VZCZCXRO0758
RR RUEHGR
DE RUEHBH #0159/01 0751614
ZNR UUUUU ZZH
R 161614Z MAR 09
FM AMEMBASSY NASSAU
TO RUEHC/SECSTATE WASHDC 6211
INFO RUCNCOM/EC CARICOM COLLECTIVE

UNCLAS SECTION 01 OF 02 NASSAU 000159 
 
SIPDIS 
 
E.O. 12958:  N/A 
TAGS: EFIN ECON ETRD BF
SUBJECT:  CLICO BAHAMAS LIQUIDATED FOLLOWING COLLAPSE OF TRINIDAD'S 
CL FINANCIAL 
¶1.  (U) SUMMARY:  Nearly one hundred agents were laid off from one 
of The Bahamas largest insurance companies, CLICO Bahamas Ltd., the 
week of March 2 as the company goes into liquidation.  Concerns were 
 
raised when Trinidad based parent company, CL Financial, collapsed 
due to massive losses and subsequently received a government 
bailout.  Liquidation negotiations with at least four companies are 
currently in progress.  In the meantime several creditors (including 
banks, personal policy holders, and even the Guyanese Government) 
have demanded debt repayment from CLICO Bahamas.  Although CLICO 
Bahamas representatives assured local media that the interest of 
policy holders will be protected, Prime Minister Ingraham announced 
that the GCOB cannot guarantee a complete repayment to creditors or 
policy holders.  End Summary. 
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A STORIED PAST 
-------------- 
 
¶2.  CLICO's challenges began as early as 2004, when it started 
sending money to its parent company, CL Financial, in Trinidad in 
order to invest in U.S. real estate.  It is alleged that this move 
was an attempt to evade Bahamian exchange control laws.  James 
Smith, former Minister of State for Finance, told local media that 
the Registrar of Insurance met with CLICO several times about the 
matter.  Smith indicated that CLICO Bahamas was eventually ordered 
to repatriate USD $53 million of the funds, which the company never 
did.  Smith also alleged that the Registrar did not disclose this 
piece of information to the Ministry of Finance, an omission he 
speculates was a result of a strained working relationship between 
the two entities. 
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LIQUIDATION 
----------- 
¶3.  CLICO Bahamas' liquidation was ordered when the company's 
liabilities were found to exceed assets by USD 9 million.  Craig 
Gomez, the appointed liquidator, told local media he has spent the 
last two weeks ascertaining the company's financial position and 
four companies have already expressed interest in purchasing CLICO's 
life and health policies -- British American, Colina Imperial, 
Family Guardian and Atlantic Medical.  The annuity policies, 
however, remain a source of concern as there has been no interest to 
date in purchasing the company's annuity policies.  In a statement 
to local media, Gomez said it is too early to make any definitive 
statements on the extent of compensation clients will receive if the 
company is not sold.  He also highlighted that liquidations are 
normally lengthy process, lasting up to five years in some cases, 
and assured the Bahamian public that the liquidators will protect 
the interest of policy holders. 
 
¶4.  Shortly after the liquidation announcement creditors began 
pursuing CLICO Bahamas for owed loans and investments.  Among these 
is FirstCaribbean International Bank (who has called in a nearly USD 
$500,000 loan) and Belize Bank (who has called in a USD $1 million 
loan).  In addition, the Guyanese Minister of Finance recently 
petitioned the GCOB for a share of the assets, claiming CLICO 
Bahamas owes CLICO Guyana USD $35 million.  GCOB officials have 
denied the claim made by the Government of Guyana and have made no 
payments to any companies to date, though Craig Gomez told local 
media he is in negotiations with several creditors.  In the 
meantime, several Bahamian owned properties have been used as 
collateral, including the property on which CLICO Bahamas is 
situated. 
 
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NO ASSURANCE FOR INSURANCE 
-------------------------- 
 
¶5.  In an uncharacteristically gloomy announcement to the press, 
Prime Minister Ingraham said annuity holders have little protection 
under the law and there is no guarantee that they will receive full 
value for their investment.  CLICO Bahamas estimates that USD $23 
million is owed in annuities alone.  This news is especially 
worrisome for the Broadcasting Corporation of the Bahamas and 
Bahamasair, both quasi-government agencies that invested their 
pension funds with CLICO.  Prominent religious leaders and other 
professional private citizens have voiced their real concerns as to 
whether they will see their investments again.  In addition, health 
policy holders received a shock when Doctor's Hospital, one of two 
main hospitals in Nassau, announced that it will not honor CLICO 
claims.  This latest news creates an especially difficult situation 
for the GCOB since both the PM and the liquidators have continuously 
advised clients to continue paying their premiums. 
 
¶6.  Nearly 100 employees were laid off from CLICO Bahamas the week 
of March 2 and there is a real fear that more lay-offs are to 
follow.  These lay-offs add to the country's struggle to maintain 
the economy during a time of recession.  The tourism sector lost 
1000 jobs within the last six months and the public is worried that 
the financial services sector will be hit next, a loss that would 
create significant problems for the little-diversified economy of 
The Bahamas. 
 
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COMMENT 
 
NASSAU 00000159  002 OF 002 
 
¶1.  (U) SUMMARY:  Nearly one hundred agents were laid off from one 
of The Bahamas largest insurance companies, CLICO Bahamas Ltd., the 
week of March 2 as the company goes into liquidation.  Concerns were 
raised when Trinidad based parent company, CL Financial, collapsed 
due to massive losses and subsequently received a government 
bailout.  Liquidation negotiations with at least four companies are 
currently in progress.  In the meantime several creditors (including 
banks, personal policy holders, and even the Guyanese Government) 
have demanded debt repayment from CLICO Bahamas.  Although CLICO 
Bahamas representatives assured local media that the interest of 
policy holders will be protected, Prime Minister Ingraham announced 
that the GCOB cannot guarantee a complete repayment to creditors or 
policy holders.  End Summary. 
-------------- 
A STORIED PAST 
-------------- 
 
------- 
 
¶7.  The failure of CL Financial has resulted in yet another blow to 
the already weakened Bahamian economy.  How badly the collapse of CL 
Financial will hurt The Bahamas is not fully known.  The potential 
collapse of the financial services sector is a real fear among the 
Bahamian public.  The GCOB continues to encourage the population to 
see this as a time of frugal spending, even as nervous policy 
holders line-up outside CLICO offices in an attempt to verify 
personal solvency.  For the moment, the GCOB maintains its tenuous 
hold on the financial situation, though the Bahamian public is 
losing confidence as layoffs continue to mount. 
ZUNIGA-BROWN