Monday, May 17, 2010

CLICO (Bahamas) liquidator rejects Guyana’s claim


The Tribune

CLICO Bahamas’ liquidator has “rejected” almost US$50 million worth of claims made against the insolvent insurer by its affiliates in Guyana and Suriname, and pledged to “call on” the US$58 million guarantee its Trinidadian parent made to it to cover any shortfall in sums due to policyholders and creditors.

In his third report to the Bahamian Supreme Court on the life and health insurer’s liquidation, Craig A. ‘Tony’ Gomez, the Baker Tilly Gomez accountant and partner, said the $34 million and $15.5 million (collectively $49.5 million) claims submitted by CLICO Guyana and CLICO Suriname had not been approved.
“After further consultation, I have rejected the above claims received from Guyana and Suriname,” Mr Gomez said. “My preliminary view of the documentation suggests that policies were never issued by [CLICO Bahamas]. Moreover, the premiums received by Guyana and Suriname were never paid to [CLICO Bahamas].
“It appears that the funds were remitted directly to a bank account held in the name of [CLICO Bahamas] at Ocean Bank, Miami, Florida, and to another account held by the company in Trinidad.”

Mr Gomez said he had subpoenaed records from the Ocean Bank branch, and would do similar in Trinidad, to determine how the funds were used.
Mr Gomez’s decision to reject the Guyana and Suriname claims is unlikely to sit well in the two countries, and may well become a political issue at the governmental/CARICOM level when administrations in those countries meet Prime Minister Hubert Ingraham and his ministers.

It is also highly likely that Guyana and Suriname will hire attorneys to challenge Mr Gomez’s decision in the Bahamian courts.
Elsewhere, there was little new in Mr Gomez’s report, which covers the period up to January 31, 2010. He is continuing efforts to sell Wellington Preserve, the Florida-based real estate project that accounts for 63 per cent of its assets, to the Hines Group, and find another insurer to take on the CLICO (Bahamas) life and health policy portfolio.
That insurer is still thought to be Colina Insurance Company, but Mr Gomez’s report makes it clear he thought the portfolio transfer would have been accomplished by now.
“The selection of a new insurance provider has been made and the due diligences are being performed, and at the time of this report the selection is being reviewed by [his attorneys], the insurance specialist [David Thurlow], myself and the Insurance Commission, and will be forwarded for approval to the Supreme Court of the Bahamas. This process is tentatively expected to be completed by April 15, 2010,” Mr Gomez said. That date, of course, has now passed.

And, if the funds realised from the Wellington Preserve sale were insufficient to compensate CLICO (Bahamas) creditors and policyholders for 100 per cent of what they were owed, Mr Gomez said: “If the realisation of the property at this time is not sufficient to cover the outstanding advances made by CLICO (Bahamas) to CLICO Enterprises, then I will call on the guarantee to mitigate the shortfall for the benefit of the creditors of CLICO.”

As of January 31, 2010, CLICO (Bahamas) had some 17,707 policies with a collective surrender value of $23.302 million in force. The majority of these were 11,290 life policies, with a surrender value of $11.236 million, and 5,401 medical policies with a surrender value of $137,465.
“There was considerable attrition with regard to the number of in-force policies,” Mr Gomez said, “which was attributed mainly to the non-deletion by CLICO of life policies tied to Citibank loans, totalling 5,873, which were no longer needed as Citibank’s commercial operation had ceased doing business in the Bahamas.
“There was further attrition of policies due to the lapsing of some of the student protection plans, totalling 2,441. Based on my discussion with many of the policyholders cancelling their policies, the decision to cancel is as a result of the economic conditions that existed, and not necessarily as a result of CLICO’s insolvency.”

Between October 8, 2009, and January 31, 2010, CLICO (Bahamas) saw some 9,121 policies, with a sum assured worth $251.789 million, lapse.
Mr Gomez said he was reviewing and drafting responses to offers made to acquire 11 of CLICO (Bahamas) real estate assets - its former branch and sales offices, plus associated land parcels and the Centreville Medical Centre - which he wanted to raise around $5 million from.

The liquidator added that he would apply to the Supreme Court to settle the $360,786 mortgage balance owed to FirstCaribbean International Bank (Bahamas), in order to prevent any real estate assets he was selling from being encumbered.

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