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Cabinet OKs proposals for Clico policyholders
On Thursday, Cabinet agreed to two proposals for Clico policyholders with short-term investments in the insurance company of over $75,000. Some 14,000 EFPA policyholders will have the option of a shareholding in a scheme similar to National Enterprises Ltd (NEL) or they will be able to cash in their bonds at a higher discount rate. The NEL-type arrangement is a new proposal being examined. “The technical analysis still needs to be done,” said Dookeran yesterday. However, he refused to divulge any more details. Part of the Government’s exit strategy for Clico that is being discussed involves offering policyholders a higher discount rate for the 20 annual bonds.
Cabinet agreed that whatever discount rate was offered by the local commercial bank, that the Government would top up the difference to ensure that should policyholders want to cash in their 20 bonds for a lumpsum payment, they’ll be able to do so. In an earlier statement this week, Dookeran had said EFPA policyholders would get 90 cents to the dollar for the first five years but for the next 15 years the discount rate would range from 67-80 cents to a dollar. Dookeran had said he was working to improve the discount rate for the policyholders. However, a final rate has to be determined by the commercial banks before the Government will say how much they will have to top up. The Government is hoping to give policyholders 90 cents to the dollar for all 20 bonds.
The bonds cannot be issued until legislation for them is approved in Parliament. In the 2011 budget, Dookeran had proposed an initial $75,000 payment and 20 annual zero-interest bonds to repay about 25,000 Clico policyholders. Already, 11,000 policyholders under $75,000 have been paid. The beleaguered insurance company has already been dealt a blow by the local courts after Justice Maureen Rajnauth-Lee’s ruling that Clico should pay six Clico EFPA policyholders $58.7 million plus interest last month. The claimants alleged breach of contract after failed attempts to cash-in their policies following the company’s collapse in January, 2009.
While Clico will appeal this decision, there is a winding up action by Dr Claude Denbow which seeks to liquidate the insurance company to give claimants their investments. In May, Dookeran told the Guardian that the sale of Clico, once it becomes viable again, was part of Government’s exit strategy. He had said that Clico’s statutory reserves had been restored by the Government’s transfer of a percentage of Methanol Holdings shares. On Wednesday, Dookeran told the Guardian that policyholders will have to take a haircut for their investments and that Government’s intervention in the empire of former CL Financial chairman Lawrence Duprey empire would cost about $20 billion exclusive the request of T&T’s Caricom neighbours.
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