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    October 16

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Trinidad government says conclusion is near on CLICO’s debt

CMC,

Added 10 October 2019

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PORT OF SPAIN – The Trinidad and Tobago government says it is “finally reaching a conclusion” a decade after the collapse of the Port of Spain-based regional insurance giant, Colonial Life Insurance Company (CLICO) and its parent company, CL Financial.

Finance Minister Colm Imbert, delivering the TT$53.03 billion budget to Parliament on Monday, said that the government had pumped an estimated TT$23 billion in a bailout plan for the company.

He told legislators that when it came to office in 2015, the Keith Rowley government found the CL/Financial/ CLICO arrangement “in disarray with the shareholders and government in conflict and without any clear sight of a resolution”.

“Further, in 2011, an arbitration caused by the then government’s arbitrary transfer of shares in Methanol Holdings Trinidad Limited to CLICO without first offering the shares to the minority shareholder, concluded with the sale of the asset at a price significantly lower than market, losing three billion dollars in value in the process.”

Imbert said that in addition, following 17 extensions of the original 2009 Shareholder’s Agreement, without any clear repayment plan, the present administration had to act quickly when the former shareholders made a grab for CL Financial.

“In the interest of taxpayers, who had pumped billions of dollars into the CLICO bailout, we had no alternative but to apply to the High Court to liquidate the company and on September 15 2017, the High Court ruled that the operations of CL Financial would be fully placed in the hands of liquidators appointed in July 2017.”

Imbert said that this liquation process is now ongoing in the context of an orderly settlement of the debt owed by CL Financial to Trinidad and Tobago and he expects that the exercise to be completed in 2020.

The Finance Minister said that in parallel, the Deposit Insurance Corporation, the liquidator of CLICO Investment Bank (CIB), “after many false starts in the pre-2015 period,” has almost completed its assignment, with a substantial proportion of the debt being settled, allowing substantial shareholdings in blue chip companies, such as Republic Bank, to be transferred to the State.

“Further, the Central Bank of Trinidad and Tobago recently announced the commencement of the final stages of the CLICO resolution with the sale of CLICO’s traditional insurance portfolio to a well-capitalised local insurance company.”

Last week, the Barbados-based Sagicor Life Inc said it had acquired the assets of CLICO and British American Insurance Company (Trinidad) Limited (BAT).

“We are pleased to welcome the policyholders to the Sagicor family and assure them of the same level of protection and service that our existing policyholders enjoy upon the completion,” said. Sagicor group president and chief executive officer, Dodridge Miller in a statement.

The company did not disclose the amount paid to acquire the traditional insurance portfolios of both companies but CLICO’s executive chairman and BAT chairman, Claire Gomez-Miller, said, “Sagicor emerged as the preferred buyer in an open and very competitive tender process with guidance from independent global industry experts.”

A statement issued by the Central Bank of Trinidad and Tobago (CBTT) said since 2009, both CLICO and BAT have been its under control and a resolution strategy with several phases was developed to stabilise the activities of the institutions.

“A key component of the resolution strategy included the sale of the traditional portfolios of BAT and CLICCO to a suitable purchaser at prices consistent with independent valuation.

“Following a transparent, competitive and rigorous bidding process conducted by CLICO/BAT with Central Bank oversight, Sagicor was selected as the preferred purchaser. Agreements for the transfer of their respective traditional insurance portfolios to Sagicor were executed . . . by CLICO and BAT,” the CBTT said in the statement.

It said that in accordance with the Insurance Act, Schemes of Transfer are required before the sale can be completed.

Imbert told Parliament that as a result of decisive intervention by the government, CLICO has now settled approximately TT$15 billion of its debt to taxpayers.

“This excludes the funds which will be received from the sale of the traditional portfolio. We are now in the process of analysing the remaining debt to be repaid by CLICO and CL Financial,” Imbert said, noting that “a full decade after the collapse of CL Financial and the Colonial Life Insurance Company (Trinidad and Tobago) Limited and approximately TT$23 billion later, we are finally reaching a conclusion”. (CMC)

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