Clico

The Clico headquarters located on St. Vincent Street Port of Spain.  

The Colonial Life Insurance Company (Trinidad) Ltd (CLICO) now owes the Government $1.21 billion as part of its 2009 bailout arrangement.

It’s taken 12 years to have the debt reduced from $18 billion in 2009 to now $1.2 billion in 2021.

This is according to the 40th quarterly report of the Central Bank, which was filed in the High Court pursuant to section 44E (7) of the Act, for the quarter that ended September 30, 2021.

The report is a progress report of proposals to restructure CLICO, BAT and Clico Investment Bank (CIB)

“Payments for interest on the preference shares due to the Government have commenced. As at August 31, 2021, the remaining interest due to the Government on these preference shares amounted to approximately $27.9 million. In summary, of the approximately $18 billion (inclusive of preference interest due) provided by the Government in respect of CLICO, approximately $16.78 billion has been repaid by CLICO, leaving a balance of approximately $1.21 billion, as at September 30, 2021,” according to the report.

The report noted that pursuant to directions from the Minister of Finance of July 13, 2016, Government received at least 15 payments, totaling $5 billion from CLICO between July 25, 2016 and October 30, 2020.

In March 2021, according to that quarterly report, the Central Bank had said that CLICO was now solvent and that it still owed the Government $2.09 billion as part of its bailout.

By May 2021, a ministerial directive was given to the Central Bank to release $400 million to the State.

At that time the Central Bank said, “At May 31, 2021, CLICO’s outstanding debt to the Government of Trinidad and Tobago is approximately $1.6 billion.

“Pursuant to a Ministerial direction, CLICO was directed on September 21, 2021 to pay GORTT approximately $380 million in cash in consideration for an appropriate reduction in liabilities owed to GORTT in order of priority. The payments were made on September 30, 2021,” the latest report said.

“Over the period July 25, 2016 to August 31, 2021, approximately $486.2 million (15 per cent balance or, where applicable, 100 per cent of contractual liability plus interest) and $1,155 million was paid to 757 CLICO STIP holders and 34 mutual fund holders, respectively of the total value payable. The balance of monies owing to this group is available for payment as and when the individuals involved make the appropriate requests,” it said.

CLICO has been under the control of the Central Bank since 2009, in accordance with Section 44D of the Central Bank Act.

In an interview earlier this year, Central Bank Governor Dr Alvin Hilaire said he was 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 CLICO traditional portfolio to Sagicor remains stalled following an injunction granted to Maritime Life (Caribbean) Ltd in July 2020.

The 2020 financials of CLICO noted: “The long-term insurance and investment contract liabilities represented in the balance sheet of the company amounting to $7.7 billion make proper provision for the future obligations under the companies’ policies and meets the requirements of the Act and any other regulations made thereunder.”

Ministerial directives

Despite CLICO being under the management of the Central Bank, the report noted that a number of transfers were made pursuant to ministerial directive over the course of the Central Bank’s management of CLICO.

These directives are permitted under section 44F (5) of the Central Bank Act, which 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.”

Among them recorded in the court document:

• In January 2017, in light of the unanticipated delay in the sale of MHIL shares and pursuant to directions from the Minister of Finance to the Central Bank, CLICO obtained an independent valuation of CLICO’s 100 per cent shareholding in Occidental Investment Limited (OIL) and Oceanic Properties Limited (OPL) in preparation for the transfer of these shareholdings to the Government, thereby appropriately reducing CLICO’s liabilities to Government. The valuation report was completed and the share sale and purchase agreement executed by the parties on March 28, 2017. On May 8, 2017, the parties signed the necessary share transfer forms to facilitate the transfer of CLICO’s 100 per cent shareholding in OIL and OPL to the State Enterprise, Golden Grove-Buccoo Ltd.

• On April 11, 2018, approximately $107 million of a WASA loan facility together with a cash payment of $21 million were effectively transferred to the Government for an appropriate reduction in liabilities owed by CLICO to the Government in order of priority.

• Pursuant to directions from the Minister of Finance, agreements were executed on March 29, 2018 for the transfer of CLICO’s approximately 21 per cent shareholding in One Caribbean Media Ltd (OCM) and approximately five per cent shareholding in West Indian Tobacco Company Ltd to the Government based on an independent valuation, in consideration for an appropriate reduction in liabilities owed by CLICO to the Government in order of priority. These shares were transferred on April 25, 2018.

• On April 30, 2018, CLICO received from the liquidator of CIB, the Deposit Insurance Corporation, an interim distribution of 27,619,219 Republic Bank Ltd (RBL) shares and 848,564 OCM shares. Pursuant to directions from the Minister of Finance, the Central Bank directed CLICO to transfer to the Government the RBL shares and the OCM shares based on the price determined by an independent valuation in consideration for an appropriate reduction in liabilities owed to the Government in order of priority. These shares were transferred to the Government on July 4, 2018.

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