02 March, 2011 - Published 12:35 GMT

Clico's ticking timebomb

The Guyanese president Bharrat Jagdeo has warned of significant uncertainties ahead for the Eastern Caribbean resulting from the financial meltdown of the insurance companies Clico and British American.

The two are subsidiaries of the troubled Trinidad-based regional conglomerate, CL Financial.

Clico alone, according to President Jagdeo, had 27,000 clients in the Organisation of Eastern Caribbean States.

President Jagdeo said the company's Barbados holdings, estimated at US$ 800 million, would be insufficient to cover what's outstanding to those clients.

That he said amounts to 17% of the sub-region's Gross Domestic Product.

But the Guyanese leader says a lot hinges on what Barbados decides to do about the company's losses there and the implications for Barbadian clients.

“If Barbados were to decide to dispose of their assets, then those in the Eastern Caribbean Currency Union (ECCU) have no possibility of getting their money,” he cautioned.

Problem

The scale of the problem caused by the financial woes of Clico and British American in the Eastern Caribbean continues to occupy the attention of the islands' leaders.

British American alone has 33,000 thousand clients across the OECS.

Of this, 22,000 are said to be life insurance policies.

At last weekend's Caricom meeting in Grenada it was decided to provide an initial safety net of 50 million dollars for British American policy holders to be paid from a Trinidad-backed Petroleum Fund.

The prime minister of St Vincent and the Grenadines, Dr Ralph Gonsalves, says one option is to refinance the company and sell it.

He said: “One of the pillars is that we protect the financial system.”

Trinidad and Tobago has decided not to be part of a new company being established in the Eastern Caribbean to ease the financial burdens of the affected policy holders.

The Grenada Trades Union Council which picketed the Caricom leaders meeting in Grenada has called on the Trinidad and Tobago government to rethink its position.