Tuesday, January 16, 2018

CLICO group head praises Republic

THE Clico Policyholder Group is very happy with the performance of Republic Bank.

Chairman of the group, Peter Permell, yesterday described the group's 25 per cent indirect ownership of the country's largest financial institution through the CLICO Investment Fund (CIF) as the "gift that keeps on giving".

The CLICO Policyholders Group represents the interests of former CLICO Executive Flexible Premium Annuities (EFPA) policyholders who recently opted to become unit-holders of the CIF in exchange for their 11 to 20-year zero-interest bonds.

Speaking to the Express via telephone after Republic's Annual General Meeting for shareholders yesterday, Permell said he was "very impressed with the bank's management of assets, including posting a $1.2 billion profit over the last financial year".

The meeting, which was closed to the press, was the bank's first since the establishment of the CIF on November 1. The CIF holds in trust some 40,072,299 RBL shares which were formerly owned by CLICO. These shares make up approximately 86 per cent of the CIF's total assets. The value of these shares exceeds $4 billion based on Republic's share price of the Trinidad and Tobago Stock Exchange ($105.53 at the close of trading yesterday).

"Based on what I heard this morning, the bank is on solid footing. The purpose of me coming to this meeting was to get a first hand view of how Republic does its business. Having sat through this meeting I am very satisfied with what I have seen and heard. This can only benefit the unit holders," Permell said.

He said it is his understanding that the cumulative return on investment from Republic's shares was about 17 per cent. "You're not going to get that on any other investment in the country, all things being equal and regarding the safety of your investment. A fixed deposit in the bank would yield about 0.5 per cent returns, and as a shareholder, you're part owner, not just a customer. It's really a no-brainer," he said.

"From where we sit, we are very comfortable with Republic Bank being the key asset in the CIF and have the utmost confidence in the bank going forward unless something really untoward happens that no one can foresee," he added.

He said in hindsight, CLICO's EFPA's were not a good investment because of the poor regulation of the product.

"It is an established insurance product sold all over the world. It was not regulated properly by the Central Bank and had they done their job we would not be in this situation now. They approved and allowed it to continue to be sold to 16,000 people, $12 billion put at risk," he said.

The group, he said, does not have any of these regulatory concerns with Republic.

"What we would like is for them to keep on making profits, because the more money they make the better the distributions of dividends to policy holders. (The CIF's Republic shares) are being held in trust for policy holders, so after ten years those unit holders will get actual Republic shares; that is a major benefit that has not been really underscored. And what you have to keep in mind is these share will not stay stagnant. They have appreciated almost 50 per cent in the last ten years. Going forward there is every likelihood as the earnings of the company grow, so too will the price of the shares," he said.