March 12, 2010
BDS $300m Clico turnoff

A GOVERNMENT-BACKED SPECIAL OVERSIGHT COMMITTEE has another 21 months to sell CLICO International Life Insurance Company before a $300 million demand on the company is due.{{more}}

That’s because the bulk of CLICO Life’s Executive Flexible Premium Annuities (EFPAs) – which promised high interest rates on deposits – become due in 2012.

As part of a strategy to return calm to the Barbados operations following the near collapse of CLICO’s parent company CL Financial in Trinidad and Tobago last year, Prime Minister David Thompson announced that CLICO had been barred from selling any more EFPAs.

He also established a special oversight committee headed by William Layne, permanent secretary in the Ministry of Finance, and comprising some former CLICO board members excluding chairman Leroy Parris. The committee was mandated to find buyers for the life insurance and general insurance companies and CLICO Mortgage and Finance.

However, in an exclusive interview with BARBADOS BUSINESS AUTHORITY last week, Layne said the EFPA situation and the $300 million payout had become a major turn-off for prospective buyers.

“The life insurance company has proven to be the most difficult because the EFPAs [are] part of its portfolio and so the balance sheet has to be restructured to make it appealing to buyers. We hope it can be completed in about six months,” he pointed out.

According to the senior Government official, “All the potential buyers expressed concern about the EFPAs, most of which will mature in 2012, and that’s around $300 million.”

And if the oversight committee fails to secure a buyer by 2012, Layne said, “Well, we will have to sell the assets.”

“The problem with CLICO is that there is an assets/liabilities mismatch,” he explained.

Meanwhile, Anthony Griffin, president of the Public Workers’ Co-operative Credit Union Limited, disclosed that its purchase of CLICO Mortgage and Finance should be completed by month-end.

Consumers Guarantee Insurance Company, which was approved to purchase CLICO General Insurance Company, has yet to announce completion of that buyout. (BARBADOS NATION)