Suzanne Shep­pard

Cen­tral Bank Gov­er­nor Jwala Ram­bar­ran has an­nounced a five-point plan to set­tle out­stand­ing debts owed by the Colo­nial Life In­sur­ance Com­pa­ny (CLI­CO) to pol­i­cy­hold­ers and the gov­ern­ment.

Speak­ing at a press con­fer­ence yes­ter­day, Ram­bar­ran said the res­o­lu­tion plan "will bring clo­sure to this deep fi­nan­cial wound in­flict­ed on thou­sands of CLI­CO pol­i­cy hold­ers and Cen­tral Bank is do­ing all in its pow­er and more to en­sure that such a fi­nan­cial trau­ma will nev­er again be in­flict­ed on you."

He said the com­pa­ny is now in a po­si­tion to make its first pay­ment of just over $7 bil­lion to the T&T Gov­ern­ment. This amounts to more than 40 per cent of CLI­CO's debt to gov­ern­ment.

This de­vel­op­ment comes al­most six years af­ter the col­lapse of the in­sur­ance em­pire in 2009 which prompt­ed gov­ern­ment to em­bark on a res­cue plan in­volv­ing bil­lions of dol­lars.

Ram­bar­ran said gov­ern­ment, which is CLI­CO's biggest cred­i­tor, re­ceived $4 bil­lion in cash to­day, with set­tle­ment of the re­main­ing $3 bil­lion in lieu of cash through the trans­fer of three CLI­CO as­sets–An­gos­tu­ra Hold­ings Lim­it­ed, CL World Brands Lim­it­ed and Home Con­struc­tion Lim­it­ed.

In ad­di­tion, CLI­CO's 1,500 short-term in­sti­tu­tion­al prod­ucts (STIP) pol­i­cy­hold­ers will re­ceive 85 per cent of their claims to­tal­ing $950 mil­lion in three months and will re­ceive the re­mainider af­ter the sale of Methanol Hold­ings In­ter­na­tion­al Lim­it­ed (MHTL).

"These two pay­ments are be­ing made ac­cord­ing to the terms of the CLI­CO Res­o­lu­tion Plan de­vel­oped by Cen­tral Bank and fi­nalised last week Mon­day af­ter con­sul­ta­tion with the Min­is­ter of Fi­nance and the Econ­o­my, as re­quired un­der Sec­tion 44F of the Cen­tral Bank Act.

"Cen­tral Bank's CLI­CO Res­o­lu­tion Plan was de­vel­oped to re­pay all cred­i­tors and pol­i­cy­hold­ers and to ul­ti­mate­ly fa­cil­i­tate the trans­fer of CLI­CO's tra­di­tion­al in­sur­ance port­fo­lio to a suit­able buy­er by en­sur­ing that enough ap­pro­pri­ate as­sets are put aside," Ram­bar­ran said.

He said CLI­CO's De­cem­ber 2014 man­age­ment ac­counts show that there are now suf­fi­cient as­sets to pay the com­pa­ny's li­a­bil­i­ties in its statu­to­ry fund. This is main­ly due to the sale of its share­hold­ing in MHTL last Oc­to­ber ,which added just over $7 bil­lion in cash to the statu­to­ry fund.

Ram­bar­ran said in the first phase of the pay­ment plan, Gov­ern­ment has been paid $4 bil­lion in cash. STIP pol­i­cy hold­ers, who did not take up Gov­ern­ment's of­fer to be paid through bonds and shares in the CLI­CO In­vest­ment Fund, will be paid $950 mil­lion of the just over $1 bil­lion owed to them.

"Gov­ern­ment and these 1,500 pol­i­cy­hold­ers will re­ceive first pri­or­i­ty for pay­ment as their pol­i­cy oblig­a­tions are ac­cord­ed le­gal pro­tec­tion through as­sets held in CLI­CO's Statu­to­ry Fund. Of course, CLI­CO's 100,000 odd tra­di­tion­al pol­i­cy­hold­ers have equal pro­tec­tion through the Statu­to­ry Fund and our process has en­sured that suf­fi­cient as­sets are avail­able to meet their oblig­a­tions," he said.

The sec­ond phase will cov­er the re­main­ing 15 per cent of claims from Gov­ern­ment and the bal­ance of non-as­sent­ing STIPs pol­i­cy­hold­ers and will be fund­ed from the pro­ceeds of the sale of CLI­CO's 57 per cent share­hold­ing in Methanol Hold­ings (In­ter­na­tion­al) Lim­it­ed (MHIL) for an es­ti­mat­ed $2 bil­lion.

In the third phase, will cov­er the com­pa­ny's li­a­bil­i­ties to non-Gov­ern­ment mu­tu­al fund hold­ers and non-res­i­den­tial STIPs pol­i­cy­hold­ers.

Ram­bar­ran said CLI­CO's oblig­a­tions to the group that did not ac­cept the Gov­ern­ment's vol­un­tary of­fer amount to about $410 mil­lion. This pay­out will be fund­ed by the sale of CLI­CO's 7 per cent share­hold­ing in Re­pub­lic Bank Lim­it­ed and the sale of oth­er as­sets.

The Cen­tral Bank Gov­er­nor as­sured that CLI­CO's 18,000 as­sent­ing pol­i­cy­hold­ers "will not be made worse off" for ac­cept­ing Gov­ern­ment's of­fer and Fi­nance and the Econ­o­my Min­is­ter Lar­ry Howai will an­nounce­ment arrange­ments for that group short­ly.

He said in the case of British Amer­i­can In­sur­ance Com­pa­ny Trinidad Lim­it­ed (BAT), there is a broad­ly sim­i­lar pay­ment plan but be­cause of fi­nan­cial con­straints with­in the com­pa­ny, some as­sis­tance is re­quired.

"As a re­sult, Gov­ern­ment will pro­vide fund­ing as­sis­tance to BAT to meet statu­to­ry fund and oth­er cred­i­tor li­a­bil­i­ties and to pro­vide the nec­es­sary as­sets to en­able the po­ten­tial trans­fer of BAT's tra­di­tion­al in­sur­ance port­fo­lio to a suit­able buy­er," Ram­bar­ran said.

Read the full state­ment made by Cen­tral Bank Gov­er­nor Jwala Ram­bar­ran.