Basseterre, St. Kitts – The direct impact of the US financial crisis has struck the region’s financial sector as it was recently revealed that some local insurance companies are experiencing “financial difficulties”.
The announcement that the Trinidad and Tobago government will bail out one of the region’s most prolific multinational entities, CL Financial Group, has prompted regional Ministers of Finance to ask for details of the insurance companies’ financial status.
CL Financial Group is the parent company of Colonial Life Insurance Company (CLICO) and British American Insurance Company, both of which have branches throughout the East Caribbean. The company also holds significant investments in some of the larger companies throughout the region including 86.6 percent stake in Lascelles de Mercado, parent company of Appleton Jamaica Rum in Jamaica and 40 percent stake in Caribbean Money Market Brokers in Trinidad.
The Patrick Manning administration and the Central Bank of Trinidad have signed a Memorandum of Understanding (MOU) with the privately held corporation, and the local government will be retaining control through equity interest and collateral in CLICO. CL Financial Group will also be divesting some of its Trinidad holdings in order to subsidize CLICO’s Statutory Fund deficit.
Though no dollar amount was given for the sum of the bailout plan, it is believed to be extremely significant in light of the fact that the company reportedly controls an asset base of over TT $100 billion spread across 65 companies in 32 countries worldwide.
CL Financial chairman Lawrence Duprey stated that this is “not a crisis” but a pre-emptive move to address the situation.
Regional heads have voiced concerns that although the onset of financial downtown is initially affecting insurance companies, its effects may soon be felt in other branches of the Caribbean’s financial sector.
Officials in some countries where CL Financial Group subsidiaries operate have declared their individuality from the troubled parent company, saying the financial difficulty was limited to Trinidad and Tobago and had no effect on their respective operations.
St. Kitts’ British American Insurance Company Ltd. has stated that “the situation in Trinidad in no way affects the local operations” and assured local policy holders and general public that the company would “continue to exercise prudent management over our business and investment decisions”. It was also stated that the company’s operations are legally held separate.
The local branch of CLICO also attempted to allay public fears saying that CLICO operations in the East Caribbean have “experienced impressive growth and profit” and that the long term future of CLICO will be guaranteed.
The company has scheduled a press conference to be held in St. Kitts on Thursday, February 5.
St. Kits-Nevis Prime Minister Hon. Dr. Denzil Douglas admitted today (Feb. 3) that he had no knowledge of the potential financial crisis as he “has not had the opportunity to read any statement with regard to the financial situation with the insurance companies”.
“I have not been informed through the Minister of Finance, whose portfolio would cover that, or through the Financial Secretary or media or any other means, that there is any peculiarity with regard their financial situation.
“I will inquire of the Finance Minister if there is any difficulty that I do not know about.”
