An­tho­ny Wil­son

The ju­di­cial man­ag­er of Bar­ba­dos-based Cli­co In­ter­na­tion­al Life In­sur­ance Ltd (CIL) has pro­posed that the Gov­ern­ment of Trinidad and To­ba­go com­mit to al­lo­cate $660 mil­lion (EC$300 mil­lion) as part of a pro­pos­al to re­solve the sta­tus of hold­ers of Ex­ec­u­tive Flex­i­ble Pre­mi­um An­nu­ities (EF­PAs) in Bar­ba­dos and the is­lands of the East­ern Caribbean.

The pro­pos­al by the ju­di­cial man­ag­er, De­loitte Con­sult­ing Ltd, is to float a bond whose pro­ceeds would be used to ac­quire qual­i­fy­ing as­sets that would be trans­ferred to the buy­er of the in­sur­er's tra­di­tion­al busi­ness as well as fund the par­tial pay­ment and re­struc­tur­ing of the EF­PA port­fo­lio.

The ra­tio­nale for the flota­tion of a bond is that "a sub­stan­tial ma­jor­i­ty" of the Bar­ba­di­an in­sur­ance com­pa­ny's as­sets are re­al es­tate or re­al es­tate-backed, which are lim­it­ed to 20 per cent of the val­ue of statu­to­ry funds in the re­gion. The bond would be is­sued by a spe­cial pur­pose ve­hi­cle that would be es­tab­lished to hold the as­sets of CIL and its Bar­ba­di­an hold­ing com­pa­ny, Cli­co Hold­ings Bar­ba­dos Ltd.

The as­sets of CIL in each of the is­lands (An­tigua, An­guil­la, Mon­ster­rat, St Vin­cent, Grena­da and Do­mini­ca) would be trans­ferred to the spe­cial pur­pose ve­hi­cle and those as­sets, most­ly land or re­al es­tate de­vel­op­ments would be re­placed by qual­i­fy­ing as­sets from the pro­ceeds of the bond is­sued. It is pro­posed that the spe­cial pur­pose ve­hi­cle should be man­aged and con­trolled by the ju­di­cial man­ag­er.

"Based on a pre­lim­i­nary mar­ket read from an in­vest­ment bank en­gaged by the ju­di­cial man­ag­er, the at­trac­tive­ness and hence suc­cess of the spe­cial pur­pose ve­hi­cle's bond is­sue will be high­ly de­pen­dent on a cred­it en­hance­ment be­ing pro­vid­ed by the Gov­ern­ments of Bar­ba­dos and Trinidad and To­ba­go.

"The cred­it en­hance­ment can take the form of a guar­an­tee or an eq­ui­ty call. The es­ti­mat­ed amount of the cred­it en­hance­ment for the bond to be suc­cess­ful is Bds$150 mil­lion from Bar­ba­dos and EC$300 mil­lion (TT$660 mil­lion) from the EC is­lands/Trinidad."

Ac­cord­ing to the ju­di­cial man­ag­er, those gov­ern­ments not in a fi­nan­cial po­si­tion to pro­vide cred­it en­hance­ment "could sup­port the so­lu­tion by com­mit­ting their state agen­cies to in­vest di­rect­ly in the bond is­sue." Most of the is­lands in which CIL op­er­ates are high­ly in­debt­ed.

This means that the bur­den of the pro­pos­al is like­ly to fall on the T&T Gov­ern­ment. Speak­ing with the Guardian last night, Fi­nance Min­is­ter Win­ston Dook­er­an said: "We have al­ready in­cor­po­rat­ed all of the East­ern Caribbean cit­i­zens who pur­chased their poli­cies in Trinidad in our bailout pro­pos­al. Those Caribbean cit­i­zens are re­ceiv­ing the same fi­nan­cial arrange­ments as T&T cit­i­zens as we are com­mit­ted to ho­n­our­ing all pol­i­cy­hold­ers wher­ev­er they are from, once their poli­cies were is­sued in T&T."

Dook­er­an said that the pre­vi­ous ad­min­is­tra­tion had al­lo­cat­ed US$50 mil­lion to re­solve the is­sues of East­ern Caribbean cit­i­zens who had pur­chased non-T&T EF­PAs. He said that at the re­cent heads of gov­ern­ment meet­ing in Suri­name, Prime Min­is­ter Kam­la Per­sad-Bisses­sar had com­mit­ted a fur­ther US$75 mil­lion to en­hance the bailout on the con­di­tion that East­ern Caribbean coun­tries pro­vide sim­i­lar sup­port.

"It is my un­der­stand­ing that the Caribbean De­vel­op­ment Bank is work­ing with the East­ern Caribbean coun­tries to co-or­di­nate their US$75 mil­lion and that this, plus the sale of as­sets by the liq­uida­tors in the re­gion, should be enough to sat­is­fy the non-T&T EF­PA hold­ers."

Dook­er­an said he had not had any dis­cus­sions with the Bar­ba­dos gov­ern­ment on the is­sue of Cli­co as he un­der­stood that they were han­dling that is­sue them­selves. Asked whether the Gov­ern­ment would be will­ing to con­sid­er the new Bar­ba­dos ini­tia­tive, Dook­er­an said he would not want to go so far but that "what we have placed on the ta­ble, we would want to ac­tu­alise."