Central bank announces resolution plan for CLICO
The Central Bank of Trinidad and Tobago Friday said it had instituted a five-point plan that would result in billions of dollars being used to settle the outstanding debts owed by Colonial Life Insurance Company (CLICO).
“Central Bank CLICO’s resolution plan will bring closure to this deep financial wound inflicted on thousands of CLICO policyholders and Central Bank is doing all in its power and more to ensure that such a financial trauma will never again be inflicted on you,” said CBTT Governor Jwala Rambarran at a news conference.
CLICO, the flagship of regional conglomerate CL Financial, collapsed in 2009 with the Trinidad and Tobago pumping billions of dollars into a rescue plan.
Rambarran said the broad elements of the plan would result in the Trinidad government as “the single largest creditor of CLICO will receive TT$4 billion in cash today and the balance of around TT$3 billion in lieu of cash upon the transfer of three CLICO assets - Angostura Holdings Limited, CL World Brands Limited and Home Construction Limited”.
He said the plan also allows for the 1,500 short term institutional products - STIP - policyholders to receive 85 per cent of their claims, totalling TT$950 million, within three months, and the balance after the sale of Methanol Holdings International Limited.
The Central Bank Governor said creditors outside the Statutory Fund, such as non-government mutual fund holders and non-residential STIP policy holders would be paid following the sale of CLICO RBL shares and other assets.
Rambarran said the policyholders who accepted the government’s offer of bonds and shares in the CLICO Investment Fund “will be no worse off”.
“The Minister of Finance and the Economy (Larry Howai) will provide details shortly on how these policy holders will be treated,” he said.
The central bank governor told the news conference that the claims of policyholders with British American Insurance Company and creditors would also be settled.
Rambarran told reporters that based on the latest financial report on British American, it is still “in a negative equity position and its statutory fund is still in deficit, therefore it cannot meet its obligations to its policyholders and creditors.”
He added that the government has decided that “it will buy that level of assistance that is needed to resolve” British American.
“At the moment we are not in a position to communicate what that particular number is because it depends on having the most up to date and recent accounts and we are in the process of finalising those statements,” he said.
Chairman of The CLICO Policyholders Group, Peter Permell told the Caribbean Media Corporation that his group was pleased with the announcement by the central bank.
“It could not have come a day too soon,” he said, adding that it is “a major step closer…in ensuring that the terms and conditions of the insurance contracts are met in full”.
Rambarran dismissed suggestions that the CLICO plan was tantamount to a fire sale of the company’s assets, saying that when the central bank assumed control of both CLICO and British American Insurance in 2009 “we indicated we would be treating both entities in a broadly similar manner and that has happened over the intervening period. So what we are doing today is no different from the principle that we said we would abide by,” he said.