(Trinidad Express) 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 to the Express 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.
The Sunday Express reported exclusively in February that Cabinet had agreed to rebrand CLICO with the name Atrius.
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.
It is expected also that CLICO agents and staff members at the company’s eight branches and Port of Spain head office will be absorbed when Atrius opens its doors for business.
This is expected to happen with the next few months, a company source said.
Staff members who can’t be absorbed into Atrius will be offered severance packages in line with proper industrial relations protocol, it was said.
There are also longer-term plans for Atrius once it is managed properly and starts generating healthy returns, financial sources told the Express yesterday.
The idea is that within five years, Atrius shares could be offered for investment on the local stock market through an initial public offering, a source said.
Sources yesterday confirmed the necessary preparatory work is already going ahead with regard to Atrius, and administrative details are being ironed out.
CL Financial chairman Gerald Yetming could not be immediately reached for comment on the Atrius plan yesterday.
Contacted yesterday, Finance Minister Larry Howai confirmed the CLICO-Atrius transfer and e-mailed the Express the following response: “Cabinet has approved the establishment of the company and a portfolio of assets sufficient to meet its commitments as well as approved third-party obligations will be transferred to it.”
He added: “The process will involve the execution of an agreement with CLICO which will ensure that there will be an orderly transfer of the assets and liabilities. There has been a delay with this process, but over the past week I have taken specific action to get the establishment of the company back on track.
“While the intention of the Ministry of Finance is to have the company listed on the Stock Exchange, we have not yet approached Cabinet for approval and we have not yet established a timetable for such a listing.”