CLICO policyholders to keep close eye on budget
The CLICO Policyholders Group will be paying very close attention to the budget this afternoon to hear how and when the Government is going to make good on its promise to pay policyholders "dollar for dollar" or 100 per cent of the face value of years 11-20 of their GORTT (CLICO) zero-coupon bonds, group chairman Peter Permell has said.
In a statement yesterday, Permell said if Government fails to satisfactorily address this issue this afternoon not only would it translate into a loss of more than 50 per cent of the face value of these bonds—or approximately $2.5 billion of the life savings of thousands of policyholders-—it will send a clear and unequivocal message that the Government has no credibility and cannot be trusted.
"As the country is aware NEL 2 is the brainchild of the PP Government that is intended to protect policyholders from the above loss. It involves the establishment of a CLICO investment trust called NEL 2, into which approximately 30 per cent of the Republic Bank shares currently held by CLICO will be placed. However, although this plan was promised more than a year ago, to date, it has failed to get off the ground or appears to be stillborn," he said.
"We are advised that relative to the Insurance Act Chap. 84:01 there seems to be certain legal hurdles surrounding the transfer of the Republic Bank shares out of the statutory fund and into NEL 2. Accordingly, much will be riding this afternoon on whether the new Finance Minister and his technical team has been able to resolve these issues, and if not, what alternative solution has he been able to craft."
Permell said a possible solution would be to issue a new set of government bonds to policyholders with an appropriate coupon (interest) rate in exchange for the existing zero-coupon bonds previously issued.