THE almost one-third stake to be acquired by National Commercial Bank Jamaica Limited (NCB) in Guardian Holdings will give it controlling interest in a regional company with total assets of TT$23.08 billion (TT$1 = US$0.16) and with a diversified footprint in insurance and finance markets spanning the English and Dutch-speaking Caribbean.

The purchase of a 29.99 per cent stake in GHL is expected to be achieved through a private sale of shares owned by the Lok Jack and Ahamad families and the International Finance Corporation, the private sector arm of the World Bank to NCB.

Guardian, a Trinidadian company formed in 1982 and listed on the Trinidad and Tobago Stock Exchange (TTSE) has 20 subsidiaries.

Through these and other associated companies it provides financial services through the production, distribution, and administration of insurance and investment products. Its principal business segments are life and health insurance, and pensions; property and casualty insurance; and asset management — services are primarily distributed and sold throughout the Caribbean.

It also provides reinsurance cover on a limited basis through the group’s international property and casualty business segment.

The sale of shares in GHL appears to have been prompted by the desire of the IFC to exit its holdings in Guardian. NCB, the prospective purchaser, is Jamaica’s largest banking and finance house, with assets in the region of $500 billion.

Guardian had previously entered into a partnership agreement with the IFC for a US$50-million subordinated loan which was later converted into common equity. IFC held 13 per cent of the company.

Prior to the acquisition, the largest shareholders of GHL were the Lok Jack and Ahamad families through their respective holding companies.

Even though they will sell a portion of their shareholding to NCB, they will continue to hold approximately 22 per cent of GHL.

The new deal with NCB awaits regulatory approvals in Jamaica, Trinidad and Tobago and other relevant jurisdictions. The transaction price was not disclosed. But, by this means NCB is accelerating its speed towards the goal of becoming one of the top five finance businesses in the region.

Recent expansion by NCB in Jamaica and the region included the acquisition of general insurance company Advantage General, AIC Limited in Trinidad, and the opening of NCB Capital Markets Barbados in May of this year. The company also has an asset management subsidiary in the Cayman Islands.

In Jamaica — through Guardian — NCB has acquired strong life and property portfolios to complement its own offerings, including large motor insurance holdings, taking a significant place in an insurance market previously dominated by Sagicor Group.

Guardian Holdings, for the nine-month period ended September 30, 2015, saw net income from insurance activities grow by TT$80 million to TT$533 million from $453 million in 2014. Investment activities generated net income of $527 million as against $629 million in 2014.

Overall, profit was TT$235 million as compared to $286 million for 2014.

Arthur Lok Jack will continue as Chairman of GHL and the majority of the board will continue to be independent directors post-acquisition.

In the 2014 GHL annual report Lok Jack described Trinidad as the largest insurance market in the English and Dutch Caribbean. The company, he said, held “the number one market position in every line of insurance business through Guardian Life of the Caribbean Limited and Guardian General Insurance Limited”.

Guardian General Insurance Limited has branches and agencies in almost every English-speaking Caribbean island.

Lok Jack said then that in the majority of its other markets, including Curaçao, Aruba, Barbados and Jamaica, Guardian held either the number-one or number-two market position in the key business lines.

In Jamaica, the group buttressed earnings for Guardian General Insurance Jamaica Limited following the 2012 acquisition of Globe Insurance Company of Jamaica Limited. Guardian’s Dutch Caribbean business operates collectively as Guardian Group Fatum.

On Monday, by way of a joint release, both companies described the pending transaction as “a game changer in the history of the financial services sector in the Caribbean” and a first between “two of the leading indigenous financial institutions in the region”.

NCB Group Managing Director Patrick Hylton was quoted as stating, “The acquisition is consistent with our stated intentions to expand our regional interests through strategic investments, joint ventures, mergers and acquisitions, in order to drive continued growth and shareholder value.”

He said the deal laid the foundation for a “future state where an indigenous Caribbean financial institution will also be a leader on the global stage”.

By the same circular, GHL Chairman Lok Jack commented that NCB had provided a solution to the IFC’s desire to exit the company.

“IFC was clear from the onset that they would desire an exit in a roughly seven-year horizon, as this is their business philosophy. I am very happy that we have achieved a regional solution to their desired exit. In the process, we have replaced shareholders desiring exit with shareholders who are eager to support the growth and expansion of the Guardian Group.”

NCB Group Chairman Michael Lee-Chin stated in the same release that the partnership will yield significant benefits for all participating stakeholders.

“Beyond that, it represents the adoption of a new model for growth led by indigenous Caribbean private sector institutions long seen in the African and South East Asian regions. We are excited about and proud of the implications of this partnership for our region’s growth prospects,” he said.