CLICO cuts debt to taxpayers to $1.6b
(Trinidad Express) The Colonial Life Insurance Company (Trinidad) Ltd’s (CLICO) debt to the Government is now about $1.6 billion.
Express Business understands that the Minister of Finance issued a directive to the Central Bank to get CLICO to release $400 million to the State.
In response to questions from Express Business, Central Bank communications manager Nicole Crooks responded: “At May 31, 2021, CLICO’s outstanding debt to the Government of Trinidad and Tobago is approximately $1.6 billion.”
CLICO has been under the control of the Central Bank since February 13, 2009, when section 44(D) of the Central Bank Act was triggered to allow the Bank to exercise its special emergency powers to step in and manage financial institutions.
Section 44(F) 5 of the Central Bank Act states: “In the performance of its functions and in the exercise of its powers under section 44D the Bank shall comply with any general or special directions of the Minister and shall act only after due consultation with the Minister.”
In a 2011 amendment, 44E(7) of the Act also requires the Central Bank to report quarterly to the Parliament and the High Court on the
progress of the proposals to restructure financial institutions that have come under the Bank’s 44(D) control.
By March 2021, in its report to the High Court and Parliament on its management of CLICO, the Central Bank said CLICO was now solvent and that it still owed the Government $2.09 billion as part of its 2009 bailout arrangement.
“In summary, of the approximately $18 billion (inclusive of preference interest due) provided by the Government in respect of CLICO, approximately $16.6 billion has been repaid by CLICO, leaving a balance of approximately $2.09 billion as at February 28, 2021,” the court report noted.
The report had noted that since 2017, there were several ministerial directives issued to the insurance company for assets or cash which were used to offset its debt to the Government.
The report noted that by January 24, 2019, CLICO made approximately $5 billion in cash payments to the Government “in consideration for an appropriate reduction in CLICO’s liabilities to GORTT.”
“A further cash payment of approximately $300 million (paid in tranches) was made to GORTT by CLICO between March 20 and 27, 2020.
“An additional $125 million was paid to GORTT on July 8, 2020.
On September 17, 2020, pursuant to another ministerial direction, CLICO was directed to pay GORTT $600 million, in cash, in two tranches in exchange for an appropriate reduction in liabilities owed to GORTT. The first tranche of approximately $300 million was paid to GORTT on September 30, 2020 and the second tranche of approximately $300.1 million was paid in two parts on October 24, 2020 and October 30, 2020, respectively,” it said.
CLICO’s 2019 audited report showed that CLICO’s after tax profits plunged by 95 per cent for the year ending December 31, 2019.
CLICO recorded $119.23 million in after-tax profit in 2020, compared with $123.69 million in 2019, as its net results from investing activities totalled $118.05 million in 2020, down from $223.45 million in 2019.
Its net results from insurance activities, declined to a loss of $145.41 million in 2020 from a loss of $178.73 million in 2019.
Despite the decline in profitability, CLICO’s positive net worth climbed to $3.23 billion in 2020, from $3.22 billion in 2019.
It’s total assets amounted to $13.55 billion at the end of 2020, while its total liabilities were $10.31 billion.
It’s been over 12 years that CLICO has been under the control of the Central Bank.
In an interview earlier this year, Central Bank Governor Dr Alvin Hilaire said the Bank is anxious for T&T’s regulator of financial institutions to close the book on this country’s largest bailout.
“As I told you before, we want to get out of this thing yesterday. Right? We are not in the business of running insurance companies. Most of the conditions are no longer there in terms of the systemic issue. And in terms of the health of the financial system, so we don’t have a systemic problem,” he had said.
The sale of the traditional portfolios of CLICO and British American (Trinidad) to Sagicor remains stalled following an injunction granted to Maritime Life (Caribbean) Ltd in July 2020.
Section 44G of the Central Bank Act sets out the requirements under which the Central Bank can end its control of a financial institution under section 44(D).
Section 44(G) says the Central Bank (1) Where the Bank has under section 44D assumed control of an institution, the Bank shall, subject to subsection (2), remain in control of, and “may continue to carry on the business of that institution until such time as the Bank...as it thinks appropriate (to issue) a notification that it has ceased to be in control of the institution.”
The section states: “The Bank shall relinquish control and shall not continue to carry on the business of an institution where—
(a) the circumstances on the basis of which the Bank assumed control of the institution under section 44D have ceased to exist;
(b) the Bank is of opinion that it is no longer necessary for it to remain in control of the business of the institution; or
(c) the Bank has sold or otherwise disposed of the property, assets and undertakings of the institution.”
Section 44(G)4 of the Central Bank Act states: “Where the Bank has, in pursuance of section 44D, assumed control of an institution, the High Court may, upon the application of the directors of the institution acting independently of the Bank, if it is satisfied that it is no longer necessary for the protection of the depositors or creditors of the institution that the Bank should remain in control of the business of that institution, order that the Bank cease to control the business of that institution as from a date specified in the Order