COLUMN – Following the CLICO money . . .
Four years have elapsed since my last article on what can best be referred to as the CLICO Saga. The final report of the judicial manager has been made available to the public, despite the best efforts of the Government and regulatory authorities to continue to hide the truth from the policyholders and wider public.
A cursory reading of the document indicates why some would want it to remain sealed in a vault in the Registry.
An application for judicial management is made pursuant to Section 42(1) (b) of the Insurance Act, Cap. 310 by the Supervisor of Insurance (now Financial Services Commission). There are three grounds on which the application may be based, namely:
“(1) that the company is in financial difficulties; or
(2) that the insurance business of the company is not being conducted in accordance with sound insurance principles or practice; or
(3) that it is otherwise in the interest of policyholders that such an order be made.”
Leave or permission of the court would have been required to present the petition which was granted. In the intervening period, the management of the company vested in the judicial manager acting within parameters set by the court rather than the board of directors.
Judicial management is an interim solution until the company and a report from the judicial manager to the court would have been required “as soon as practicable”. The options available to the judicial manager would have been
(1) the transfer of the company’s business to another insurance company;
(2) the carrying on of the business by the company, subject to specified conditions;
(3) the winding up of the company; or
(4) such other course as he considers advisable.
Policyholders and those interested persons should note that a copy of the final report is available for inspection by any person who cares to read it either at the Registration Department or the Supreme Court.
Controversy has surrounded the proposals relating to the first option of transferring the goodwill (if there is any left) and other assets of the company to a new entity, aptly entitled New Life. With only $30 million of the estimated $300 million required, it appears as if New Life was stillborn. The judicial manager appears to have moved on from that position, regardless of who made the initial proposal.
The carrying on of the business appears to be a moot point (since the company appears insolvent), which would have been the second option. We are therefore left with the third option of winding up pursuant to the provisions of the Companies Act and in accordance with any further directions of the court, which would involve a sale of the assets of the company and which may not allow investors and policyholders to recover their principal investment.
In the intervening years, the EFPAs have continued to present a problem to the company, the Government and the judicial manager. The court may reduce the company’s contract exposure, and there are common law rules which govern how such a reduction should be approached.
For example, policy liabilities which have accrued prior to the presentation of the petition cannot be reduced as per the dicta in (Re Capital Annuities  3 All E.R. 704). Perhaps the time has come to tell the holders of the EFPAs that when one engages in high-risk investments, there is a possibility of gain, as well as loss, and they cannot possibly fall into the same category as holders of pensions and annuities and the like.
This is still Barbados and, despite the very pointed criticisms and allegations of outright fraud mentioned in the report, I wait with baited breath to see if anyone “follows the money” or pursues criminal charges.
(Alicia A. Archer is an attorney-at-law.)