Policyholders in failed insurance giant CLICO and the Hindu Credit Union yesterday welcomed the announcement by Finance Minister Larry Howai that their long wait for a solution to recovering millions of dollars they are owed will soon be at an end.
Delivering the national budget in Parliament yesterday, Howai said: "The CLICO and Hindu Credit Union matters have dragged on for far too long. I intend to bring these matters to a close this year... The cost to the national community has been substantial—an amount of $19.7 billion or 13 per cent of our current GDP; yet this expenditure was necessary and decisive for containing an economic and financial crisis."
As part of the overall solution, "we shall incorporate a new insurance company into which those traditional policies and other assets will be transferred from CLICO. That new company will continue to manage the traditional policies," he said.
Howai said the Government was discharging the liabilities held by individual and corporate investors in Short-Term Investment Products (STIPs) in two components: cash payments for amounts less than $75,000 and a mix of cash and zero-coupon one-20 year bonds for amounts over $75,000.
Government will launch the CLICO Investment Fund on November 1 and on January 2, 2013, trading will begin on the Trinidad and Tobago Stock Exchange for the units of policyholders who exchanged their 11-20 year bonds for units in the Fund, he said.
"This action will bring the CLICO matter to an end, having settled all the obligations committed by this Government."
The cost of this is $521.1 million, he said.
Howai said that as at September 18, 25,115 STIP holders, including credit unions and trade unions, accounting for $10.268 billion, had accepted Government's settlement offer.
"We have arranged in the budget for the income generated by the Fund to be tax-exempt in the hands of investors. We have in place a similarly-structured settlement plan for depositors and shareholders of the Hindu Credit Union Co-operative Society Ltd which is currently in liquidation.
Chairman of the CLICO Policyholders Group Peter Permell said yesterday members, "welcomed the news with a feeling of relief and vindication even though the announcement was a year overdue. It is better late than never and we believe it was the robust representation of the policyholders that allowed it to happen."
He told the Express by phone that policyholders were happy they would benefit when the CLICO Investment Trust, which will contain CLICO's $5 billion or so worth of Republic Bank stock, is set up on November 1 and shares start trading on January 2 next year.
He was happy that income and dividends policyholders will receive will be tax-exempt but added that the "devil would be in the details" with regard to arrangements for the Trust.