By ANDRE BAGOO Sunday, November 7 2010

A PROPOSAL made by the Clico Policyholders Group (CPG) to have the Government pay out 40 percent of monies owed to policyholders would cost approximately $1.1 billion annually, according to details of the plan released by the group’s acting chairman Peter Permell.

In a statement on the issue, Permell also notes that the proposal, which is to be considered by the Cabinet, also calls for policyholders to be entitled to nominate two directors to the boards of Clico and parent company CL Financial to protect the interest of policyholders.

Permell, in a statement sent to this newspaper, noted that two specific CL Financial assets now under State control under the terms of a State intervention, alone generate $1 billion in income annually.

“Clico’s annual dividend income from these two sources alone would be approximately TT$1.028 billion,” he said of the company’s holdings in Republic Bank Limited and Methanol Holdings Limited.

“It should be noted that the funding required as per the CPG proposal is approximately $1.116 billion per annum over the next five-seven years. Hence the CPG proposal would effectively fund itself and more importantly there would be no additional burden on taxpayers and no impact on our debt to GDP ratio or country’s credit rating,” he said.

Of the actual proposal, Permell noted that it calls for the Government to agree that:

•Policyholders should be allocated two (2) Directorships each on the Boards of Clico and CLF respectively — to protect their interest;

•The Government should immediately conduct a detailed financial review of Clico, CL Financial and its subsidiaries in order to determine the fair value of the assets;

•Executive Flexible Premium Annuity policyholders and CSI Mutual Fund depositors whose principal plus capitalised interest are $75,000 and under will be immediately paid up to $75,000 or 100 percent of the amount due;

•Credit Unions and Trade Unions regardless of size of principal plus capitalised interest will be immediately paid 100 percent of the amount due;

•CIB, CIB, Government/State and Private Corporations, whose principal balances plus capitalised interest exceed $75,000 will be paid via a GORTT seven-year Zero Coupon Bond at the end of seven years. The Notes (bonds) must be Sovereign, redeemable by GORTT at full face value and Transferable.

•There must be a specific cut-off date for determining liabilities owed to policyholders (ie November 30, 2010).

•Policyholders with Capitalised Interest must be honoured up to an agreed cut-off date (ie October 31, 2010). A market rate will be paid beyond this date until the effective date of implementation of the proposal.

•GORTT will mandate the Government Securities Intermediaries (GSI) (eg CMMB, Bourse Securities etc) which are all members of the TTSE to make a market for this Government PAN which would be structured in such a way so that it could be traded on the secondary market via the Trinidad and Tobago Stock Exchange (TTSE) at fair market value, thereby creating a measure of immediate liquidity for the note-holders.

•Notes will have equity participation by the issue of Warrants. The Warrants will give Note-holders the right to participate in the upside or any gain on the sale of all assets backing the EFPAs.

•This will be calculated on the basis of 51 percent of the difference between the Book Value and Sale Price of the assets, distributed proportionately according to the note-holder’s EFPA holdings.

•Note-holders will also have access to additional liquidity by being able to trade not only the Notes but also the Warrants on the TTSE.