September 30, 2011
CLICO Judicial Manager tells of restructuring plan

Less than one week after a restructuring plan for CLICO International Life Insurance Limited (CIL) was tabled in the High Court of Barbados, policy holders here in St. Vincent and the Grenadines were briefed on the contents of the plan.{{more}}

Judicial Manager for CIL, Deloitte Consulting Limited, represented by Chief Executive Officer Oliver Jordan and Patrick Toppin, met with policyholders here on Tuesday, September 27, at Frenches House in Kingstown.

Jordan’s visit to SVG followed a similar stop in Grenada as part of a series of meetings to update policyholders in Barbados and the Eastern Caribbean. While here, he also met with Prime Minister and Minister of Finance Dr Ralph Gonsalves and Ministry of Finance officials.

In separate meetings, Corporate Executive Flexible Premium Annuity (EFPA) holders (fixed deposits) and Individual EFPA Policyholders and holders of traditional policies (life, health, pension plans and flexible premium annunity policies) were given a comprehensive update on the financial condition of CIL and the various options considered for restructuring.

During his presentations, Jordan explained that in considering the options for reconstructing the CLICO International Life Insurance (CIL), his firm has sought to find a solution which “will minimize the financial impact on policyholders of the existing insurance and EFPA (Executive Flexible Premium Annuity) business of the company.”

Jordon told the gathering of concerned policyholders that consideration has been taken of several other general principles in developing and considering the reconstructing options.

“These include seeking where possible, a consistent result for policyholders in all jurisdictions; recognition of the needs of different policy holders group (example Corporate verses Individual policy holders), as well as minimizing potential impact on systemic risk in the region,” he said.

With regard to the financial position of the CIL, the Judicial Manager said his company commissioned a reassessment of the actuarial reserves reported by the company’s actuary, to establish the required reserves for policyholder liabilities.

“In addition, the Judicial Manager undertook an exercise to value all the assets of CIL as of May 31, 2011,” Jordan said.

The gathering, which listened attentively as Jordan spoke, was also informed that it was estimated that the return to policyholders, under a forced liquidation will be $0.49 for every dollar of liability. Taking into consideration liquidation costs, the return to policy holders under a forced liquidation could fall as low as $0.40 for every dollar, Jordan said.

However, if the policies of the company are transferred to a new company as a going concern, “it was also estimated that the return to policyholders would be $0.60 for every dollar of liability,” he said.

The Judicial Manager said on July 28, 2011, a recommendation was made to restructure the traditional business and the EFPA portfolio by transferring 60 per cent of current policy value to a new company. All policyholders will receive shares in the new company for the other 40 per cent of their policy. These shares, he said, will have nominal value initially, but have the opportunity to increase over time.

The July 28 recommendation was made assuming no external funding of the new company from the governments of Barbados and the East Caribbean Currency Union (ECCU) governments.

Following that report, through consultation with a CIL Advisory Committee, four other restructuring options, primarily based on the possibilities of capital injections from the Barbados and ECCU governments were developed. These options require the governments to make investments ranging from Bds$152 million to Bds$56 million.

“Upon confirmation of available funding, the Judicial Manager will seek final approval of the Court for the restructuring of CIL,” Jordan assured the local policyholders.

The High Court of Barbados also approved the recommendation of the Judicial Manager to commission a forensic audit given that a high percentage of the company’s stated assets could not be verified.

The Judicial Manager stressed that the operations and coverage of the Company’s existing policies remain in effect, subject to premiums on such policies continuing to be paid by policyholders.

Following Jordan’s presentation, a question and answer segment was held during which a number of individuals took the opportunity to ask questions and voice their concerns and opinions.

Deloitte Consulting Limited was appointed as the Administrator of CLICO International Life Insurance Limited (CIL) by the Supreme Court of Anguilla pursuant to Section 31 (2) (b) of the Financial Services Act (‘FSC’ Act) on May 27, 2011.

Effective with the appointment, the Administrator assumed immediate control of the affairs of the Company and is now responsible for assessing the financial position of the Company.