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Monday, February 24, 2025

Per­me­ll on pro­posed sale of 49% of Cli­co:

Buyer beware of policyholders' claims

by

145 days ago
20241002
Peter Permell, head of the Clico Policyholders Group

Peter Permell, head of the Clico Policyholders Group

The head of the Cli­co Pol­i­cy­hold­ers Group (CPG), Pe­ter Per­me­ll, has is­sued a cau­tion to com­pa­nies that may be in­ter­est­ed in ac­quir­ing the State's 49 per cent share­hold­ing in Cli­co that Ex­ec­u­tive Flex­i­ble Pre­mi­um An­nu­ity (EF­PA) pol­i­cy­hold­ers of the in­sur­ance com­pa­ny are en­ti­tled to claim the 15 per cent resid­ual bal­ance on their poli­cies plus the ac­crued in­ter­est.

In a news re­lease yes­ter­day, Per­me­ll dis­put­ed an as­ser­tion made by Fi­nance Min­is­ter, Colm Im­bert, that the 'as­sent­ing' EF­PA pol­i­cy­hold­ers 'sold' their poli­cies in re­turn for $75,000 in cash and ze­ro-coupon bonds for a pe­ri­od of 20 years.

"This is sim­ply not the case as there is no le­gal frame­work un­der the In­sur­ance Act that al­lows a pol­i­cy­hold­er to sell his or her pol­i­cy, and as such Cli­co's le­gal li­a­bil­i­ty as trustee is not ex­tin­guished," Per­me­ll said.

In fact, he said the group has been ad­vised that ac­cord­ing to sec­tion 170 (6) of the In­sur­ance Act, “An as­signee un­der a du­ly reg­is­tered as­sign­ment shall have all the pow­ers and be sub­ject to all the li­a­bil­i­ties of the as­sign­or un­der the pol­i­cy, and may sue in his name on the pol­i­cy, but noth­ing in this sec­tion shall be con­strued so as to ad­mit the as­signee to mem­ber­ship of an in­sur­er or to de­prive the as­sign­or of his mem­ber­ship in re­spect of a pol­i­cy, ex­cept as pro­vid­ed in the in­stru­ments con­sti­tut­ing the in­sur­er or in its ar­ti­cles of in­cor­po­ra­tion, by-laws or oth­er con­stituent doc­u­ment.”

Per­me­ll said, as a con­se­quence, 'as­sent­ing' pol­i­cy­hold­ers not on­ly con­tin­ue to have valid con­trac­tu­al arrange­ments with Cli­co, but they are now en­ti­tled to claim, from Cli­co, or who­ev­er ac­quires the shares of com­pa­ny, the 15 per cent resid­ual bal­ance plus the ac­crued in­ter­est on their poli­cies.

He placed the EF­PA pol­i­cy­hold­ers' en­ti­tle­ment to claim the resid­ual bal­ance owed to them in the con­text of the Gov­ern­ment hav­ing been ful­ly re­paid by Cli­co in 2023.

Per­me­ll not­ed that re­mind­ed all stake­hold­ers and the wider pub­lic that Cli­co is now in the black, based on its 2023 au­dit­ed fi­nan­cial state­ments which dis­closed $3.18 bil­lion in ac­cu­mu­lat­ed sur­plus and $2.30 bil­lion in net prof­it.

Per­me­ll al­so chal­lenged com­ments made by Im­bert in Mon­day's 2025 bud­get pre­sen­ta­tion.

Im­bert said, "I have not­ed a false nar­ra­tive cir­cu­lat­ing that the Gov­ern­ment has been re­paid all that it is due for the 2009/2010 Cli­co bailout. This is en­tire­ly un­true, since the Cli­co bailout in­volved not on­ly the in­sur­ance com­pa­ny, but it al­so in­volved the bailout of CL Fi­nan­cial and its sub­sidiaries, as well as com­pa­nies like Cli­co In­vest­ment Bank, British Amer­i­can In­sur­ance and so on.

"Far from be­ing ful­ly re­paid, the Gov­ern­ment is still owed over at least a fur­ther $13 bil­lion in tax­pay­ers’ funds in­ject­ed in­to CL Fi­nan­cial and the oth­er re­lat­ed com­pa­nies."

In the news re­lease, Per­me­ll said the Min­is­ter of Fi­nance seems to have con­flat­ed the mon­ey that was owed by Cli­co to the Gov­ern­ment with that which is due from its par­ent com­pa­ny, CL Fi­nan­cial (CLF) In liq­ui­da­tion and its sub­sidiaries Cli­co In­vest­ment Bank (CIB) and British Amer­i­can In­sur­ance (BA).

Ac­cord­ing to in­vestor ac­tivist, when the min­is­ter states “the Gov­ern­ment is still owed over at least a fur­ther $13 bil­lion in tax­pay­ers’ funds in­ject­ed in­to CL Fi­nan­cial and the oth­er re­lat­ed com­pa­nies,” he is re­fer­ring to CLF, CIB, BA, but not Cli­co.

Per­me­ll re­mind­ed Im­bert of his own state­ment in the Sen­ate on Sep­tem­ber 9, 2024 that "as of April 2023, Cli­co’s re­main­ing li­a­bil­i­ty to the Gov­ern­ment for the Cli­co bailout was $1 bil­lion” and that “all is­sues were thus sat­is­fac­to­ri­ly ad­dressed: Cli­co’s sat­is­fac­tion of its oblig­a­tion un­der the In­sur­ance Act 2018, with re­spect to its share­hold­ing in MHIL be­ing re­duced to less than 20 per cent; and Cli­co’s oblig­a­tion to re­pay the Gov­ern­ment the $1 bil­lion that was still owed in 2023.”

Per­me­ll said that the min­is­ter can­not have it both ways in that the in­sur­ance com­pa­ny could not have re­paid its debt to the Gov­ern­ment and still be ow­ing mon­ey.


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