Turks & Caicos Clico clients told “pay up or lose out”

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turkspm_a<<< Prime Minister Hubert Ingraham (l) and Premier of Turks and Caicos Michael Misick

By Gemma Handy

DISTRAUGHT clients with bankrupt insurers CLICO are at risk of losing thousands because they are unable to keep their policies live due to the Providenciales branch shutting up shop.

Sick with worry policyholders say staff have apparently vanished since news broke of the beleaguered firm’s plight, leaving their investments – and their futures – hanging in the balance.

The company’s 260 TCI clients have been told their only chance of retaining the cash they have invested is by continuing to pay their premiums.

This will allow policies to be transferred to a new firm if a buyer is found.

Superintendent of Insurance Derek St Rose said he had been inundated with calls from frantic Islanders terrified they will be left high and dry.

He said he had urged the manager of the Leeward Highway outlet to reopen immediately.

But, more than two weeks after the winding-up order was granted, the shop remains closed.

A sign on the front door merely refers clients to liquidators in the Bahamas for information.

Single mother Euwonka Selver says she has invested more than $20,000 in life insurance and savings for her children’s future over the last five years.

Ms Selver, who has two young daughters aged two and five, said she only learnt of the company’s troubles after seeing it on a Bahamian news channel.

“I have been saving for my children’s college tuition ever since I was pregnant with my first.

“I rang the Superintendent of Insurance who said I should carry on paying so my policy does not become invalidated.

“I have been going by the office every day for the last two weeks but it’s still closed.

“CLICO has not contacted anyone or said anything.

“It’s horrible. The lady that manages the place is my aunt, she sold me the policy.

“Now she seems to have disappeared. I have been asking everyone but no one knows where she is.

“I just want my money back; I can’t afford to lose it. I am a single parent, I work really hard and have been saving for such a long time.

“I feel sick when I think about all the money I have invested.”

Meanwhile, anger is mounting at the Government’s continued silence on the catastrophe.

Many clients are furious that no official statement has been made to advise them or assuage their increasing concern.

Ms Selver added: “The Government really needs to say something. I have tried contacting the Premier who is now Minister of Finance but have heard nothing back.

“We desperately need some sort of representation on our behalf.”

Yvonne Ewing has held life and health insurance policies with CLICO, an acronym for Colonial Life Insurance Company, for several years.

She said she had managed to contact local staff – only to be told not to pay any more cash in premiums.

“I find it strange that no one seems to know what is going on.

“My big beef is that the Government gave CLICO a licence to operate in the TCI but are not saying anything now.

“I have invested over $10,000. It’s very important to have insurances in place; I have two children aged 20 and seven. It’s distressing.

“The Government needs to step in and make sure they reopen.”

Mr Rose said it was “very likely” CLICO would be sold to another entity but warned the process was “complicated” and could take some time.

He said it was essential policyholders were able to continue paying their premiums to keep policies current.

“Although the company is in liquidation, it is very likely that they will get another entity to take over the business and the portfolio will be transferred to a new company.

“I have had calls from people who are worried because they need to make payments and they can’t.

“I contacted the branch manager who was under impression that staff were not to collect any money.

“That’s not the case. They can’t sell any new policies but they have to accept money from existing clients.”

As one of the country’s principal providers of pensions, life and medical insurance, the tumult could have a devastating effect on the nest eggs of hundreds of TCI residents.

Locally, claims already top a colossal $2.6m, many of them surrender requests.

Talks are currently in place with a number of potential buyers in the Bahamas where sister firm CLICO Bahamas, which has 30,000 clients, is being forced to sell up following a court hearing initiated by the Government.

The move follows losses of more than a billion dollars suffered by Trinidadian parent company CL Financial.

Mr St Rose said it was not yet clear whether a buyer would be prepared to take on the company’s entire portfolio.

Fears are rife that investment-linked annuities may be left out in the cold.

“Investment type policies such as annuities are more ticklish because they are based on the value of an investment made.

“We don’t yet know any details about a potential sale. We will just have to wait for the liquidators to give some sort of indication.

“It’s a very complicated process,” he added.frist-caribbean-b

This week’s news that FirstCaribbean Bank has called in a debt of almost $500,000 will do little to allay clients’ fears.

The deficit is just one of a number of bank loans made to CLICO which collectively stand in excess of $2m. They also include a loan from Belize Bank.

CLICO’s accounts payable and accrued expenses are listed at just under $2m.

Other creditors have reportedly also lined up to be paid as liquidators continue their assessment of the company’s assets and liabilities.

A spokeswoman for Premier Michael Misick said he was still involved in discussions with the country’s chief economists regarding the local situation.

She said it was not yet known whether he would make a public statement.

Parent firm CL Financial has faced months of difficulties as financial establishments across the globe continue to grapple with worldwide economic strife.

The Trinidadian Government announced some weeks ago it would bail out the firm due to the massive losses it had racked up.

CL Financial is one of the largest conglomerates in the Caribbean, encompassing more than 65 companies in 32 countries worldwide with total assets standing at roughly $100 billion.

TCI policyholders can contact Mr St Rose at the Financial Services Commission at Harry E. Francis Building, Pond Street, Grand Turk, or call 946 2550 for more information.

5 COMMENTS

  1. Joe Blow :KIM: Since the Government was not a guarantor in CLICO it stands to reason that they cannot guarantee anyone’s investment in that entity. Since the Parent Co. is not here in the Bahamas there is little leverage to be applied. Only the physical assets and any bank accounts here can be used to help pay some of the creditors. The Government does not determine this; the liquidators will. The sad part is that CL Financial- the parent co. has itself lost billions over the past months due to the global downturn. For the sake of the policy holders (Health and Life) we can only hope another Co. will step up to the plate and take over those policies. Holders must be aware that if that is agreed to, the new Co. might make some changes to the policies. Annuity money will most likely be lost with a recovery rate of about 10%. The longer the money was invested the better off the clients will be if they took out the 12% each year. As to regulations- I have no doubt they are in place but what good are any regulations when there is no oversight. Now this we can blame the governments for-not just the present one. As long as we put ill-educated, incompetent people with poor work ethics, in these positions, the general public will continue to suffer. WHOEVER PROMOTED THE IDEA THAT CIVIL SERVANTS CANNOT BE FIRED CERTAINLY DID US ALL IN. This is not the first time this kind of fiasco has happened in the Bahamas. We must start being more vigilant about our investments because the only person really interested in our well-being is ourself. ” None of us can change our yesterdays, but all of us can change our tomorrows.” Remember when Gramma said, “never put all your eggs in one basket” ? The people who invested only in CLICO forgot that smart investors always diversify their portfolios. Good-night Kim. Keep safe!
    [Reply]

    Joe Blow: You are definitely an asset to this site. You have a way of helping others to put things in a better perspective. I agree with you one should never put all their eggs in one basket. I am sure a lot of people will learn not to do that after this Clico fiasco. Thank you for taking the time to explain this to me, I now see things more clearly.

  2. KIM: Since the Government was not a guarantor in CLICO it stands to reason that they cannot guarantee anyone’s investment in that entity. Since the Parent Co. is not here in the Bahamas there is little leverage to be applied. Only the physical assets and any bank accounts here can be used to help pay some of the creditors. The Government does not determine this; the liquidators will. The sad part is that CL Financial- the parent co. has itself lost billions over the past months due to the global downturn. For the sake of the policy holders (Health and Life) we can only hope another Co. will step up to the plate and take over those policies. Holders must be aware that if that is agreed to, the new Co. might make some changes to the policies. Annuity money will most likely be lost with a recovery rate of about 10%. The longer the money was invested the better off the clients will be if they took out the 12% each year. As to regulations- I have no doubt they are in place but what good are any regulations when there is no oversight. Now this we can blame the governments for-not just the present one. As long as we put ill-educated, incompetent people with poor work ethics, in these positions, the general public will continue to suffer. WHOEVER PROMOTED THE IDEA THAT CIVIL SERVANTS CANNOT BE FIRED CERTAINLY DID US ALL IN. This is not the first time this kind of fiasco has happened in the Bahamas. We must start being more vigilant about our investments because the only person really interested in our well-being is ourself. ” None of us can change our yesterdays, but all of us can change our tomorrows.” Remember when Gramma said, “never put all your eggs in one basket” ? The people who invested only in CLICO forgot that smart investors always diversify their portfolios. Good-night Kim. Keep safe!

  3. Joe Blow: Before now I never fear doing business with any financial institution in the Bahamas, because I always believe that the government had the backs of investors and I thought regulations was put in place to prevent these types of things from happening. We realize that not all investments are guaranteed. If I invested in a non-guaranteed investment and things go wrong, that’s a risk that I have decided to take and should not blame anyone when it fails. What I would like to know will the government be able to make sure Clico honors the contracts they had with their policy owners that were guaranteed? Say if someone had a contract proving their investment were guaranteed will the government be able to make Clico pay them the monies that were promise to them? This whole Clico thing is very interesting and a learning experience.

  4. I want to comment once again about the annuities portion of ClICO. This would appear to be the area of concern where actual money loss will occur. The holders of these annuities made a cash contribution and received an annual sum of 12% return on their contribution. Suppose an annuity of $100,00.00 was purchased in 2000. Each year the purchaser should have received a return of $12,000.00. He/she would have recouped $96,000.00. More than a fair return. If that purchaser loses all of the initial contribution, there would be a loss of $4000.00. Let us take a look at someone who purchased $100,000.00 worth of shares in a company which trades on the Bahamas stock market. Dividends were paid out at 7% per annum. That nets him/her $7,000.00.per annum.$70,000.00 after 10 years. Still a fair return. The value on the shares doubles. Some 10 years after purchase,the company has some problems and they discontinue dividends. The shares drop in value to half of the original purchase price and then the company goes belly-up and is put in liquidation. Since there are some, in the first instance, who are calling for the government to compensate them for their loss; should the government also be on the hook to compensate the person who bought shares in the Bahamian Co.? An investment is a gamble. Sometimes you hit it big. Sometimes you have a loss. This is a risk we all take. What do you think? Can we expect the government to stand as a surety against all losses in areas where we freely invest our monies?

  5. The Commission of Inquiry into the Missick matter released a statement today of a very damning nature as to the reputation and the dealings of Mr. Misick. He will not be about making any comforting statement cocerning CLICO to his countrymen. I suspect he is in the midst of a “Madoff-like” fiasco.

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