– President announces
…Government injecting $3.6 billion
A total of 11,290 active policyholders of the distressed Clico Life and General Insurance (South America) will have their policies fully covered, President Bharrat Jagdeo announced yesterday. Meeting policyholders at the National Cultural Centre in Georgetown, he announced that the government is injecting $3.6 billion to reimburse holders of policies other than long term insurance, including those with investment policies and pension funds, although some of these will be capped to a ceiling of $30 million per policyholder.
A week ago, acting Chief Justice Ian Chang ordered Clico wound up, declaring that the company was in no position to continue operations, not even under judicial management.
At yesterday’s meeting, President Jagdeo said Clico now has just over $600 million and $100 million was needed to proceed with the windup.
“From the actuarial review, 6,924 active policies are in the long term insurance portfolio, the liabilities under that will be just under $500 million. So we anticipate that we can safeguard 6,924 persons…they will be taken care of,” he assured.
According to the President, he met the policyholders because he felt that the government needed to work with the Central Bank since there is a human face to this issue.
“There are people whose lives had to be put on hold because they don’t have access to their money. [There are] people who can’t build their homes because they were saving up to [do this]…people who cannot buy basic necessities, furnish their house, take a trip, pay school fees. Some of these people who write in the papers they don’t see that. For them it is all about numbers and politics,” he said.
“I don’t have any apology to make to anyone in this country for meeting people…I think it is part of my job. And so, I promise you that I will continue to work with the Central Bank to ensure that these promises are kept,” President Jagdeo stated.
He said he is not prepared to let an investigation into any question of financial impropriety at the company delay the payment to the policyholders, since in many cases the investigations take years to be completed while people have to wait for their money.
The President said he is not averse to having an investigation into both Clico and Globe Trust and if people are found culpable actions will be taken against them.
Policyholders were told that in a matter of weeks they can report to the Clico head office on Camp Street to pick up their cheques.
Mr. Jagdeo said notices to this effect will be published in the media.
He said that of the $600 million available to the company, $100 million is set aside to meet its expenses until it is wound up and $500 million is earmarked to ensure that the liabilities associated with the long term insurance business are adequately backed.
The long term insurance portfolio, he added, will be separated and hopefully sold to another licenced insurance company in Guyana to ensure that the policies of 6,924 active policyholders under that particular class of business exit Clico’s books intact and unimpaired.
President Jagdeo said that while some insurance companies have already expressed interest in acquiring this portfolio, expressions of interest will be invited from all licenced insurance companies in Guyana and discussions will be accelerated to conclude these.
He said that in addition, the government will make available immediately a total of $3.6 billion, which includes $3 billion it received from the Caricom Petroleum Stabilisation Fund.
“This amount of $3.6 billion will be utilised to finance the payout to policyholders under the company’s classes of business other than long term insurance 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 policy holder,” President Jagdeo said.
Continuing, he explained: “So if you have under $30 million you will get all of your money in full over the next few weeks. That will result in 4,366 holders of Executive Flexible Premium Annuities and other undisputed claims against the company being paid in full.”
These, he said, include six pension funds – Grace Kennedy, Davis Memorial Hospital, New GMC, CJIA, Go-Invest and GAWU.
“They are all under $30 million, they will all get their full money,” he said.
Mr. Jagdeo said this will leave only 39 large policyholders with balances in excess of $30 million.
“So once we do these two things, we will only have 39 policyholders remaining in Clico – large ones. So it becomes more manageable to work with them – 39, rather than over 10,000 people,” he said.
The President said the remaining $900 million of the $3.6 billion will be utilised to pay these policyholders to a maximum of $30 million each, with priority given to non-institutional policyholders.
“So, everyone below $30 million will get the full sum”, he said.
The President said the balances outstanding will be those as at the time that the Judicial Manager took over in February 2009 and at some point in time in the future the government and the liquidator will determine how to treat the related parties.
“In addition, we hope to realise another $8.5 billion through the following actions: the sale of assets, [of which] the book value is [over] $2 billion. When those are tendered and sold through a public process we don’t know what we will realise. [There is also] legal action concerning Bosai [Minerals] (regarding a loan that company took from Clico Investment Bank), and against Caribbean Resources Limited (CRL) and Clico Bahamas. We are taking legal action against these related companies. From proceeds coming in from sale of assets, we will then deal with the remaining 39 policyholders,” he said.
The President said the government holds most of the remaining liabilities and these include those held by NIS, the Guyana Forestry Commission, the Dependents Pension Fund and Guyoil.
“So we have to ensure that they are also protected. We will liquidate some of their claims on the sale of assets and from the money that hopefully will realise through legal action and then the State will determine how it will pay them the balance. We will be meeting with them separately,” President Jagdeo said.
He said that as a result of these interventions, a total of 11,290 policyholders will get back all their money and will have their long-term insurance policies covered.