• Today
    November 12

  • 03:57 PM

Browne: It's up to govt

Geralyn Edward,

Added 16 May 2010

 RESTORING CONFIDENCE in the market after the CLICO crash was Trinidad and Tobago’s key action  and responsibility.And while not seeking to offer Barbados a prescription for how to handle the controversial CLICO International Life Insurance Company, Trinidad’s junior finance minister Mariano Browne said where there  was no market-based solution, it is incumbent on the state to step in.“What we have sought to do is to return confidence to the market by indicating that [government] will guarantee the survival of the insurance company,” said Browne, a former Butterfield Bank (Barbados) managing director who was asked to serve in the Patrick Manning Cabinet two years ago.“As you are aware, CLICO is not just a financial entity. It is very much a conglomerate with a number of financial interests and those interests were financed by policyholders’ funds. So it acted very much like a bank, effectively, in real terms but without many of the controls of a bank, so we in Trinidad and Tobago had to act in a fashion that is wide-ranging,” he told BARBADOS BUSINESS AUTHORITY in an interview  in Port-of-Spain last week.“We had a diverse approach  to what is a multifaceted and  difficult problem and we have  operated to give confidence to the marketplace to ensure that depositors are protected in all instances,” Browne pointed out.The junior finance minister said there were precedents for how to deal with insurance companies that ran into difficulty.According to Browne, the parts  of the insurance company that were “salvageable” should be taken over  by the marketplace.“Where there is a market-based opportunity, use the marketplace. Where there is none, then the role  will have to be taken by the state.  The state will have to make a determination . . . .  I am not in a position to give Barbados advice on what it should do but to point out  that there is [a] precedent elsewhere, and the precedent in the Caribbean would be Jamaica.“They had a significant financial collapse involving insurance companies and non-bank financial intermediaries in the 1980s and 1990s and they had to take some decisions and work out some solutions. The relevant example would be Sagicor, which grew substantially by purchasing many of the insurance companies that got into  difficulty,” he noted.After pumping more than  TT$5 billion (BDS$1.5 billion) into  the CL Financial group, the ultimate parent company of CLICO Holdings Barbados Limited, Browne said going forward, financial sector regulation in Trinidad would be more “robust”. He said a number of pieces of legislation governing the financial sector  would be heading to parliament  in the next session.

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