Clico is for sale but it will only go if the price is right, Finance and the Economy Minister Larry Howai said yesterday. He said so during yesterday’s Standing Finance Committee meeting of the House of Representatives on the 2015 budget, in response to questions from Opposition MP Colm Imbert on Atrius, the company which was to be established to acquire Clico’s assets and liabilities of last year.
Clico was part of the CL Financial Group of companies which collapsed in 2009 and received at least $7 billion in bailout from the former People’s National Movement (PNM) government. Howai said the People’s Partnership Government was “no longer pursuing the company (Atrius) taking over the assets and liabilities of Clico.” “We expect that we will be disposing of the portfolio by way of a portfolio sale and therefore there was no need for us to budget for this item,” he confirmed to legislators yesterday.
Imbert then asked the minister if Clico was being wound up. Howai said: “Yes, the intention... yes, would be to sell the portfolios and it depends on whether we get the price that we are looking for.” Howai said if the right price was not obtained, via a sale, the company would have to continue under existing arrangements. Imbert reminded the minister that $46 million was allocated to the holding company Atrius in 2014. He asked what would be the fate of the staff at the company.
Howai said there was no staff at Atrius. He later clarified that “nothing was transferred (to Atrius). We had simply capitalised the company, which monies the company will now return to us.” He said no assets were given to Atrius. Imbert then asked Howai to explain the reason for abandoning the plan to establish Atrius.
In response, Howai said that was being done “because at the end of the day we would have to invest $1.5 billion more to purchase the assets of Clico and to capitalise the company under the new insurance regime.” Imbert then asked Howai to give details of the method to be used to sell the insurance company.
Howai said the ministry was in the process of getting the valuations done and hiring an investment bank to provide the assistance and guidance on how to proceed with the sale after the valuations were received. Responding to Imbert’s claim that while the Government had decided to sell Clico, it had not as yet determined how the sale will proceed, Howai said: “We have decided that it makes sense to explore the possibilities of the sale.”
He added: “If we do not get the prices that we are looking for, the option always remains with us to continue to operate the company under Section 44.” Operating the company under Section 44 means it will be under the control of the Central Bank.