A strange message scrawled on the wall of the San Fernando Jama Masjid, where Daniel Bostic was gunned down, left mourners troubled yesterday.
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National debate needed on sale of Clico’s traditional portfolio
On Monday May 19, the Central Bank issued a news release in which it made clear that the traditional insurance portfolio of Clico would be sold. Here, in part, is what the Central Bank said:
“As part of the resolution strategy for Clico, the Central Bank proposes to transfer Clico’s traditional insurance portfolio for value to an acquiring insurance company that is well capitalized, has a proven track record and the capacity to honour all obligations to policyholders.
“In order to achieve this objective, the Act requires the Central Bank to have a market price for Clico’s traditional portfolio determined by an independent valuation company. An independent actuarial firm has, therefore, been engaged to value Clico’s traditional business for this purpose and the exercise is still in progress. “Subsequently, the Central Bank will conduct the process for the sale and transfer of
Clico’s traditional insurance portfolio on a transparent, open market basis. The Bank has neither engaged with any prospective buyers nor made any decision on the structure of the portfolio transfer.” In the absence of any serious debate or even discussion on the Clico issue in the Parliament, I would like to start a national debate on whether the decision by the Government to sell Clico’s traditional insurance portfolio is the right one.
The issue of the sale of Clico is important enough to warrant a national debate for the following reasons:
• Its collapse in January 2009 shook the confidence of many locals in anything but the safest investments;
• It was one of the first indigenous insurers in T&T;
• For many years, it was T&T’s largest, most influential insurance company;
• It was the first local private sector company to venture into T&T’s downstream petrochemical sector;
• Its sale will reshape the country’s financial services sector in profound ways.
As with previous debates initiated by the Business Guardian—such as the issue of further industrialisation of T&T using its natural gas; whether RBTT should have been sold to the Royal Bank of Canada and if Economic Partnership Agreement with the European Union was in the region’s best interest—all emails or letters submitted on this issue will be published. The expectation is that the responses given by the readers of this publication will shape the decision of the Government on this issue.
The question might be asked: If the Government/Central Bank has already decided to sell Clico, is there any sense in debating the issue? Before answering that question, it is necessary to point out that most of the existing Clico staff, as well as the insurer’s agents, have been put on notice that they will be separated from the company. It is also clear that the Government has quashed the idea of Atrius, a state-owned company that was established last year as the successor company to Clico.
By its actions, therefore, the Government has taken steps to clean Clico’s slate in preparation for sale. But, it seems to me, the issue of the sale of Clico will remain a live one until the Central Bank Governor and the Minister of Finance have signed on the dotted line. The national debate is being called for in the context of the Central Bank Governor’s commitment that the process for the sale will be conducted transparently and openly and because there has been a dearth of information on this issue for too long.
The opening of the debate on the sale of Clico’s traditional insurance portfolio is also a call for a certain kind of perspective from the Ministry of Finance and the Central Bank. In other words, the population needs to be told the following:
• What are the issues that have informed the decision to sell Clico’s traditional portfolio rather than transfer it to a state-owned company with plans for an IPO in five years?
• What is the Government’s position if the offers to buy the portfolio are not in accordance with the estimate of its value?
• How does the sale of Clico fit into the overall resolution of CL Financial, which received at least $20 billion of taxpayers’ funds?
There is great interest in hearing from the trade union movement, Clico employees and executives both past and present, politicians, credit union officials, financial analysts, academics, insurance executives and university students.
In particular, the views of the following are being directly solicited: former Clico executive chairman, Lawrence Duprey, former Minister of Finance Karen Tesheira, former Central Bank Governor Ewart Williams, UTC chairman Wendell Mottley, actuary Kyle Rudden, economist Terrence Farrell, public affairs commentator Afra Raymond, trade unionist Vincent Cabrera and economist Mary King.