No easy solution seen to CLICO bailout

Signalling a lack of progress on the two-year-old issue, the governments of the Organisation of Eastern Caribbean States (OECS) on Wednesday said there were no easy solutions to dealing with the crisis brought about by the financial problems of the Trinidad and Tobago-based regional conglomerate CL Financial Group.

The governments of the region have been trying to craft a rescue plan for policyholders of the group's flagship companies - Colonial Life Insurance Company (CLICO) and the British American Insurance Company (BAICO) - since January 2009, when CL Financial failed and was taken over in its home by the Trinidad government.

"We wish that these matters were simpler, and that solutions could have been put in place faster. However, our experience in such a difficult and complex situation is not unique in this regard," the OECS heads of government said in a statement updating the various stakeholders on the matter.

The statement also stressed their "appreciation for the patience and calm with which policyholders have responded to the very painful and personal challenges arising out of BAICO and CLICO issues."

It came two days ahead of the Caricom Inter-Sessional of the heads of government of the 15-member bloc, starting today, February 25 in Grenada.

They said they now anticipate that the next phase of the rescue plan "will take time, and that we will encounter obstacles, but we will continue to work tirelessly to overcome them".

The entreaty follows failed efforts to establish a new insurance com-pany, which hit a snag following the change of government in Trinidad and Tobago last year.

The OECS leaders said the new company would have brought toge-ther several investors, including Trinidad and Tobago, which would have invested US$100 million and US$5 million from Barbados.

OECS countries would also have contributed financially to the new initiative.

"Following the change of administration in Trinidad and Tobago in late May 2010, the Eastern Caribbean Currency Union (ECCU) governments worked hard to engage the new administration, and in particular to seek confirmation that the government of Trinidad and Tobago was committed to the Newco Plan and the necessary financial contribution," said the statement.

"We pursued this for many months but, by the end of 2010, were unable to gain the necessary confirmation. Without the required financial commitment of the government of Trinidad and Tobago, Newco is not feasible as originally envisaged."

The leaders said, as a result, alternative solutions must now be embraced to protect against systemic economic risks, and to offer much-needed relief to policyholders.

They said that a decision has been made to concentrate on solutions in a phased approach, including an ECCU/BAICO Health Insurance Support Fund, traditional business lines, and the annuity and investment contract business.

There are also plans to establish a regional support fund, which they said Trinidad has agreed to explore, and to establish a regional support fund through CARICOM to assist those affected by these and other similar events that threaten the region's economies.

"We will be working with our regional colleagues to consider funding and other options to resolve this issue with minimal delay. Given the regional nature of this problem, we have requested that it be placed on the agenda of the upcoming meeting of CARICOM Heads from February 25-26.

"In the meantime, a regional technical committee chaired by the president of the Caribbean Development Bank and including representation from the ECCU, Trinidad and Tobago, Barbados and CARICOM are considering various options for consideration by the heads. Although we expect that this process will take time to finalise, the parties are aware of its urgency," the statement said.

- CMC