Big profits for CLICO
PORT OF SPAIN, Trinidad (CMC) – The Colonial Life Insurance Company (CLICO), the regional insurance giant that almost collapsed four years ago, has made an after tax profit of nearly TT$3.8 billion in 2012.
CLICO’s audited financial results for 2012 were published on its website yesterday, after the company’s board, which is chaired by former finance minister Gerald Yetming, approved the financials for issue on January 29.
According to the financial statements of the embattled company, the 2012 after tax figure was more than five times greater than the TT$702 million it declared in 2011.
CLICO declared profits of TT$6.2 billion from its investing activities for the financial year, which eclipsed the TT$2.2 billion loss from insurance activities.
The most significant contributor to CLICO’s investment profits was the TT$3.8 billion gain the company booked on the disposal of some 40 million Republic Bank shares in November 2012. Those bank shares, which were then worth an estimated TT$4.3 billion, constituted 84 per cent of the underlying investment in the CLICO Investment Fund (CIF), which converted the 11 to 20-year zero-coupon bonds into units in the CIF.
But the KPMG-conducted audit indicates that CLICO had a negative net worth of TT$6.5 billion. This is due to the company’s liabilities, recorded at TT$29 billion, while assets were valued at TT$22.4 billion at the end of 2012.
“The company’s board, together with the Central Bank and the Government are working to eliminate the current capital efficiency where the company has excess liabilities to assets,” the financial statement read.
CLICO’s liabilities include nearly TT$16 billion in taxpayers’ money, comprising $4.9 billion in preference shares and close to TT$11 billion in Executive Flexible Premium Annuities (EFPA’s) that CLICO policyholders have ceded to the State in exchange for cash, zero-coupon bonds and units in the CIF.
CLICO and its sister company, the British American Insurance Company (BAICO) collapsed in 2009 and the Trinidad and Tobago government signed a shareholders’ agreement with then CLICO chairman Lawrence Duprey following the signing of a memorandum of understanding (MOU) between them on January 30, 2009. The MOU gave the government control of 49 per cent of CLICO’s shares.