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Financial News

Mar 2009 Financial News

The Clico brand in the Caribbean remains under serious pressure

Mar 06, 2009

Clico's troubles first surfaced publicly in January when the Trinidad and Tobago government offered a rescue package for its parent company CL Financial.

Since then, Clico's operations in the Bahamas, Guyana and Belize have either been liquidated or brought under emergency state control.

And now in Barbados, its life insurance arm may be sold.
Prime Minister David Thompson told a televised media conference that Clico was in discussions with a local firm regarding the sale of Clico Life.

He hoped that a memorandum of understanding between the two sides would soon be signed as a first step.

Clico's other investments in Barbados in general insurance, property development and mortgage financing will not be involved in the deal.

Thompson has faced strong criticism from the opposition Barbados Labour Party (BLP) over his handling of Clico's troubles.

Healthy finances

The leader of the BLP, Mia Mottley, says she has filed a motion of censure against the government in parliament.
Mottley had warned of a debt of around US$46 million in Clico Life's Statutory Fund, seriously undermining the viability of the fund.

The fund is required to meet regulatory standards in the event the company runs into financial difficulties.
The Thompson administration had insisted that Clico had healthy finances.

But he acknowledged in his Sunday news conference that Clico had fallen short of its statutory obligations from 2004-2007, when Mottley's party was in power.

Thompson said: "Immediately we recognised the shortfall, the Cabinet of Barbados made a decision ... to rectify any deficiencies in the statutory fund, that we will seek to acquire a major asset from Clico and have the acquisition funds injected into the entity, should there be any concerns.

"Fortunately, there have not been any calls on Clico (Life) that it has not been able to meet, either here or in the Eastern Caribbean."Real estate

The Bahamas was the first government to take action over the conglomerate outside of Trinidad and Tobago.

The Registrar of Insurance in Nassau ordered the liquidation of Clico Bahamas in late February.

The action was prompted by the decline in the market value of Clico Bahamas' real estate investment in the United States as well as by the uncertainty regarding the financial position of its parent.

This placed the spotlight on Belize, where there is a subsidiary of Clico Bahamas, and Guyana, where the local branch has significant investments in the Bahamas operation.

The authorities in Georgetown and Belmopan felt obligated to step in to put Clico operations in their countries under judicial management.

The action effectively bars the companies concerned from issuing any new policies, varying any existing contracts or repatriating any funds and disposing of any assets without the prior written consent of regulators.

Since announcing its bailout package, the Trinidad and Tobago's government has said that it will support Clico's liabilities, clean up the firm and attempt to list it on the country's stock market in the future.

The scale of the challenge the government faces was brought home when Trinidad Central Bank governor Ewart Williams said CL may incur losses of TT$10bn (US$1.60bn) in 2008.

CL Financial also owns Clico Investment Bank and stakes in several other financial firms in Trinidad and Tobago, such as Republic Bank, and across the Caribbean.

(Courtesy of BBC Caribbean)


Source:
Jamaica Observer
Friday, March 06, 2009

http://www.jamaicaobserver.com/magazines/Business/html/20090305T200000-0500_147124_OBS_THE_CLICO_BRAND_IN_THE_CARIBBEAN_REMAINS_UNDER_SERIOUS_PRESSURE.asp