CLICO was victim of CL Financial | Local company

IN 2018, the insurance company CLICO submitted an $11 billion claim against its parent company, CL Financial (CLF) which is in liquidation.

The liquidation is managed by Grant Thornton.

To date, the CLF has only reimbursed $335,317,275 of the claim.

In an interview with the Sunday Express last Friday, CLICO Executive Chairman Claire Gomez-Miller observed that none of the claims submitted have been rejected but some claims, in the form of trust deeds, have subject of legal proceedings.

Trust deeds have been a thorny issue for liquidators.

Gomez-Miller said she hired a former central banker, Corey Gomez, to investigate the trust deeds and create a paper trail.

In the seventh report of the liquidators, dated December 18, 2020, they noted: “Our investigations have identified eight trust indentures for which CLF is the counterparty. If these trusts were determined to be valid, the impact would, among other things, see CLF’s stake in HCL drop from 70% to 37% and CLF’s stake in CL World Brands (the indirect owner of the 44 87% of the CLF group in Angostura Holdings Ltd) goes from 100% to around 38%.

He continued: “As a result, the determination of the validity of the various trust agreements will have a significant impact on the value of the CLF estate, potentially in excess of $1 billion. Trust deeds therefore require an exhaustive investigation to be undertaken by the liquidators to fully understand their origin, as well as a legal expertise to be undertaken as to their validity.

In 2020, CLICO won a trust deed regarding its stake in Methanol Holdings (International) Ltd, the Oman-based methanol company. On August 20, it was ordered that the declaration of trust was validly executed and that the MHIL shares belonged to CLICO.

Gomez-Miller noted that CLICO is now in court with the liquidators of CL World Brands because there are three trust deeds in which the insurance company claims ownership of 42% of the beverage holding company.

She described CLICO as a “victim” and the organization as one that has been badly hurt and sadly stigmatized as a result.

However, the power of the CLICO brand has endured, she said.

In the four years since she led the organization, she has not spoken publicly about the company, the steps under her leadership that have been taken to reduce its indebtedness to the government, and the work it does. took to bring it back to profitability.

But 2022 will be significant for the company, it will be 85 years old, and the Central Bank could give up control of the company.

His task was always clear: to repay the CLICO debt to the taxpayers of T&T with interest.

It took 12 years for the debt to grow from $18 billion in 2009 to $1.2 billion in 2021.

She lamented a missed opportunity to reduce debt to less than $1 billion in 2021.

As part of the CLICO resolution plan, CLICO’s assets are sold or transferred to the State to reduce its debt.

She acknowledged that GORTT is aware of the assets that would be strategic for them.

“We keep this in mind when it comes to cash payments. When there is a certain amount, we tell the Central Bank that we would like to repay a certain amount, so when that happens, we are already ready. It’s not like you get an onerous directive.

“We were trying to get it down to less than a billion dollars last year. That was my plan, but I didn’t hit my target. Not all the targets I hit, I have to tell you The plan is to pay it back this year. I’d be surprised if we didn’t,” she said.

Return to Solvency

In March 2021, the Central Bank, in its Quarterly Central Bank Report, which is filed with the High Court under Section 44E(7) of the Act, stated that CLICO is now solvent.

The report noted, “The 2019 statutory fund calculation indicated that the CLICO statutory fund has sufficient and appropriate assets to support the traditional portfolio and other liabilities of the statutory fund.”

Gomez-Miller, who spent 25 years in the energy industry before assuming his appointment at CLICO, said the focus was on the company’s solvency.

One of his first actions was to assemble his management team.

She observed that she entered CLICO in July 2017 and in September CLF went into liquidation.

“It meant there would have been a lot more emotional turmoil in the organization,” she said.

According to her, CLICO was poorly managed by its former management team because it generated a lot of cash, which was withdrawn for investments within the group.

“Under Cryill Duprey, policyholder interest remained at 100%. When it came under the control of CL Financial and Lawrence Duprey, you saw the change in governance and leadership and the style of doing business,” she said.

His management style was different.

“I tend to be very clinical,” she said.

She noted that a big inflection point was to convince staff that the Central Bank and the government were not enemies.

“It was about rebuilding the organization, reducing the debt to the government. Also, put in place a governance structure, policies and controls in the organization. CLICO has become a risk intelligence organization,” she said.

The work showed up in the company’s financial statements.

More than a decade after being placed under the control of the Central Bank, CLICO recorded an after-tax profit of $123.69 million in 2019 and $119.23 million in 2020. Its total assets amounted to to $13.55 billion at the end of 2020, while its total liabilities were $10.31 billion.

CLICO’s 2020 financial statements noted, “The long-term insurance and investment contract liabilities represented on the company’s balance sheet of $7.7 billion provide an appropriate provision for future obligations under company policies and meet the requirements of the Act and any other regulations made thereunder.

She credits her leadership team with bringing stability to the organization.

“The CLICO of yesteryear was where everyone was so proud, they were already self-sufficient, but their self-esteem was not the same after 10 years of beatings. The company lost a lot of senior executives at that time They were roughed up and I think they suffered for a long time, she said.

Currently, CLICO has 130 employees, 20 consultants and approximately 90,000 customers.

The year to come

Gomez-Miller noted that the sale of CLICO’s traditional insurance portfolio to Sagicor has stalled. The sale was halted after an injunction was granted to Maritime Life (Caribbean) Ltd in July 2020. She explained that the case had to go to the Privy Council.

“If the Central Bank wins, it means the sale can take place. If Maritime wins, that means the case is now going to court to be heard. And then we start another long process. We really don’t know when this case will be settled. So what’s happened here is we’re operating and managing the organization as if it’s going to exist for the next five to 20 years. So no matter what happens, the organization is run as if it shouldn’t be broken up – that’s an ongoing concern in the best interests of policyholders,” she said.

She noted that even if the insurance portfolio disappears, CLICO will still be a $3 billion business.

As for writing or venturing into new business/investments?

Not at this time.

“It is a risk that must always be managed. At what point does it become detrimental if we continue without new business? I think if the Central Bank pulls out this year, a tough decision will have to be made. Are we starting a new business? How can we move CLICO forward because you can’t run a wallet forever. I think that’s one of the important things to take care of as we move forward. Managing that risk and making sure our reputation, our brand or our customer service is top notch, if you come to see us,” she said.

“The strategic objective we have now is how do we build the shared value of our organization? How to ensure that when you value the organization, the stock price is very attractive if you want to bring it into the market. So at this point CLICO has a lot of options,” she said.

She said that the Central Bank has a success in CLICO.

“We must recognize that the Central Bank has a success story to tell because, looking at the situation of CLICO, one could easily have thought that it might never have been brought back to a profitable organization. So yes, it took time and even paid off that debt. The Central Bank is to be applauded because under his leadership they have been able to really stabilize the organization, turn it around with a strong industrial relations climate and resilient staff,” she said.

She said one of her dreams was to create a CLICO Cryil Duprey museum.

“There are a lot of works of art. We want to preserve this history of people. If I get the chance to do it, I will,” she said.

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