrive at a uniformed approach to achieve this objective.
Gonsalves also said in Parliament yesterday that the hope is to give policyholders a one-off settlement payment, once the bond has been monetised.
“We’re hoping that, as it works through court system, we’re looking on short end, about six months from now and on the outer limit, probably 12 months from now. It will be in that time frame, for full payment,” he said while responding to a supplementary question from Friday.
It is likely that a trustee agreement will be put in place to manage cash flows from the bond.
Gonsalves presented a timeline on the measures being taken to resolve the CLICO issue, noting that the courts in Barbados ruled on November 15, 2021 that the bond will be issued through the Eastern Caribbean Central Bank (ECCB) via a trustee to be identified for administration on behalf of ECCU policyholders.
On February 3, 2022, the Ministerial Subcommittee of Insurance, of which SVG is a member, received a letter from Prime Minister of Barbados, Mia Mottley, acknowledging the acceptance of the BD$37-million bond offer by the Monetary Council.
“I wish to indicate that the initial offer by the government of Barbados was a little bit lower and though some negotiation, we managed to get it to BDS$37 million,” the finance minister said.
Since then, the ECCB has apparently begun its assessments of documents to advise on possible logistics for receiving the bond, and modality.
Gonsalves said the Ministerial Subcommittee engaged in further dialogue with Mottley on a range of issues, including the coupon rate and the possibility of the Central Bank of Barbados underwriting the bond.
“The conversation with the Ministerial Subcommittee on Insurance and Barbados focused on whether Barbados Central Bank could legally underwrite the bond and provide cash to the ECCB,” he explained.
“In the course of those conversations, a Barbadian financial institution indicated its willingness to factor the debt at about 70 per cent which would mean they would essentially be taking 30 per cent of that $37 million off the top and discounting the settlement essentially… “The Ministerial Subcommittee on Insurance considered this so called discount to be unacceptably high and sought other options. These other options included engaging another entity such as the Caribbean Development Bank or a commercial institution or a series of localised arrangements, on a country by country basis.”
The finance minister however, noted that a third party would want to purchase at a discounted rate and it was determined that “we didn’t want to impose upon the people who have been waiting for so long, a further discount on the settlement that they would be receiving”.
The Monetary Council, on April 14 approved by round robin, a proposal for the establishment of a trust arrangement to administer the proceeds of the Government of Barbados issued bond, to leverage, as far as practicable, the existing structure that was used for the BAICO annuity relief programme.
This decision was ratified on July 22 at the ECCB Monetary Council’s 102nd meeting in St Lucia.
“A trustee arrangement s being sought with the entity that provided services previously in regard to the BAICO annuity payments, on behalf of ECCU governments. Negotiations on the terms and conditions of the trustee arrangements are expected to commence subsequently,” Gonsalves said yesterday in Parliament.
He noted that the next meeting of the Ministerial Subcommittee on Insurance is expected to convene on August 12, after which the government of Barbados and the court system in Barbados will be informed on the progress towards the resolution of CLICO.
The next court date on which the court is expected to be informed of this trustee arrangement is August 18.