Seeking to reposition itself in a local market worth approximately $3.1 trillion — the GraceKennedy Financial Group (GKFG) - a wholly owned subsidiary and operating unit within the GraceKennedy Group — is undertaking a brand refresh in preparation for a restructuring exercise which is nearing completion.

The market worth of $3.1 trillion comprises J$2.8 trillion in insurance, banking and securities assets plus US$2 billion in remittance flows.

GKFG has 12 subsidiaries offering remittance and cambio, commercial banking, insurance and investment services. Total assets held within the group are valued at $104 billion.

Unification under one company is slated for 2022

As part of the restructuring process, the group is also contemplating listing one or more of the subsidiaries on the Jamaica Stock Exchange as a means to increasing shareholder value.

GraceKennedy Group President and CEO Don Wehby told the Jamaica Observer, “We are always looking at the GK group structure to maximise shareholders’ value. Listing is one option that could meet that strategic objective in the future or listing individual subsidiaries owned by GKFG. For example, Key Insurance is listed on the JSE.”

The restructuring of the financial group as a unit falls under the Banking Services Act, 2014 (BSA) which came into effect in 2015, and mandates that a financial holding company (FHC) be established where two or more financial institutions operating in Jamaica are members of the financial group and one of them is a deposit-taking institution. The primary purpose of the required financial holding company structure is to allow for consolidated supervision of financial groups by the Bank of Jamaica (BOJ).

Wehby outlined, “The Banking Services (Financial Holding Companies) (Licensing Application Form) Supervisory Rules, Resolution, 2019 (The Rules), which was passed in 2020, sets out the procedures for financial holding companies to be licensed and effectively become subject to the BOJ’s consolidated financial holding company supervisory regime. It should be noted that the consolidated supervisory regime is applicable to the GraceKennedy Financial Group (GKFG) because a deposit-taking institution is a part of the group.”

The licensing process, he told the Business Observer, was advanced, noting, “We are doing very well. I would say we are ahead.”

In anticipation of the creation of a unified GraceKennedy Financial Group under a new holding company, the GraceKennedy Group has rolled out a campaign leveraging the Grace brand and highlighting its capacity to deliver higher returns to clients.

Wehby told the Business Observer that, “’the Live a Graceful Life’ campaign seeks to communicate the GraceKennedy Financial Group’s (GKFG) value proposition of optimism. In this case, everyday financial optimism. Money is one of the main sources of concern for many. GKFG’s purpose is to help people achieve their financial goals big or small, and in turn, live a richer more fulfilled life. More money” is what the group is offering clients.“

Wehby continued: ‘There will be more positive changes to come as we continue our unification as one GraceKennedy Financial Group into quarter four (Q4) 2022. In the coming months the targeted investment and campaign will enter another phase which will showcase our specific lines of business and how they can help customers ‘Live a Graceful Life’.“

With the exception of remittances, where it is the market leader in partnership with Western Union, GK as a group is going up against giants in banking (seven other commercial banks), insurance and a securities industry with 30 players.

While the asset base of individual players is undisclosed, as at March 2020 —the most recent data provided by the Financial Services Commission — show total assets among 30 broker-dealers stood at J$632.5 billion.

GK is seeking to strengthen its position in banking and investments, offered through First Global Bank Limited, SigniaGlobe Financial Group Inc, GK Investments Limited and GK Capital Management Limited – offering Caribbean investors commercial banking, stock brokerage services, corporate finance and advisory services.

Insurance

Competition in the insurance sector for GKFS comprises 12 other companies registered in Jamaica and offering life and general insurance products. There are 17 registered on the island. GK, through acquisitions, has been increasing market positioning, with five companies owned in Jamaica and the Eastern Caribbean.

GKFG, under its insurance units, is seeking a bigger stake in a market valued by invested assets at $360.8 billion at year end September 2020, according to the most recent data from the FSC. The general insurance market alone, valued by assets, was $95.0 billion as at September 30, 2020.

Subsidiary GKMS is the umbrella brand for the services offered by Western Union, FX Trader and Bill Express. It is already a market leader, with over 50 per cent of market share in Jamaica, as previously disclosed.

Combined, the GKMS network has over 300 locations across Jamaica. It also operates in Trinidad and Tobago, Guyana, Antigua & Barbuda, Anguilla, The Bahamas, Montserrat, St Kitts & Nevis, St Vincent & the Grenadines, the British Virgin Islands, the Cayman Islands and the Turks & Caicos.

The marketing manager noted that the company has been transforming internal operations, processes, and the team to deliver faster, consistent and heightened customer experiences.

Wehby told the Business Observer that a digital transformation strategy is a “huge priority” for GKFG. “It will be integrated to use the services of our subsidiaries.” The group is also planning the launch of new products and services by year end 2021.

GraceKennedy Limited for the six months ended June 30, 2021 realised revenue of J$63.4 billion, up J$6.8 billion or 12.1 per cent over the corresponding period of 2020.

Net profit was $4 billion, 30 per cent up on 2020. Earnings per stock unit for the first half of 2021 were J$3.62, compared to $2.77 for the corresponding period in 2020.

Wehby indicated that the GraceKennedy Financial Group (GKFG) reported strong growth in both revenue and profit before tax in the first half of 2021.

He said, “GK Capital Management and GK Investments continued to show top line growth and GK’s insurance segment yielded positive results, with GraceKennedy General Insurance (GKGI) notably recording double-digit growth in revenue. GraceKennedy Money Services (GKMS) exceeded revenue and pre-tax profits in 2020.”