General Accident Insurance Company Jamaica Limited’s (Genac) expansion into the Eastern Caribbean is starting to bear fruit as the general insurance business grew its consolidated premiums eight per cent to a historic $15.11 billion.

The core Jamaican business was able to increase its premiums by six per cent, from $12.97 billion to a record $13.8 billion. However, due to an increase in premiums ceded to reinsurers and rising operating expenses, the profit before tax (PBT) declined 27 per cent to $438.6 million as per its unaudited fourth-quarter results.

Despite the relative decline for the Jamaican operations, its General Accident Insurance Company (Trinidad) Limited (GenacTT), and General Accident Insurance Company (Barbados) Limited operations were profitable as evidenced by the turnaround from an estimated loss before tax of $346.89 million to a PBT of $226.44 million. This was against the backdrop of a 45 per cent increase in GenacTT premiums of $948.1 million and a 19 per cent increase in its Barbadian operations premiums of $394.8 million.

“Both entities have gained acceptance of the market and the confidence of the insuring public so we were able to penetrate the market and gain premiums from the insuring public in both entities. We re-marketed both companies to the insuring public and continue to assure them that the capital base of both companies is pretty strong and that the parent company is financially sound,” said Managing Director Sharon Donaldson-Levine in a call with the Jamaica Observer last week.

The final consolidated figures will be available in the 2022 audited financials, which should be published by March 31. General Accident Jamaica currently has a Caricris credit rating of jmA– and jmA.

General Accident Jamaica began operations for its Barbadian business in April 2020, with the listed company currently owning 80 per cent of the business. Genac originally acquired a 55 per cent stake in then Motor One in September 2019 before rebranding it to GenacTT in October 2020. On December 31 it increased its stake from 65 per cent to 75 per cent.

“Because when we started the company one of the original shareholders was an employee, the employee has since retired and offered the shares to the existing shareholders to purchase — and General Accident saw the opportunity to purchase additional shares,” the managing director explained.

The other minority shareholder in GenacTT is Micon Marketing Limited which is now a subsidiary of AS Bryden & Sons Holding Limited, a business which is 54 per cent controlled by Seprod Limited.

While the Genac boss is looking forward to more opportunities in 2023 she is cognisant of the realities surrounding the general insurance industry, which has been impacted by a reinsurance crisis that has affected the capacity of insurers. This has seen different general insurers quote their clients new premiums, sometimes 50 per cent above last year, for property insurance.

“Unfortunately, that is the way the reinsurance works; the losses of the few must be compensated by the many. We’re not shielded from what is happening in the world when it comes to world losses,” Donaldson-Levine said in response to reinsurance queries.

Genac’s reinsurance ceded went up eight per cent to $11.33 billion, which represents payments made to reinsurance companies who effectively insure the risk on its books. Reinsurers faced reduced capital due to rising interest rates and increased losses in 2022 from more natural disasters, along with inflation. As a result, general insurers are expected to pay more in reinsurance costs for 2023, which will become more pronounced in the first half of the year.

“We’re not shielded from the earthquake that happened in Turkey, we’re not shielded from the bush fires in the United States of America, we’re not shielded from the earthquakes that happen in California. It’s the same world [for] reinsurers and when the losses increase at such steep levels, the prices must go up to compensate, somewhat. Our job is to really package that information and share with you, the purchasing public, the best way we can,” stated Donaldson-Levine as she highlighted significant events which would have resulted in reinsurers charging more to their clients.

The Jamaican insurance sector was also impacted by the increase in claims due to inflation impacting the motor segment, which saw an increase in the number of accidents and fatalities in 2022.

In spite of the events in 2022, Genac was able to improve its consolidated underwriting profit by 432 per cent to $427.33 million, with its investment income rising by 60 per cent to $361.37 million. Its consolidated net profit also grew 294 per cent to $588.12 million, with the net profit attributable to shareholders increasing 109 per cent to $533.34 million. This is its best normalised net profit since 2019. Earnings per share moved up from $0.25 to $0.52.

Total assets moved up to $12.55 billion, with the investment securities portfolio hitting $3.19 billion and its due from reinsurers and co-insurers at $3.14 billion. Total liabilities shrunk to $9.37 billion and equity attributable to shareholders increasing $2.88 billion. Genac paid its largest dividend to date, of $0.24298, on December 15.

Although its share price peaked at $6.48 within the last year the stock closed Monday at $5.33, which leaves it up 21 per cent year to date with a market capitalisation of $5.50 billion. Its price to earnings ratio stood at 10.25 times, with its price to book value at 1.91 times.

“We at the General Accident Group are confident that we will be able to deliver results that should be more or less in line with what we did in the prior year, or slightly improved if loss ratios hold. Although we have not achieved the profitability targets in all regions we remain committed to our growth plans and are confident that we will meet our strategic objectives,” Donaldson-Levine closed.