Guardian holding posts second-quarter recovery

Guardian holding posts second-quarter recovery

BY DAVID ROSE

Wednesday, August 05, 2020

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Regional financial services provider Guardian Holdings Limited (GHL) recorded net profits attributable to shareholders of TT$201.1 million ($4.39 billion) for the quarter ending June 30, 2020.

This represented a 50 per cent increase over the prior quarter in June 2019 and was a reversal of the TT$36.5 million loss recorded in the first quarter.

After a tumultuous first quarter which saw the group record fair value losses of TT$329 million in their investment activities amid the emergence of the global shutdown, GHL's primary insurance business saw a two per cent increase in gross written premiums to TT$1.54 billion and net result from insurance activities climb by 186 per cent to TT$370.2 million.

There was a 12 per cent improvement in fee and commission income from brokerage activities to TT$33 million with net income from investment activities falling by 22 per cent to TT$288.9 million.

Despite these mixed results, net income from all activities was up by 31 per cent to TT$692.1 million.

Although impairment losses from financial assets went up with other expenses remaining flat, operating profit grew by an astonishing 74 per cent to TT$309.3 million.

After accounting for share of associate companies and taxes, GHL's earnings per share had increased from $0.58 to $0.87 with the second quarter representing 29 per cent of the group's 2019 net profit.

Total assets for the group have marginally increased to TT$30.1 billion with total liabilities remaining flat at TT$26.2 billion from the audited December 2019 results.

Equity attributable to shareholders declined by two per cent to TT$3.86 billion as the share capital declined with reserves seeing an increase.

In his report to shareholders, chairman of GHL and president and chief executive of the NCB Financial Group (NCBFG), Patrick Hylton said the recovery was mainly due to the recovery in the equity markets and improvements in the life, health and pension business, property and casualty and brokerage segments in key countries.

“The property and casualty business segment increased premiums by five per cent, largely from the Dutch and Jamaican markets, while the life, health and pension business reduced premiums by two per cent, mainly from the Trinidad business,” said Hylton. “Our brokerage activities continue to grow primarily through inorganic means, achieving an income of $73 million, which represents a 21 per cent increase over the $60 million recorded in the prior year. This segment remains an integral part of your group's portfolio as it represents a relatively low-risk business.”

The main difficulties, he pointed out, that the group encountered for the period was in the collection of premiums which impacted gross written premiums. To this end, the group launched online portals to enhance customer interactions and make collections easier. While proven to be more effective, some of their customers still preferred over-the-counter collection.

As there is still a large amount of uncertainty surrounding COVID-19, GHL chose to not recommend a dividend payment out of an abundance of caution. However, the group continues to vigorously implement its strategic plan to improve its return on capital, and is optimistic for a stronger second-half performance in 2020. A major part of this planning has been reducing core expenses to improve their competitive edge and deal between a Jamaican subsidiary with another NCBFG subsidiary.

The group's life, health and pension business saw a 54 per cent decline in operating profit to TT$164.4 million due to a sharp fall-off in net income from investing activities and increase in net impairment on financial assets.


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