The plan, put to member governments of the sub-regional currency union last month by judicial managers involves the creation of a new company that will take over some of the assets of British American in the Eastern Caribbean.
But the report of the judicial managers have made it clear that even under the rescue plan investor losses seem inevitable and the governments have warned that the new company will be unable to cover all of the benefits and interest to which policy holders are entitled.
The governments believe, however, that the rescue plan offers an opportunity for recovery over time. The announcement of the rescue plan made in a statement by the Eastern Caribbean Currency Union, the monetary authority of the OECS, comes even as CLICO investors in the rest of region struggle to come to terms with their huge financial losses incurred following the January collapse of the regional financial conglomerate.
The sub-regional monetary authority has reported that the liabilities of British American branches in the entire Eastern Caribbean total EC$1.05 billion while its assets total a mere EC$30m. However, the governments reportedly opted for the rescue plan arguing that the option of winding up the entity would have been too unpalatable. The proposal is subject to the approval of the OECS courts which process is expected to be completed before mid next year.
The statement by the sub-regional monetary authority appeared to suggest that CLICO’s operations in the Eastern Caribbean were endangered by the parent company’s decision to transfer EC$301m from the sub-region’s fund to finance what were considered to be “risky” real estate investments in Florida and elsewhere.
CLICO’s interests elsewhere in the region have also been the target of an assortment of rescues aimed at protecting depositors and investors as far as possible. In September, two divisions of CLICO in Barbados which were reportedly closely allied to the Eastern Caribbean were sold to local interests while another Barbadian insurance company, Consumers Guarantee Insurance is reportedly set to gain control of the general insurance arm of CLICO in Barbados. The Barbados Public Workers Cooperative Credit Union is likely to acquire CLICO Mortgage and Finance Company.
