The Financial Services Commission (FSC) in its latest report on the insurance sector for the quarter ended June 30, 2022, indicates that the island’s six life insurance companies continue to dominate the industry.

The life sector now accounts for 77 per cent of the sector’s total assets. In comparison, the 11 general insurance companies which were operational were responsible for the remaining 23 per cent as at end June 2022.

Aggregate total assets for the life insurance companies grew by $19 billion or 5.0 per cent to $396.3 billion at June 30. The uptick in total assets was driven by a $17-billion increase in combined invested assets. Combined liabilities grew by 1.9 per cent to $259.1 billion as at end June 2022.

Due mainly to fair value losses in the bond market and the equities portfolio, the total investment reserve for the life companies fell significantly. Nevertheless, aggregate capital and surplus rose 11.6 per cent to $137.2 billion from the $123.0 billion in June 2021 due to recapitalisation and increased retained earnings.

For the six-month period ended June 2022, net premiums earned (NPE) for the industry amounted to $38.1 billion, reflecting a 6.3 per cent increase when compared to the NPE of $35.8 billion for a similar period in 2021.

Cumulative other income fell by 17.3 per cent below the amount seen for the comparative period in 2021. This was partially due to lower gains being recognised on bonds when compared to the prior period. Net investment income declined by 36.3 per cent from $13.4 billion at June 2021 to $ 8.5 billion at June 2022 due to lower investment returns. Combined total revenue decreased by 6.1 per cent to $49.4 billion (June 2021: $52.6 billion).

The FSC says accumulated total expenses excluding taxes for life insurers declined by 13.9 per cent to $37.3 billion (June 2021: $43.3 billion). Consequently, net income before tax rose by 30.0 per cent to reach $12.1 billion in June 2022, (June 2021: $9.3 billion).

General insurance affected by FX losses

For the six-month period ended June 2022, the total assets of general insurance companies grew by 12.5 per cent to $120.3 billion. The rise in total assets was assisted by the 8.2 per cent growth in aggregate invested assets to $58.7 billion from the $54.2 billion seen in June 2021.

Combined total liabilities increased by 16.5 per cent to $91.6 billion in June 2022 compared to the $79.0 billion for June 2021.

The FSC outlined that contributing factors to the growth in liabilities included amounts owing for unpaid claims and amounts due to reinsurers. The accumulated capital base for the sector rose by 2.4 per cent to $28.5 billion compared to the $27.9 billion as at June 2021.

For the first six months of the calendar year, the aggregate net premium earned (NPE) declined by 10.1 per cent to $9.6 billion (June 2021: $ 10.7 billion). The fall in NPE was primarily due to an approximately 32 per cent increase in reinsurance ceded.

With higher interest rates and growth in the investment portfolio, combined net investment income improved by 26.7 per cent to reach $1.2 billion over the reporting period compared to $1.0 billion for the comparative period in 2021.

Due to foreign exchange losses resulting from the appreciation of the Jamaican dollar against its United States counterpart, total other income was wiped out, falling by 105.9 per cent from the $0.7 million seen in the relative period of 2021.

Consequently, combined total revenue for the reporting period contracted from $12.3 billion for the June quarter of 2021 to $10.8 billion in the June quarter of 2022.

Aggregate total expenses before taxes amounted to $10.6 billion; as a result, net income before taxes for the general insurance companies was $0.2 billion.