CLICO policyholders reject 20-year IOU, outline new proposals

The Trinidad and Tobago government has been given a week to decide on new proposals submitted by a group of policy holders of the cash strapped Colonial Life Insurance Company (CLICO).

According to the proposal outlined at a public meeting on the weekend, the Kamla Persad Bissessar government is being asked to pay an immediate 40 per cent to depositors, with a promise to pay the balance quarterly over a five- to seven-year period at 4.0 to 4.5 per cent interest.

The proposal is one of two that deputy chairman for the CLICO Policyholders Group (CPG) Peter Permell said had been delivered to the government's technical team, headed by Minister of Food Production Vasant Bharath, and which is now before Cabinet for consideration.

"The 'Dookeran plan' of zero interest over 20 years is off the table," Permell said.

"The policyholders with a principal balance plus capital interest exceeding TT$75,000 (US$12,500) should be paid 40 per cent of the outstanding liability immediately and the balance by Government of Trinidad and Tobago bonds amortised on a quarterly basis over the next five to seven years between four to four and a half per cent interest on this money."

Under the government plan outlined by Finance Minister Winston Dookeran during the budget presentation last month, government will make an initial partial payment of a maximum of TT$75,000 to depositors in the short-term investment and mutual funds, and those whose principal balances exceed TT$75,000 will be paid through a Government IOU amortised over 20 years at zero interest.

Dookeran said the government IOU would be structured in such a way that it could be traded on the secondary markets, thereby creating a measure of immediate liquidity for the depositors.

But Pernell told the meeting at Woodford Square in the heart of the capital on Sunday that "we not accepting any TT$75,000".

He said that the counter-proposal called for those depositors with up to TT$75,000 investment, credit unions and trade unions be paid 100 per cent, since they represented the "small people" who pooled their money to make up the investments.

Bond warranty

This proposal was specifically tailored for the Executive Flexible Preferred Annuity and mutual-fund policyholders, and did not include Clico Investment Bank, the government, State enterprises or private corporations, he said.

Permell said a "warranty" should be placed on the bonds that would allow them to cash in on any profits from the sale of the CL Financial assets.

The profit, he said would be shared at 51:49 per cent ratio, with the policyholders retaining the majority over the government, which he described as "more than reasonable".

He said the proposal included an "as soon as possible" cut-off date.

He said the depositors were already owed two months of interest, and to ensure that the arrears payments do not "pile up", he suggested a cut-off date of October 31.

"The government should also pay some sort of interest on that arrears at the market rate, which is about five per cent. The onus is now on them to implement payment immediately," he said.

A second, but less popular proposal, outlined on Sunday, is to give the US$600 million the government has earmarked to pay the investors to Ryan ALM, an asset management company out of the United States, that would be charged with investing that money to ensure the most profitable pay-outs and turn over the cash within a 20-year period.

- CMC