PORT-OF-SPAIN: The Colonial Life Insurance Company (CLICO), the regional insurance giant that almost collapsed four years ago, has made an after tax profit of nearly TT$3.8-billion (one TT dollar=US$0.16 cents) in 2012.
CLICO’s audited financial results for 2012 were published on its website Friday, after the company’s board, which is chaired by former finance minister Gerald Yetming, approved the financials for issue on January 29.
According to the company’s financial statements, the 2012 after tax figure was more than five times greater than the TT$702-million it declared in 2011.
CLICO declared profits of TT$6.2-billion from its investing activities for the financial year, which eclipsed the TT$2.2-billion loss from insurance activities.
The most significant contributor to CLICO’s investment profits was the TT$3.8-billion gain the company booked on the disposal of 40 million Republic Bank shares in November 2012. The bank shares, which were then worth an estimated TT$4.3-billion, constituted 84 per cent of the underlying investment in the CLICO Investment Fund (CIF), which converted the 11- to 20-year zero-coupon bonds into units in the CIF.
However, the KPMG-conducted audit indicates that CLICO had a negative net worth of TT$6.5-billion. This is due to the company’s liabilities, recorded at TT$29-billion, while assets were valued at TT$22.4-billion at the end of 2012.
“The company’s board, together with the Central Bank and the Government are working to eliminate the current capital efficiency where the company has excess liabilities to assets,” the financial statement read.
CLICO’s liabilities include nearly TT$16-billion in taxpayers’ money, comprising $4.9-billion in preference shares and close to TT$11-billion in Executive Flexible Premium Annuities (EFPA’s) that CLICO policyholders have ceded to the State in exchange for cash, zero-coupon bonds and units in the CIF.
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$1.0- billion) into CLICO in 2009 to keep the collapsed insurance firm running and protect policy holders.
A few months later, through the passage of legislation in 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.
Last month, the Barbados government said it would shortly approve a new plan for the restructuring of CLICO operations. Finance and Economic Affairs Minister, Chris Sinckler, has announced that the Freundel Stuart administration would return to the High Court to indicate it has thrown its full support behind the restructuring plan.
The appointment of the judicial manager is part of the initiative by Eastern Caribbean governments, including Barbados, to recover some of the assets of policy holders with CLICO.