Head of the Clico Policyholders Group Peter Permell is cautioning anyone interested in acquiring government’s shareholding in Clico, that if they do so, they will also be buying the company’s existing problems and issues.
“With respect to the sale of the government’s 49 per cent shareholding in Clico, the group’s only comment and caution at this time is ‘buyer beware.’
“It is certainly an open secret that notwithstanding the Minister of Finance’s belief that the ‘assenting’ EFPA policyholders ‘sold’ their policies, in return for the now infamous $75,000 and zero-coupon bonds over 20 years offer, back in 2011, there is no legal framework under the Insurance Act that allows a policyholder to sell his or her policy. As such, Clico’s legal liability as trustee is not extinguished.” EFPA stands for Executive Flexible Premium annuity (EFPA).
He referred to section 170 (6) of the Insurance Act which said: “An assignee under a duly registered assignment shall have the powers and be subject to all the liabilities of the assignor under the policy and may sue in his name on the policy, but nothing in this section shall be construed so as to admit the assignee to membership of an insurer or to deprive the assignor of his membership in respect of a policy.”
Permell said as a consequence, policyholders continue to have valid contractual arrangements with Clico.
He said since the government has been repaid by Clico, this means policyholders are entitled to claim the 15 per cent residual balance from either Clico, or the owner of the shares.
During presentation of the 2025 budget in Parliament, on September 30, Minister of Finance Colm Imbert said government plans to divest its 49 per cent stake in Clico.
“Clico is no longer considered to be of strategic importance to the Government and its divestment will earn several billion dollars in revenue,” Imbert said.
Prior to 2009, CL Financial – the parent company of Colonial Life Insurance Co (Clico), British American, Clico Investment Bank and other companies, was one of the region’s largest conglomerates with over $100 billion in assets.
However, CL Financial experienced a liquidity crisis which led to a bailout agreement where government loaned the company funds to maintain its ability to operate. In exchange, government took significant shares of the company and obtained a number of seats on its board.
Government also paid people holding contracts in EFPA insurance policies for $75,000 and under in cash or in a zero-coupon bond over a 20-year period.
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