IN 2018, the insurance company, CLICO submitted a $11 billion claim to its parent company, CL Financial (CLF) which is in liquidation.
The liquidation is being managed by Grant Thornton.
To date, CLF has only repaid $335,317,275 of the claim.
In an interview with the Sunday Express last Friday, CLICO’s executive chair Claire Gomez-Miller observed that none of the claims submitted have been rejected but some claims, in the form of trust deeds, have been subject to court proceedings.
The trust deeds have been a thorny issue for the liquidators.
Gomez-Miller said she had hired a former central banker, Corey Gomez, to investigate the trust deeds and build out a paper trail.
In the liquidators’ seventh report, dated December 18, 2020 they noted: “Our investigations have identified eight deeds of trust of which CLF is allegedly a counterpart. Should these trusts be determined to be valid the impact, among other things, would see CLF’s shareholding in HCL reduce from 70 per cent to 37 per cent and CLF’s shareholding in CL World Brands (the indirect owner of the CLF Group’s 44.87 per cent shareholding in Angostura Holdings Ltd) drop from 100 per cent to approximately 38 per cent.”
It continued: “Accordingly, the determination of the validity of the various trust agreements will have a material impact on the value of CLF estate, potentially in excess of $1 billion. The trust deeds therefore necessitate an exhaustive investigation to be undertaken by the liquidators to fully understand how they arose, along with expert legal analysis to be undertaken with respect to their validity.”
In 2020, CLICO was victorious with one trust deed with regard to its shareholding in Methanol Holdings (International) Ltd, the Oman-based methanol company. On August 20, it was ordered that the declaration of trust was validly executed and MHIL shares belonged to CLICO.
Gomez-Miller noted that CLICO is now in court with the liquidators over CL World Brands as there are three trust deeds by which the insurance company is claiming ownership of 42 per cent of the beverage holding company.
She described CLICO as a “victim” and the organisation as one that has been badly wounded and unfortunately stigmatised as a result.
However, the power of the CLICO brand has endured, she said.
In the four years since she has managed the organisation, she has not publicly spoken about the company, measures under her stewardship which were taken to reduce its indebtedness to the Government and the work it took to build it back to profitability.
But 2022 will be significant for the company, it will be 85 years old, and the Central Bank could relinquish control of the company.
Her task was always clear—to repay CLICO’s debt to the taxpayers of T&T with interest.
It’s taken 12 years to have the debt reduced from $18 billion in 2009 to $1.2 billion in 2021.
She lamented a missed opportunity to reduce the debt to under $1 billion in 2021.
As part of the CLICO resolution plan, CLICO’s assets are being sold or transferred to the State to reduce its debt.
She acknowledged that GORTT is aware of the assets which would be strategic for them.
“We bear this in mind as regards cash payments. When there is a certain amount, we tell the Central Bank that we would like to pay back a certain amount, so that when that comes, we are already prepared. It’s not as you are getting an onerous directive.
“We were trying to bring it to under $1 billion last year. That was my plan but I didn’t hit my target. Not all targets I hit, I must tell you that. The plan is to pay it off this year. I would be amazed if it is we fail to do so,” she said.
Back to solvency
In March 2021, the Central Bank in its quarterly report on the Central Bank, which is filed in the High Court pursuant to section 44E (7) of the Act, said that CLICO is now solvent.
The report noted: “The 2019 statutory fund calculation has indicated that the CLICO statutory fund has sufficient and appropriate assets to back the traditional portfolio and other statutory fund liabilities.”
Gomez-Miller, who spent 25 years in the energy industry prior to assuming her appointment at CLICO, said the focus was on getting the company solvent.
One of her first actions was to establish her leadership team.
She observed that she entered CLICO in July 2017 and by September, CLF had been put into liquidation.
“It meant that there would have been a lot more emotional turmoil in the organisation,” she said.
In her assessment, CLICO was mismanaged by its former leadership team as it was generating a lot of cash, which was being removed for investments within the group.
“Under Cryill Duprey, the interest of the policyholders remained 100 per cent. When it went under the control of CL Financial and Lawrence Duprey, you saw the change in governance and leadership and the style of doing business,” she said.
Her management style has been different.
“I tend to be very clinical,” she said.
She noted that a big point of inflection was convincing the staff that the Central Bank and the Government were not enemies.
“It was rebuilding the organisation, reducing the debt to the Government. Also, putting in place a governance structure, policies and controls in the organisation. CLICO became a risk intelligence organisation,” she said.
The work has shown itself in the company’s financial statements.
More than a decade after being placed under Central Bank control, CLICO recorded $123.69 million in after-tax profit in 2019 and $119.23 million in 2020. It’s total assets amounted to $13.55 billion at the end of 2020, while its total liabilities were $10.31 billion.
The 2020 financials of CLICO noted: “The long-term insurance and investment contract liabilities represented in the balance sheet of the company amounting to $7.7 billion make proper provision for the future obligations under the companies’ policies and meet the requirements of the Act and any other regulations made thereunder.”
She credits her leadership team with bringing stability to the organisation.
“The CLICO of yesteryear was one where everyone was so proud, they were already empowered, but their self esteem was not the same after 10 years of battering. The company lost a lot of the senior managers at that point in time. They were dealt a bad hand and I think they were in pain for a long time.” she said.
As it stands CLICO has 130 members of staff, 20 consultants and about 90,000 customers.
The year ahead
Gomez-Miller noted that the sale of CLICO’s traditional insurance portfolio, to Sagicor, is stalled. The sale was halted after an injunction was granted to Maritime Life (Caribbean) Ltd in July 2020. She explained that the matter has to go to the Privy Council.
“If the Central Bank wins, it means the sale can proceed. If Maritime wins, it means the matter now goes to court for hearing. And then we start another lengthy process. We really don’t know when that matter will be settled. So what has been happening here is that we have been operating and managing the organisation as though it will be around for the next five to 20 years. So regardless of whatever is happening the organisation is being run as though it is not to be broken up- it’s a going concern in the best interest of the policyholders,” she said.
She noted that even if the insurance portfolio goes, CLICO will still be a $3 billion company.
As for writing or venturing into new business/investments?
Not at this time.
“That’s a risk that you always have to be managing. At what point does it become detrimental if we continue without new business? I believe if the Central Bank steps out this year, then a hard decision has to be made. Do we start a new business? How do we move CLICO forward because you cannot run off a portfolio indefinitely. I think that is one of the serious elements that needs to be addressed as we move forward. Managing that risk as well as making sure our reputation or brand or customer service is top notch, if you come to us,” she said.
“The strategic objective that we have now is how do we build the shared value of our organisation? How do we make sure that when you value the organisation, that the share price is very attractive if you want to list it on the market. So, at this point in time, CLICO has a lot of options,” she said.
She said the Central Bank has a success story in CLICO.
“We need to recognise that the Central Bank has a success story to tell because they look at the situation of CLICO, one could have easily thought that it might not have ever been brought back to a profitable organisation. So yes, it has taken time and even repaid that debt. The Central Bank has to be applauded that under their management, they have been able to really stabilise the organization, turn it around with a strong industrial relations climate and a resilient staff,” she said.
She said one of her dreams is to establish a CLICO Cryil Duprey Museum.
“There is a lot of artwork. We do want to retain that history of people. If I have the opportunity to get it done, I will,” she said.
