May 2013 Financial News

Acquisitions boost GHL's premium income

May 20, 2013

The acquisition of three insurance companies last year contributed US$12 million (J$1.1 billion) in gross premiums to Guardian Holdings Limited's (GHL) earnings for the first quarter ended March 31.

GHL acquired Globe Insurance Company for a consideration of US$38 million, Royal & Sun Alliance Antilles (RSA) for US$18 million and Dutch insurance broker, Thoma Exploitatie, B.V. (Thoma) for $8.9 million - all purchased between November and December.

The Dutch insurance broker was a joint venture between Royal & Sun Alliance and Maduro and Curiel's Bank, the largest bank in the Netherlands Antilles.

GHL said it expect final regulatory approval for that acquisition in the second quarter of 2013.

Royal & Sun Alliance Antilles will be merged with GHL's existing general insurance company Fatum General in the Dutch Caribbean.

GHL said the acquisition of Thoma Exploitatie, B.V. (Thoma) will reinforce Fatum's carefully managed expansion into the Netherlands general insurance market.

GHL is also parent company to another general insurance company, West Indies Alliance. The merger of Globe and West Indies Alliance is now under way.

Last week, the Financial Services Commission published a notice advising the public that West Indies Alliance will be transferring its insurance business to Globe under a scheme of arrangement.

Top-line growth

The merger of the two entities will make the GHL subsidiary the largest general insurance company in Jamaica.

Commenting on the financials for the first quarter, GHL Chairman Arthur Lok Jack said "top-line growth was quite strong. Gross premiums grew 25 per cent from US$214 million in first quarter 2012 to US$268 million in this first quarter".

Lok Jack noted that if the contribution of US$12 million from GHL's new acquisitions was excluded, gross premiums written still grew by 20 per cent.

For the review quarter, GHL said its net income from insurance activities improved by 52 per cent to US$20 million, up from US$13 million during the corresponding period last year.

In relation to investing activities, income declined marginally to US$36 million from US$37 million for the first quarter in 2012.

However, the company noted that the performance of its investing activities was impacted by realised loss of US$5 million from the National Debt Exchange (NDX).

GHL said premiums written in its life, health and pensions business increased by 16 per cent over the corresponding period last year, while operating profit dropped slightly due to the effects of the NDX.

For the quarter, GHL posted net profit of US$11.4 million, declining from US$16 million during the corresponding period in 2012.

The property and casualty segments top line were bolstered by both the recent acquisition of Globe Insurance Company and by low-risk fronting arrangements on which the company received fee income from its global network partners.

Operating expenses and finance charges grew 21 per cent from US$32 million to US$38 million during the quarter, due primarily to costs relating to the company's acquisitions.

At the end of the review quarter, GHL has total assets of US$3.6 billion. The Trinidad and Tobago-based conglomerate last traded at $270 on the Jamaica Stock Exchange.


Source:
Jamaica Gleaner
Sunday May 19, 2013

http://jamaica-gleaner.com/gleaner/20130519/business/business6.html