PORT-OF-SPAIN, Trinidad, Friday May 30, 2014, CMC – The Central Bank of Trinidad and Tobago is seeking to assure policyholders that the terms of conditions of their policies “have not changed at all” and that the plan for the resolution of the insurance giant “has always included the transfer of the traditional insurance portfolio to a third party insurance company.
The Central Bank last week confirmed it had put up for sale, the cash-strapped insurance company, whose near total collapse four years ago, led to the Trinidad and Tobago government pumping billions of dollars to keep it afloat.
“As part of the resolution strategy for CLICO, the Central Bank proposes to transfer CLICO’s traditional insurance portfolio for value to an acquiring insurance company that is well capitalised, has a proven track record and the capacity to honour all obligations to policyholders,” CLICO said in a statement.
In newspaper advertisements over the weekend, the Central Bank said that “CLICO will continue to pay your monthly pension, honour your health and life claims, renew all group and health and life contracts and receive and process your premiums”.
It said that the plan for the resolution of CLICO “has always included the transfer of the traditional insurance portfolio to a third party insurance company and, as such, this group of policy holders was not included in the payout arrangement by government, but continued to be serviced by CLICO”.
Central bank Governor Jwala Rambarran said that as the first step in the transfer of the traditional portfolio, “an independent valuation is being performed in accordance with the Central bank Act.
“Following this exercise, the market will be invited to make offers for CLICO’s traditional business through an open and transparent process. The preferred buyer must meet the regulatory requirements of the Bank, including meeting capital and “fit and proper” requirements”.
He said once a preferred buyer has been identified, the Central Bank will follow the transfer scheme process under the Insurance Act.
Rambarran said that the Central Bank “continues to undertake the resolution of CLICO in a transparent manner and I am committed to keeping policy holders informed on the progress”.
CLICO and its sister company, the British American Insurance Company (BAICO) collapsed in 2009 and the Trinidad and Tobago government signed a shareholders’ agreement with then CLICO chairman Lawrence Duprey following the signing of a memorandum of understanding (MOU) between them on January 30, 2009. The MOU gave the government control of 49 per cent of CLICO’s shares.
The then Patrick Manning government injected seven billion Trinidad and Tobago dollars (US$1.01 billion) into CLICO in 2009 to keep the collapsed insurance firm running and protect policy holders.
Through the passage of legislation in the Parliament, the Kamla Persad Bissessar led coalition People’s Partnership Government committed a further TT$13 billion (US$2.01 billion) to keep the floundering insurance company afloat.
Earlier this year, CLICO, announced it had made an after tax profit of nearly TT$3.8 billion (One TT dollar = US$0.16 cents) in 2012.