Next Steps on Clico (Guyana)
1.    Pursuant to the wind up order, the liquidation process will proceed accordingly.
2.    The company currently has immediate access to just over $600 million of its own cash resources. Of this: –    $100 million is required to be set aside to meet expenses of the company until wind up.
–    $500 million will be earmarked to ensure that the liabilities associated with the long term insurance business are adequately backed.
–    The long term insurance portfolio will be separated and sold to another licensed insurance company in Guyana, thereby ensuring that the policies of 6,924 active policyholders under this class of business exit Clico’s books intact and unimpaired.
–    While some insurance companies have already indicated interest in acquiring this portfolio, expressions of interests will be invited from all licensed insurers in Guyana, and discussions accelerated to conclude this sale.
3.    In addition, Government will make immediately available a total of $3.6 billion, which includes $3 billion received by Government from the CARICOM Petroleum Stabilisation Fund.
4.    This amount of $3.6 billion will be utilised to finance a payout to policyholders under the company’s other classes of business, as follows:
–    $2.7 billion will be used to pay off in full all holders of investment annuity policies and other insurance liabilities not in dispute, subject to a maximum limit of $30 million per policyholder.
–    This will result in 4,366 holders of Executive Flexible Premium Annuities (EFPAs), and Flexible Premium Annuities (FPAs), and other undisputed claims against the company being paid in full (this number includes 6 pension funds:
o    Grace Kennedy
o    Davis Memorial Hosp
o    New GMC
o    CJIA
o    Goinvest
o    GAWU
–    This will leave only 39 large policyholders with balances in excess of $30 million;
–    The remaining $900 million will be utilised to pay these policyholders up to a maximum of $30 million each, with priority given to non-institutional policy holders.
5.    The following two main points should be emphasised:
–    The balances outstanding will be those as at the time that judicial management commenced, that is, end-February 2009.
–    At some point in time in the future the Government and the liquidator will determine how to treat with related parties.
6.    In addition, GoG hopes to realise an additional $8.5 billion through the following actions:
–    the sale of assets, depending on the tender prices that come in; and
–    legal actions with respect to CL Financial, CRL, and Clico (Bahamas).
7.    Of the remaining liabilities, approximately $6.2 billion is due to Government/public sector entities (e.g., NIS, etc.), while approximately $2.4 billion is due to non-Government/private sector entities.
8.    As a result of the immediate interventions, a total of 11,290 policyholders will have their policies fully covered. Only 39 policyholders will have balances outstanding. The Government will be meeting with these remaining policyholders shortly to decide on a modality for settling the outstanding balance.
16 September 2010