The Governor of the Central Bank has unveiled a picture of CL Financial that shows that Trinidad and Tobago's largest insurer operated with a risky business model and global deals that moved money out of CLICO, creating a $10 billion deficit.
Ewart Williams said Friday CLICO's parent company moved billions of dollars of policyholders' funds to other projects in the CL group. The result was that in four years its statutory reserve funds went from a surplus in 2006, to a $10 billion deficit.
And Williams said matters have been made worse because the assets of some of CL subsidiaries that were funded from CLICO are worthless. That, he said drives the deficit to nearly $17 billion.
It means the Government has to shore up the company to help depositors and policyholders. Williams said it has provided a first tranche of $1 billion in cash. He told reporters the funds would be sourced through the raising of Government bonds.
CLICO has about 100,000 policyholders and holds pension funds for tens of thousands of workers in Trinidad and Tobago. It has a commitment for monthly payment for pensions and annuities of $40 million, but CLICO currently bank balance of only $15 million. And it is running "a sizable bank overdraft", Williams said.
Williams said the Central Bank is "working frantically" to prepare deposit files to transfer CIB's holdings to the government-owned First Citizens Bank. The bank dissolved CIB two weeks ago and took control of it as part of the Memorandum of Agreement signed on January 30 between CL Chairman Duprey, Government and the Central Bank for the State to assist the CL Financial subsidiaries.
"The exercise turned out to be a major challenge because of the state in which CIB's records have been found," Williams said. He added that the exercise would be completed in a week, and funds would be available by February 25.
The CL brokerage house, CMMB, will also be transferred to First Citizens within the next ten days, said.
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