Stabroek Business has been reliably informed that in the wake of the bail-out by the Government of Trinidad and Tobago of the operations of four subsidiaries of CL Financial in the twin-island Republic including CLICO (Trinidad), the company’s Georgetown operations have mobilized its senior managers to respond to a number of “enquiries” from local stakeholders.
When Stabroek Business sought to reach local CLICO (Guyana) Chief Executive Officer Geeta Singh-Knight earlier yesterday a staffer in her secretariat said that she was not immediately available.
In a terse statement issued on Friday afternoon after the news out of Port-of-Spain roiled the business sector here, CLICO Guyana said it “wishes to make it clear that developments in Port of Spain, Trinidad involving CL Financial Limited have no financial impact on CLlCO Guyana. CLlCO Guyana is a separate entity within the CL Financial Group, and none of its assets are intertwined with CLlCO [TRINIDAD] or CLlCO lnvestment Bank.
“The facts are that CLlCO lnvestment Bank (CIB) has been sold to Trinidad and Tobago’s First Citizens Bank Limited, and the Government of Trinidad and Tobago will provide the liquidity to support any strain on the insurance company, CLlCO Trinidad backed by assets of CL Financial Limited.
“CLlCO Guyana remains solid with a statutory fund that is in good standing,” the CEO Geeta Singh-Knight said.
CL Financial issued a statement in Port-of-Spain on Wednesday restating that only the four financial services subsidiaries were affected by the bailout plan and that other subsidiaries including CLICO (Guyana) remain unaffected.
A CLICO (Guyana) source said yesterday that the CEO and other senior CLICO managers had been required to provide a number of personal assurances to the company’s clients to buttress the general assurances that have already been given that all was well with the company. The source declined to comment when asked whether there were any plans to pursue a more pro-active initiative to reach stakeholders.
Earlier this week Stabroek Business had spoken to insurance industry officials who had indicated that the generalized assurance which the local CLICO office had sought to offer stakeholders was unlikely to prove to be enough to quell concerns.
One source had told this newspaper that the gravity of the crisis in Port-of-Spain dictates that CLICO’s Guyana operations move quickly to quell concerns here. The source had called for “a much more fulsome response” than that offered through the public statements issued by CLICO’s Georgetown office.
“At the heart of insurance is the principle of utmost
good faith. The local operations of CLICO need to be faithful to this principle and to make full disclosure to the regulatory authorities who, in turn, will have to comprehensively brief the local stakeholders,” the source told Stabroek Business.
The second insurance industry source told Stabroek Business that “nothing short of full disclosure would suffice in the circumstances. This is not a question of not trusting CLICO. There are bigger issues at stake here.” The source said that while the local CLICO office had moved “with some speed” to provide its general assurances about the state of health of the company that “was never likely to be enough” in circumstances where some people may have invested their “life’s savings” with the company.
In the wake of the intervention by the Trinidad and Tobago Government, Ewart Williams, Governor of the country’s Central Bank cited high interest rates to attract deposits to fund high-risk investments; excessive inter-related transactions within the company’s financial group which carry the risk of contagion and high levels of indebtedness carried by companies within the financial group, These problems, the source said, resulted in a huge gap in CLICO (Trinidad’s) statutory fund projected to be at TT$16 billion.
The source noted that here in Guyana CLICO had also been successful in mobilizing “large amounts of funds” by offering interest rates as high as 7 per cent on its Flexible Premium Annuity (FPA) and Executive Flexible Premium Annuity (EFPA) schemes.
The second source told Stabroek Business that since several public sector organizations, businesses and individuals have invested in these schemes one would imagine that CLICO would consider itself sufficiently accountable to them to provide them with a briefing that goes beyond what they have said so far.
Under sub section (1) of Section (30) of the Insurance Act Insurance companies pursuing long-term insurance business are required to retain an amount not less than ninety five per cent of its statutory funds in local investments. The source said that given the considerable level of overseas investments being pursued by CLICO it would be “interesting” to secure a determination of the actual extent of those investments in relation to its total statutory funds.
According to the source local anxieties about the financial health of CLICO were “not unreasonable” in the light of the crisis in its Trinidad and Tobago operations. “It was a loss of confidence in CLICO that precipitated the Trinidad and Tobago situation. We saw a run on CLICO there which resulted in huge withdrawals including a US$120m withdrawal by the National Gas Company.”
And according to the insurance industry official while the move by the Trinidad and Tobago Central Bank to take control of distressed assets in the CL Financial Group was not entirely unexpected, it should be noted that less than two days earlier Group Chairman Lawrence Duprey had dismissed questions put to him by the Trinidad Express about publicly expressed concerns that the CL Financial Group was facing serious financial troubles.
“It took just two days for the picture to change and that in itself is a sobering thought,” the source said.
CLICO’s Guyana operations, meanwhile, has declined to offer a comment on whether and when a full briefing for stakeholders would be forthcoming.
