T&T Insurance Institute exec: Lascelles sale good for T&T

Consumers are again re-investing in products being designed and offered by local insurers, three years after the near collapse of CL Financial (Clico) and Hindu Credit Union (HCU), says Douglas Camacho, chairman of the board of governors at the T&T Insurance Institute. Central Bank Governor Jwala Rambarran last week said that citizens were still experiencing the psychological effects of the bailout of Clico/Clico Investment Bank and HCU and recovery from the emotional impact would not be immediate. He said for the first time in the bank’s 48-year history, the regulator would come in for extreme scrutiny based on revelations being made at the Commission of Enquiry into Clico/HCU. This, even though the ministry of finance recovered US$338 million from Government-controlled CL Financial through the sale of its assets in Lascelles de Mercado to Italian spirits company Campari. 

Camacho was optimistic about the insurance industry, describing present operations of businesses that constitute his membership as “starting to rebound nicely” when consumer confidence dipped with the near collapse of CL Financial. “What we are seeing is actual growth in the overall size of the industry. What we were seeing at one stage was some companies growing, but really only picking up some of the slack and the industry itself not having growth. But what we are starting to see now is actual growth in the industry, which is a very positive sign, both here in T&T and in the wider Caribbean,” Camacho said on Friday at the T&T Insurance Institute’s diamond jubilee dinner and awards at the Hyatt Regency Trinidad hotel, Port-of-Spain. 

 

While it was difficult to disclose that growth with figures because the information for 2011 has only just been official filed with the Central Bank, which regulates insurance companies, and is now compiling the statistic, Camacho said, preliminary reports showed that 2011 was far better than the previous year in terms industry in aggregate. “…Of course, individual companies having done much better, some as high as 15 and 20 per cent increases, so, it’s very encouraging. On the property and casualty insurance (PNC) side, where we still face a challenge in T&T and in the region is because we are zoned as a hurricane and earthquake zone. “What we are finding because of the global situation, re-insurance rates have been a challenge and getting re-insurance capacity has been a challenge for many companies, particularly the smaller and less well-capitalised companies. They have been constrained largely by the ability to buy from the re-insurers,” Camacho said. 

 

Responding to questions on the eventual sale of Lascelles de Mercado to the Italian spirits company Campari for US$338 million by the Government-controlled CL Financial, Camacho recalled that when CL Financial turned to Government for financial assistance, it offered to put up its assets and over time either realise on the assets or get the revenue from the assets and repay the bailout. “The extent to which the required a bailout, they didn’t have assets of value at the time to have covered it, so hence the Government stepping in and intervening. What the Government then did was got control of the assets (and) advance the money with a view that the money would be repaid in the event that the assets were eventually liquidated. “In this case, CL Financial Group had, through its various subsidiaries, ownership in Lascelles de Mercado and they were able to get a big buyer who stepped in and paid the US$338 million, which would then be returned to the previous owner of those shares, which would have been CL Financial or its subsidiary which, in turn, will go back to the Treasury and would then result in CL Financial having that much less due to the state coffers,” Camacho said. Camacho added, “That is positive for everybody: positive for the country; positive, of course, to the Ministry of Finance, the Central Bank and the Government, which made the funds available. He said the deposit of funds to the Treasury from the sale Lascelles de Mercado had no particular effect on the local or regional insurance sector.