(Barbados Nation) – In a new twist to the CLICO saga, the life insurance arm of the group could be sold.
Prime Minister David Thompson made the disclosure on Sunday night during a televised programme in which he fielded questions from journalists and a Caribbean Broadcasting Corporation CBC TV studio audience as well as via the telephone lines and email.
Thompson admitted that CLICO had fallen short – by several million dollars – in 2005, 2006 and 2007 in its commitment to the Government’s Statutory Fund – a protective arrangement under the Insurance Act.
Against this backdrop, he raised the idea of government acquiring CLICO Life and having the acquisition funds injected into the entity “should there be any concerns”.
“But we have decided to go a more radical route, and have received confirmation from CLICO Life that it will work with a reputable Barbadian entity to possibly enter into a memorandum of understanding for the purchase of CLICO Life . . . out of the CLICO Group, so that the other companies can stand on a full footing,” he said.
“We will be working assiduously this week to have that memorandum satisfied.”
The Opposition Barbados Labour Party (BLP) had charged that all was not well with CLICO and that in fact the company had chalked up a Statutory Fund deficit.
According to Thompson, in 2004 the requirement under the Statutory Fund was $123.6 million and CLICO put up $123.6 million in assets.
However, in 2005, when the Statutory Fund requirement was $154 million, CLICO’s assets pledge totalled only $123.6 million, he said.
In 2006, the pledged assets were $123.6 million, while the Statutory Fund requirement was $191.4 million; “so there was a deficit of $30 million, and it started to climb,“ he added.
In 2007, the pledged assets were $155.9 million and the Statutory Fund requirement was $248.8 million, according to Thompson.
“This is a scenario of what one would call continued negligence, from 2004 right up to 2007,” he complained. “Nothing was done, and yet all of a sudden we are being told that I am the one who is responsible for the deficit . . . .”
He told listeners: “Immediately we recognised the shortfall, the Cabinet of Barbados made a decision the following Thursday that during the course of the scenario to rectify any deficiencies in the Statutory Fund that we will seek to acquire a major asset from CLICO and have the acquisition funds injected into the entity, should there be any concerns.
“Fortunately, there have not been any calls on CLICO [the life operation] that it has not been able to meet, either here or in the Eastern Caribbean.”