Barbados CLICO Life to be restructured; forensic audit coming

BRIDGETOWN, Barbados, October 29, 2012 – CLICO International Life Insurance Limited (CIL), the last remaining part of CLICO Holdings in Barbados for which no buyer could be found, is to find new life as a different company under separate governance and management.

This was revealed in a week end announcement by judicial manager Deloitte Consulting Ltd (represented by Oliver Jordan and Patrick Toppin) who notified the public that they had received sanction from the High Court of Barbados to pursue a restructuring plan for the company.

The proposed plan will see a write-down in value of all policyholders’ liabilities (traditional policies and EFPAs) to match the estimated value of the company’s net available assets. During his June 2012 national budget presentation, Barbados finance minister Christopher Sinckler revealed that the current value of CIL’s assets in Barbados were just over BDS$301 million while its policyholders liabilities was close to $370 million leaving an unrealised deficit of BDS$68,456,660.

Under the planned restructuring, policyholder liabilities and all the assets of CIL will be transferred to a new company which will be separately governed and managed, subject to regulatory approval in Barbados and the Eastern Caribbean.

This development signals that the courtship of two unnamed insurance companies that were interested in buying CIL has fallen through. The prospective buyers were mentioned both by Minister Sinckler in his budgetary address as well as St Kitts and Nevis Prime Minister Dr Denzil Douglas in a July meeting with his Cabinet when it appeared the sale was imminent.

However, the sale has failed to develop, as did the floating of a regional bond issue valued between BDS$550 and $650 million, which was supposed to fund the restructuring as well as settlement of outstanding policyholders liabilities through a mixture of cash, annuities and shares.

In last week’s announcement, Deloitte Consulting explained that, after further consultations with regional governments and potential investors, this option was deemed not to be viable given current market conditions.

Caution was also raised that further delay in the implementation of a restructuring plan could lead to further loss of confidence by policyholders and likely reduction in premium income and they asserted that they believed the proposed restructuring plan was the best option available for policyholders at this time.

Toppin and Jordan were said to be seeking the support of regional regulators and other court-appointed judicial managers to implement the proposed restructuring plan.

They also pledged to continue to explore with the Barbados and Eastern Caribbean governments, any other possible source of funding that would improve recovery by CIL’s policyholders.

It was also revealed that the High Court of Barbados had sanctioned the completion of the forensic audit of CIL, with a focus on related party transactions and balances, and the judicial manager stated that it was expected such further investigation would assist Deloitte Consulting in assessing the feasibility of possible additional recovery actions for the benefit of CIL policyholders. Click here to receive free news bulletins via email from Caribbean360. (View sample)