Assets of CLICO (Guyana) that escaped the ravages of the collapse of its sister company in the Bahamas are now under the supervision of the High Court, which has appointed Commissioner of Insurance Maria van Beek to manage its affairs as the government here scrambles to protect policyholders.
President Bharrat Jagdeo, speaking on the issue yesterday at a press conference at the Office of the President said “the court is in charge” but identified van Beek as the technical person empowered with the authority over the local company.
The court move was precipitated by the Supreme Court order in Nassau on Tuesday for CLICO (Bahamas) to be wound up. The Bahamas company at the time was holding 53% of the local company’s assets and there is thought to be significant impairment.
In her capacity as judicial manager, van Beek is expected to make a full assessment of Clico’s financial position and report to the High Court within a few days. She now manages all the affairs of CLICO (Guyana). She is expected to undertake an inventory of the local company’s assets as well as offer critical advice on the future of CLICO (Guyana).
With some $6.9 billion of its assets invested in CLICO (Bahamas) the local company faces possible liquidation, but Jagdeo said yesterday that winding it up is just one of the options available to the judicial manager. He said there is still hope that the assets can be recovered from the Bahamas company, and government is treating the assets as though they “are not yet lost”.
Jagdeo said CLICO (Guyana) has been ordered not to offer any new policies, and, according to him, van Beek met staff at the local company yesterday. He said van Beek would also have to make a decision as to what role, if any, CLICO’s (Guyana) Chief Executive Officer Geeta Singh-Knight would now have in the company.
The administration rushed to secure CLICO (Guyana’s) funds on Wednesday, hours after learning of the significant exposure of the company to the financial troubles in the Bahamas; it filed a High Court petition late Wednesday afternoon and sought an urgent hearing before Chief Justice (ag) Ian Chang yesterday.
Chief Justice Chang ordered, after reading the petition by van Beek and the affidavit in support, that leave be granted to van Beek to present a petition under Section 67 (1) of the Insurance Act of 1998 and that upon the filing of the petition, CLICO Life and General Insurance Company (SA) Limited be placed immediately under judicial management until further orders by the court.
Under Section 67 (1) the commissioner is empowered to make a petition before the court as van Beek did, if satisfied that it is necessary or proper for the insurer to be wound up. The commissioner of insurance can make the petition based on several indications and van Beek is said to have approached the court in the interest of policyholders because CLICO (Guyana) has taken a severe financial blow.
According to the law, the court can grant an order for a company to be placed under judicial management if the company is facing financial difficulties. However, the law makes provision for CLICO to respond to the court application.
CLICO (Guyana) can challenge the High Court order since it is entitled to be heard. However, sources say it is unlikely that the local company will do so when the matter is heard again on March 2.
According to the law, the judicial manager, in this case van Beek, is expected to make a full assessment and report to the court on what is the most advantageous course to follow, bearing in mind the interests of policy holders. The law also sets out that the report or a copy of it shall be open for inspection by any person at the Court Registry during official working hours.
The High Court-appointed judicial manager for CLICO (Guyana) is being closely watched and concerns are already being raised over the prioritizing of financial disbursements to depositors. But there has been no mention of priority as government insists on a full assessment. Policyholders of CLICO (Guyana) are expected to be contacted over the next few days.
Observers also contend that the law is defective in so far as it caters for the Commissioner of Insurance to be appointed the judicial manager. Since the commissioner is the regulator and could by commission or omission have had an impact on its troubles it would present a conflict of sorts for her to be appointed as the judicial manager, the observers contend.