NCB Cap Markets gets all-clear for AGI purchase

Wednesday, February 13, 2013

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NCB Capital Markets has been given the regulatory nod to acquire Advantage General Insurance (AGI).

The investment bank's parent, National Commercial Bank Jamaica Limited, last Friday told the Jamaica Stock Exchange (JSE) that it expects the transaction to be completed within a few days.

The company plans to pay US$34 million for a 96 per cent stake in general insurer.

The purchase price compares favourably to AGI's capital base and bottom line.

It was sitting on $2.6 billion in equity at the end of 2011, and the company has been profitable over the last five years -- it accumulated just under $2 billion in net profit between 2007 and 2011.

The insurance company, which is ultimately owned by NCB's parent, had previously planned to list on the JSE.

But it opted for a deal with the invesment bank instead, and made an announcement last July that it would be sold to NCB Capital Markets.

Up to 2011, AGI was the single largest general insurer, having earned gross premiums of $4.8 billion in that year.

However, the merger of Globe Insurance and West Indies Alliance (WIA), this year, will likely place Advantage General in second place, in terms of premiums earned, and perhaps, profitability.

AGI, which currently holds the number one spot, posted higher net profit in 2011 ($868 million) than Globe and WIA combined ($652 million), but its bottom line has fluctuated over the past four years.

AGI's bottom line ranged from a loss of $56 million to a profit $868 million between 2008 and 2011, while Globe and WIA combined ranged from $479 million to $652 million.

In other words, Globe and WIA together made $2.3 billion net profit over the four-year period, compared to AGI's $1.6 billion.

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