On Mon­day, the 12th re­port of the joint liq­uida­tors of CL Fi­nan­cial, dat­ed Oc­to­ber 20, 2023, was made avail­able.

The doc­u­ment was signed by an at­tor­ney for Lex Caribbean and ad­dressed to the Reg­is­trar at the Hall of Jus­tice and to Rom­ney Thomas, at­tor­ney-at-law at Hob­son’s.

The most strik­ing thing about the 12th re­port of the joint liq­uida­tors is that it ap­pears to set a time­line for the di­vest­ment of the group’s shares in the in­sur­ance com­pa­ny, Cli­co.

As not­ed in this space in the Oc­to­ber 12 edi­tion of this pub­li­ca­tion, Cli­co has 2,950,000 or­di­nary shares is­sued and out­stand­ing and three share­hold­ers com­pris­ing:

• ↓CL Fi­nan­cial Ltd (in liq­ui­da­tion) with 1,476,171 shares ac­count­ing for 50.03 per cent;

• ↓Cor­po­ra­tion Sole (Min­is­ter of Fi­nance) with 1,450,000 shares ac­count­ing for 49.15 per cent; and

• ↓Trustees of CL Fi­nan­cial Ltd with 23,829 shares and 0.807 per cent.

In the re­port, the joint liq­uida­tors note that the Cen­tral Bank ter­mi­nat­ed con­trol of Cli­co ef­fec­tive De­cem­ber 1, 2023, with con­trol re­vert­ing to its three share­hold­ers.

This has meant that the man­date of the in­sur­ance com­pa­ny’s board has changed.

“The joint liq­uida­tors have been work­ing with GORTT (the oth­er sig­nif­i­cant share­hold­er), and the Cli­co board and man­age­ment in as­cer­tain­ing the cur­rent sta­tus and strate­gic di­rec­tion of Cli­co. On Oc­to­ber 10, 2023 the share­hold­ers of Cli­co elect­ed a new board and chair­man.

“It is an­tic­i­pat­ed that dur­ing the next six months a fur­ther un­der­stand­ing of Cli­co’s strate­gic di­rec­tion will be de­vel­oped and fol­low­ing, the joint liq­uida­tors will be­gin the process of sell­ing the com­pa­ny’s ma­jor­i­ty in­ter­est in Cli­co.”

This in­di­cates that by April 2024, in six months time, the joint liq­uida­tors “an­tic­i­pate” that they will be­gin the process of sell­ing CL Fi­nan­cial’s ma­jor­i­ty in­ter­est in Cli­co.

De­spite the fact that Cli­co stopped writ­ing new busi­ness with ef­fect from Sep­tem­ber 1, 2014—and ter­mi­nat­ed the ser­vices of its agents ef­fec­tive Sep­tem­ber 24, 2014, the in­sur­ance com­pa­ny re­mains prof­itable, de­clar­ing an af­ter-tax prof­it of $294.01 mil­lion in 2022, down 20 per cent from the $367.61 mil­lion it re­port­ed in 2021.

The com­pa­ny col­lect­ed $168 mil­lion in in­sur­ance pre­mi­ums, while pay­ing out $412.68 mil­lion in ben­e­fits and claims. Cli­co’s un­der­writ­ing loss of $324.55 mil­lion was more than com­pen­sat­ed by its net re­sults from in­vest­ing ac­tiv­i­ties of $701.7 mil­lion.

Cli­co al­so has a very strong bal­ance sheet with to­tal eq­ui­ty of $3.80 bil­lion and as­sets of $13.09 bil­lion, some 63 per cent ($8.25 bil­lion) of which are Gov­ern­ment se­cu­ri­ties bonds.

But if the joint liq­uida­tors “an­tic­i­pate” that they will be­gin the process of sell­ing CL Fi­nan­cial’s 50.03 per cent in­ter­est in Cli­co by April 2024, sev­er­al is­sues arise:

i) The for­mer ex­ec­u­tive chair of Cli­co, Claire Gomez-Miller, in an in­ter­view af­ter the Oc­to­ber 10 share­hold­ers’ meet­ing to choose a new board, said the com­pa­ny is ready to start sell­ing new busi­ness. “How­ev­er there is a process that needs to take place, which is the ap­pli­ca­tion for a new busi­ness li­cence. When that is com­plet­ed, Cli­co should be in a po­si­tion to sell new prod­ucts,” said Gomez-Miller.

She al­so in­di­cat­ed that Cli­co’s ap­pli­ca­tion to sell new busi­ness has to wait on the com­ple­tion of IFRS-17 fi­nan­cial state­ments com­par­ing 2022 and 2023 fi­nan­cial re­sults.

Ques­tion: Will CL Fi­nan­cial sell its ma­jor­i­ty stake in the in­sur­ance com­pa­ny be­fore or af­ter Cli­co re­sumes the sale of new busi­ness?

ii) On Sep­tem­ber 30, 2019, Cli­co ex­e­cut­ed a sale and pur­chase agree­ment with Sagi­cor Life Inc for the dis­pos­al of Cli­co’s tra­di­tion­al in­sur­ance port­fo­lio. The ef­fec­tive date of the trans­fer is de­pen­dent on reg­u­la­to­ry ap­proval from the Cen­tral Bank, ac­cord­ing to Cli­co’s 2019 au­dit­ed fi­nan­cial re­port, which adds, “The sale and pur­chase agree­ment con­tem­plate with­in a pe­ri­od of two years from Sep­tem­ber 30, 2019 for the trans­fer to take place.”

Ques­tion: Sagi­cor Fi­nan­cial Com­pa­ny’s cur­rent CEO, An­dre Mousseau, and its pre­vi­ous CEO, Do­dridge Miller, have both said that the Toron­to Stock Ex­change-list­ed com­pa­ny is still in­ter­est­ed in ac­quir­ing Cli­co’s tra­di­tion­al in­sur­ance port­fo­lio. Af­ter more than four years, does Sagi­cor still have a claim on the port­fo­lio?

iii) Mar­itime Life (Caribbean) Ltd filed an ap­pli­ca­tion for leave to make a claim for ju­di­cial re­view of the sale and pur­chase agree­ment for the tra­di­tion­al port­fo­lio in No­vem­ber 2019.

Mar­itime al­so re­ceived a draft or­der “pro­hibit­ing the Cen­tral Bank from tak­ing steps to pro­vide reg­u­la­to­ry ap­proval or to oth­er wise progress or fi­nalise the trans­fer of the tra­di­tion­al in­sur­ance port­fo­lio” to Sagi­cor pend­ing the hear­ing and fi­nal de­ter­mi­na­tion of this mat­ter. That’s from Cli­co’s 2022 au­dit­ed fi­nal re­sults.

The Mar­itime law­suit went to T&T’s Court of Ap­peal and the Privy Coun­cil, which dis­missed the Cen­tral Bank’s ap­peal against the de­ci­sion of a High Court judge to grant the leave for ju­di­cial re­view.

Ac­cord­ing to Cli­co’s 2022 au­dit­ed fi­nan­cials, which were re­leased in April 2023: “The sub­stan­tive case of ju­di­cial re­view will now be­gin.”

Ques­tion: Will Mar­itime’s law­suit against the Cen­tral Bank im­pact on the sale of CL Fi­nan­cial’s 50.03 per cent stake in Cli­co?

iv) In Jan­u­ary and Feb­ru­ary 2023, Cli­co of­fered to sell 19.63 per cent of Methanol Hold­ings In­ter­na­tion­al Ltd to Cor­po­ra­tion Sole and 17 per cent of MHIL to the Na­tion­al In­vest­ment Fund (NIF), an in­vest­ment hold­ing com­pa­ny that is 100-per cent owned by Cor­po­ra­tion Sole.

In April, Min­is­ter in the Min­istry of Fi­nance, Bri­an Man­ning said: “To date, Cli­co has signed share ac­qui­si­tion agree­ments and share trans­fer forms with the Gov­ern­ment of the Re­pub­lic of Trinidad and To­ba­go and NIF. But the share reg­is­ter of MHIL has not yet been amend­ed to re­flect the trans­fers.”

Ques­tion: Will the ap­par­ent le­gal squab­ble be­tween the Gov­ern­ment and Switzer­land-based Pro­man over the trans­fer of some of Cli­co’s shares in MHIL shares (it plans to re­tain just un­der 20 per cent) to Cor­po­ra­tion Sole im­pact on the sale of CL Fi­nan­cial shares in the in­sur­er?

v) In their 12th re­port, the joint liq­uida­tors of CL Fi­nan­cial placed the group’s li­a­bil­i­ties to un­se­cured cred­i­tors at be­tween $16.93 bil­lion and $22.69 bil­lion.

The to­tal es­ti­mat­ed re­al­i­sa­tion of the sale of the group’s as­sets was placed at be­tween $3.24 and $6.24 bil­lion. That sug­gests that un­se­cured cred­i­tors of CL Fi­nan­cial will be re­quired to take a hair­cut.

Ques­tion: Is CL Fi­nan­cial’s debt to Cor­po­ra­tion Sole, which an Oc­to­ber 17 Guardian ed­i­to­r­i­al es­ti­mat­ed at over $8 bil­lion, in­clud­ed among the un­se­cured cred­i­tors of the group?

Lawrence Duprey in 2008

In re­search­ing CL Fi­nan­cial, ref­er­ence was made to the group’s 2007 an­nu­al re­port, which is im­por­tant for the fol­low­ing rea­sons:

In his chair­man’s let­ter to the CL Fi­nan­cial share­hold­ers, which was prob­a­bly draft­ed in No­vem­ber 2018, the group’s chair­man, Lawrence Duprey, said he was ad­dress­ing the let­ter “at a time of ex­treme fi­nan­cial tur­bu­lence,” in which the US sub-prime mort­gage cri­sis had “mor­phed in­to the most se­ri­ous fi­nan­cial cri­sis since the Great De­pres­sion of the 1930’s.

Duprey added that “many peo­ple fear that the eco­nom­ic con­se­quences of the cur­rent glob­al fi­nan­cial cri­sis could last 12-24 months and cre­ate con­di­tions sim­i­lar to the Great De­pres­sion.

“I do not share this view. The world to­day is very dif­fer­ent from the 1930s. Gov­ern­ments and busi­ness­es have learned from the mis­takes of the past, and we have learned from each oth­er’s ex­pe­ri­ences...

“Across the world, cen­tral banks have in­ject­ed ex­tra­or­di­nary amounts of liq­uid­i­ty in­to economies; gov­ern­ments have arranged the takeover of key fi­nan­cial in­sti­tu­tions to guar­an­tee all de­posits.”

I think these are ex­tra­or­di­nary words for the chair­man of a com­pa­ny to have writ­ten three months be­fore the group’s col­lapse.