Cayman Islands regulators have imposed business restrictions on the Cayman branch of troubled insurer and investor, CLICO, amid concerns about whether it can meet its liabilities.
The Cayman Islands Monetary Authority on Friday announced it had ordered CLICO’s Cayman entity to stop issuing new policies with investment features until it can improve its assets to satisfactory levels.
CLICO (Cayman) has also been ordered to stop collecting premiums on existing policies with investment features.
In a statement to media, CIMA said it has put in place new reporting requirements for the company so regulators can better monitor CLICO’s business activities and financial condition.
In a statement Friday, the company sought to assure policyholders and the public that the company continues to service all existing policies, stressing that CIMA’s intervention relates only to its investment policies at this time.
‘CLICO continues to communicate with CIMA and assures policyholders that it is fully available for client support,’ it said.
The company reached an informal agreement with CIMA over a month ago to stop writing new business on its investment policies. But CIMA didn’t act to formalise the agreement until Wednesday – two days after the Caymanian Compass sent questions to the authority on whether it had concerns about CLICO.
The investment side of CLICO’s business is understood to account for about 25 per cent of the company’s total operations here.
CIMA has given CLICO (Trinidad), which manages the Cayman branch, until 13 March to top up its asset reserves to required levels. The extent of the asset shortfall remains a mystery, but regulators in Cayman demand that such funds have enough cash available to meet liabilities likely to arise for 12 months.
The CIMA release said it also requires CLICO to ‘take certain actions within a prescribed time frame,’ but the authority did not elaborate on what this means.
CIMA is the latest regional regulator to act against the insurance and finance conglomerate. The fallout from CLICO’s financial woes has been spreading across the Caribbean since the shock 30 January decision of the Trinidad and Tobago Central Bank to bail out parent company, CL financial.
In the past fortnight regional regulators have ordered the liquidation of CLICO operations in both the Bahamas and Guyana, which in turn has had knock-on effects for subsidiaries in the Turks and Caicos Islands and Belize.
There are moves afoot in Barbados to sell the company’s life insurance arm amid reports it had fallen millions of dollars shot of meeting its statutory obligations.
CLICO (Cayman) was told of the restrictions on 3 March, the same day company representatives were trying to assure the Compass that policyholders in Cayman had nothing to worry about, and that the Cayman branch had been unaffected by the company’s financial woes across the region.
In a series of brief responses to questions from the Compass, Jasmine Bain, head of sales and distribution with Colonial Life Insurance Company (Trinidad), said policyholders and investors can remain confident that CLICO (Cayman) remains solid.
She said the T&T bailout had ‘not in any way’ affected local operations.
Those responses followed a 31 January press release in which Cayman branch manager Vera Kissoon assured policyholders that the developments in T&T ‘have no financial impact on CLICO (Cayman),’ adding that CLICO remained ‘solid with its own assets in trust in support of its liabilities.’
Founded as Colonial Life Insurance Company in Trinidad in 1932, parent company CL financial developed into one of the largest conglomerates in the Caribbean, with worldwide assets recently estimated at roughly US$ 100 billion. The group has holdings in a range of industries including banking and financial services, general and life insurance, energy and petrochemicals, real estate and media and communications.