Bahamas High Court shuts down CLICO Bahamas

The High Court in the Bahamas has ordered the liquidation of CLICO Bahamas Limited, a local subsidiary of Trinidad and Tobago's troubled conglomerate CL Financial Limited.

It came following an application by Prime Minister Hubert Ingraham, who also holds the finance portfolio, seeking to protect CLICO policyholders.

A news release issued by the Office of the Registrar of Insurance Companies said the position was taken "after very careful consideration of the interest of the policyholders, staff and creditors of the company in the Bahamas and in the region."

It stated that there it became necessary "after discussions with the principals of the company over many months urging and directing them to inject additional capital and liquidity into the company but to no avail."

It added, "This action was precipitated at this time because of the continuing decline in the market value of the real estate investment in the United States via CLICO Bahamas Limited subsidiaries, CLICO Enterprises Limited and Wellington Preserve Limited, the uncertain financial position of its ultimate parent CL Financial Limited of Trinidad and Tobago, the inability of the company to pay claims/surrenders of policies in one of the jurisdictions where it operates and the lack of a credible plan by the company to address the shortfall in capital and liquidity in a reasonable time."

It said any further delay in moving against the Clico subsidiary would have further eroded the assets of the company to the detriment of policyholders. The statement assured Bahamians that the action against the CL company does not in any way reflect "the entire dynamic and robust local Bahamian insurance industry.

It said at the end of 2007 the domestic insurance industry had 52 local companies and branches of foreign companies, over US$1.2 billion in assets and total gross premiums of US$701 million. The CLICO subsidiary represents only a small fraction of the overall investment in the Bahamas,

"CLICO Bahamas represented less than one per cent of the total assets and less than one per cent of the total gross premiums. The financial difficulties of CLICO Bahamas are a direct result of the company's business model and investment policies," it added.

"We would like to encourage the liquidators to move with all speed in communicating practical guidance to policyholders and other creditors who have claims against the company so as to minimize any uncertainty."

The Office of the Registrar of Insurance Companies further advised policyholders to consult with their financial advisers on the actions they should now take.

CLICO Bahamas Limited (formerly British Fidelity Assurance Limited), a subsidiary of CLICO (Holdings) Barbados Limited and a subsidiary of the CL Financial group, operated in the Bahamas as a part of the CL Financial group since 1992.

Prior to 1992 it operated as British Fidelity Assurance Limited under different owners. The company has active operations in the Bahamas, Belize and the Turks and Caicos Islands, as well as run-off business in the US Virgin Islands, Cayman and Barbados.

It has just over 29,000 policyholders, over 170 staff and over US$100 million dollars in policy liabilities, the majority of which are in the Bahamas.