PORT OF SPAIN — The country’s largest insurance company is about to become potentially one of the State’s most lucrative and far-reaching assets.
Cabinet has approved the transfer of about $8 billion worth of insurance giant’s CLICO’s profitable business to a new company called Atrius which will be 100 per cent owned by the state, sources close to the transfer decision confirmed yesterday.
The decision to absorb CLICO’s “book of good insurance business only” comes even as the Finance and General Purposes Committee continues to discuss a letter of intent hammered out by the Ministry of Finance and CL Financial’s 400 shareholders, which envisions taxpayers will recover the more than $20 billion government has injected since 2009 to keep CL subsidiary CLICO and other companies afloat, sources close to the transfer arrangement disclosed yesterday.
CLICO financially caved in on itself at the end of 2008 after the investment instruments of major policyholders matured and they wanted hundreds of millions of dollars they were owed.
At its annual general meeting in Port of Spain last month, CL Financial shareholders voted to extend the agreement with government until August 25 while cabinet decides on a new framework accord to recover the debt owed to government through divestment of CL subsidiaries, including Methanol Holdings, Republic Bank, Angostura Holdings, CL World Brands and Home Construction Ltd.
Proceeds from the divestment of these assets will go toward government’s recovery of the billions it pumped into CLICO.
It will also be used to repay creditors, and shareholders will also benefit if the assets are sold for higher than valuation prices when they go on the market, financial sources told the Express earlier this week. But CL shareholders have agreed they will not benefit from any profits generated from the formation of Atrius, and the CLICO assets in this company will not be a part of CL Financial, sources confirmed yesterday.
“CL Financial will have no interest in the insurance business,” one source close to the agreement explained. “What it does mean is that Atrius will be fully a 100 per cent-owned state company.”
It was also pointed out that it would be a scenario of the State getting into the insurance business the same way it rescued three failing banks and turned them around into what is today a very profitable state-owned First Citizens banking group.
While it will not directly affect their business, the transfer of CLICO’s business to Atrius will also likely ignite a conversation for months to come among the company’s more than 100,000 policyholders.
Sources also noted that when CLICO’s profitable corporate health plans are included, it takes the number of policyholders that will be moved to Atrius to approximately 200,000. (Express)