Cen­tral Bank Gov­er­nor Ewart Williams said yes­ter­day that the in­sti­tu­tion wants hold­ers of short-term Cli­co de­posits above $100,000 to agree to an ex­ten­sion of the ma­tu­ri­ty pe­ri­ods of these in­vest­ments. Speak­ing at a news con­fer­ence at the Cen­tral Bank, Williams in­sist­ed that the in­sur­ance com­pa­ny, which is un­der the man­age­ment of the Cen­tral Bank, is not "broke," bank­rupt," or "in­sol­vent," but is ex­pe­ri­enc­ing a liq­uid­i­ty prob­lem. Car­olyn John, act­ing CEO of Cli­co, told the news con­fer­ence that the in­sur­er was hop­ing to pay off all ma­tur­ing in­vest­ments of less than $100,000 by March 31.

Williams warned that Cli­co could be forced in­to liq­ui­da­tion if too many de­pos­i­tors de­mand their monies im­me­di­ate­ly, in which case de­pos­i­tors would re­ceive be­tween "10 and 15 cents on the dol­lar," as the com­pa­ny would be forced to em­bark on a fire sale of its as­sets.

"We recog­nise that pol­i­cy­hold­ers have le­gal rights but there are costs to en­forc­ing these rights and if every­body seeks to ex­er­cise their rights im­me­di­ate­ly, we will all be worse off," he said.

Williams said that for every­one, "the bet­ter op­tion may be to reach agree­ment, in a col­lec­tive way, with all the pol­i­cy­hold­ers, so that we could max­imise the lev­el of re­cov­ery in the short­est pos­si­ble time." He said Cli­co's pol­i­cy­hold­er li­a­bil­i­ties amount to $17 bil­lion, of which about $11 bil­lion is held in short-term de­posits or poli­cies and $6 bil­lion is in long-term an­nu­ities or in­sur­ance con­tracts.

Ac­cord­ing to Williams, pol­i­cy­hold­ers and de­pos­i­tors with ac­counts of more than $100,000 ac­count for 54 per cent of the num­ber of Cli­co ac­counts and about 95 per cent of the val­ue of the de­posits held.

He al­so re­vealed that most of the $11 bil­lion that Cli­co holds in out­stand­ing short-term de­posits and poli­cies is be­ing held in EF­PA ac­counts–once Cli­co's most pop­u­lar in­vest­ment be­cause they paid very high de­posit rates for pe­ri­ods of up to five years. Of the $11 bil­lion, an es­ti­mat­ed $1.2 bil­lion is owed to non-res­i­dent hold­ers of the EF­PAs and $1.1 bil­lion to hold­ers of the CORE mu­tu­al funds. This means that Cli­co is look­ing to con­vince de­pos­i­tors hold­ing an es­ti­mat­ed $8.7 bil­lion in the short-term EF­PAs to ex­tend the ma­tu­ri­ty of their in­vest­ments.

While the pol­i­cy­hold­er li­a­bil­i­ties equal $17 bil­lion, Williams dis­closed that the in­sur­ance com­pa­ny has "avail­able re­sources" of be­tween $11 bil­lion and $12 bil­lion. The avail­able re­sources in­clude the $5 bil­lion the Gov­ern­ment put in­to the in­sur­ance com­pa­ny in the last year as part of a bailout pack­age, but it ex­cludes monies Cli­co is owed by its par­ent com­pa­ny, CL Fi­nan­cial. Williams at­trib­uted the cur­rent state of Cli­co to larg­er-than-ex­pect­ed re­demp­tions of the EF­PA and the de­cline in the val­ue of Cli­co's re­al es­tate hold­ings as well as its stake in Re­pub­lic Bank. He al­so said that it was dis­cov­ered that CL Fi­nan­cial's as­sets "were far more lever­aged than we thought and that the con­tri­bu­tion ex­pect­ed from the sale of these as­sets in the short to medi­um term would be min­i­mal."