On mutual ground

Insurance giant Colonial Life Insurance Company of Trinidad and Tobago (Clico), a company that falls under the umbrella of the CL Financial Group, is ramping up its investment strategy with an energy mutual fund that will be launched soon. CL Financial is headed by business titan Lawrence Duprey. The Clico energy fund has already been given approval by the Securities and Exchange Commission (SEC), said Clico CEO Claudius Dacon, in an interview in his office last week. Everything with the SEC, he added, went smoothly. The fund is expected to up and running in the next three months. “To run a mutual fund like this, you must own shares in the energy industry and we are the only institution that does,” he said. “No other insurance company owns significant assets in methanol or  ammonia, to the extent that we do,” he said, noting that this was what allowed Clico to invest in these high yielding-type of investments.

The gem in CL Financial’s pocket is Methanol Holdings Trinidad Limited (MHTL). MTHL has constructed, commissioned and operated three methanol plants, starting with the Caribbean Methanol Company (CMC). This was followed by the TTMC 11 plant and the MIV plant. CL has begun construction of of its M5000 plant and the plant is expected to be commissioned in 2005. With an energy mutual fund as part of its investment portfolio, the company is sure to send ripples throughout  the financial sector. Dacon is certain that such a fund will generate “superior earnings” for their clients. “We thrive on turbulence,” he said, when asked about the company’s decision to move up the energy chain. People may be quite happy with putting their money in the bank, like fixed deposits, but “is that really working for your client?” he asked. He said there was still the feeling that Clico misused policy holders’ funds to finance its energy projects.

He acknowledged that at the time, the energy proposal looked risky, “but the dividends paid off handsomely.” “We are reaping dividends from our investments in the energy sector and our share holders have benefitted tremendously,” he said. Clico, he said, was now in a position to “transfer some of its wealth that was generated in the investments in energy sector to our clients.” None of their competitions have been able to launch such a fund, at least not yet, he said. The fund will allow Clico’s policy holders a “huge opportunity” to create revenues and derive wealth from the energy sector. He welcomed the move that put the insurance companies under the Central Bank. “The Supervisor of Insurance has not been as vigilant in enforcing the regulations,” he said, and felt that this can only benefit and protect consumers.

He noted too that confidence in the industry brings more sales, and more sales is good for any company’s bottom line. What might have forced the government’s  hand in getting insurance companies under the Central Bank’s umbrella was the “thinning of lines” between the banks and insurance companies, he said, noting that financial institutions were offering similar packages. Regulations, he said, will force insurance and banking companies to be more innovative and creative in the way they do things and give more scope to products that will be put in the market. “If you think about it,” he said, “there is no real reason why they should be separate. when you look at it both are in the business of creating wealth and managing risk.” He was dismissive of competition from the banks. “I have no problems with competing with the banks. We have our strengths, they have theirs.”