It appears that General Accident Insurance Company Jamaica Limited (GENAC) is on the cusp of another acquisition as it is set to ask shareholders for permission, in the coming weeks, to issue new ordinary and preference shares.

This was revealed on Wednesday when the company put out a new annual general meeting (AGM) notice which contained fresh special business resolutions. GENAC’s original AGM date was scheduled for September 13 before it was moved to November 6 to be held at 9:00 am.

The first special item is seeking to increase the maximum number of directors that can sit on the company’s board from 12 to 15. General Accident’s current board has 11 directors with Paul B Scott being the chairman, Melanie Subratie as deputy chair and Sharon Donaldson-Levine as the company’s managing director.

The second special item seeks to have the company’s authorised share capital be increased from 1.1 billion ordinary shares to 1.4 billion through the creation of an additional 300 million new ordinary shares. General Accident’s current issued share capital is 1,031,250,000 ordinary shares with 80 per cent of those owned by Musson Jamaica Limited.

The third special item seeks to increase the company’s authorised share capital by creating 10 million new redeemable preference shares which will be known as the 2024 redeemable preference shares. These shares would be allotted and issued on such terms and conditions to such persons as the board of directors determines. There is also a second part of this special item which speaks to the company’s ability to choose, at any time, when to redeem these redeemable preference shares and at an issue price to be determined by the board of directors.

GENAC is currently among the top two general insurance companies in Jamaica alongside British Caribbean Insurance Company Limited (BCIC). Donaldson-Levine is reported as saying that the company has a 25 per cent market share. It also operates in Barbados with an 80 per cent subsidiary and Trinidad and Tobago where it owns 75 per cent of the subsidiary.

The company began its regional expansion journey in September 2019 when it acquired 55 per cent of Motor One Insurance Company Limited, a Trinidadian general insurance firm, while Micon Marketing Limited acquired the remaining 45 per cent interest. It then began operations in Barbados in March 2020 from the ground up.

The company graduated from the Junior Market of the Jamaica Stock Exchange (JSE) in September 2023, two years after its tax remission had expired. That move to the Main Market opened new opportunities for the company to pursue new deals or raise equity due to it being constrained by the $500-million share capital limit of the Junior Market when its issued share capital was already at $470.36 million.

At a September 4 Mayberry Investments investor forum Donaldson-Levine said that the GENAC is looking at more regional expansion.

An Ernst & Young document noted that General Accident Insurance Company (Trinidad) Limited was the smallest general insurance company in the market with TT$29.2 million in gross written premiums in 2021. The then largest five general insurance companies — Guardian General Insurance Limited, Colonial Fire and General Insurance Company Limited, CG United Insurance TT Ltd (formerly Massy United Insurance), The Beacon Insurance Company Limited and Sagicor General Insurance Trinidad and Tobago Limited — controlled 64 per cent of the market.

“The acquisition of AS Bryden in Trinidad has made the GENAC Trinidad increase at a much faster rate than we had actually planned. So, when we bought it, it was a company that was under receivership and being managed by the Central Bank of Canada. We actually made a profit after three years because the acquisition of AS Bryden gave us some critical mass. So we were able to insure their business,” Donaldson-Levine said at the Mayberry event.

AS Bryden & Sons Holding Limited was acquired in June 2022 by Seprod Limited, another company chaired and controlled by PB Scott. AS Bryden acquired Micon Holdings Limited, which was also the parent of Micon Marketing, by issuing new AS Byrden ordinary shares to the former owners of Micon Holdings — Michael, Beverly, Gerard and Juliet Conyers as well as Stony Hill Capital Limited — in November 2022.

Checks with the Trinidad registry revealed that GENAC’s (Trinidad) stake increased from 65 to 75 per cent in 2022 with Michael and Gerard Conyers owning 12.5 per cent and Susan Scott owning the other 12.5 per cent. Both Michael and Gerard Conyers sit on the board of the Trinidadian subsidiary.

In the second quarter (April to June) of 2024, Michael Conyers became the fifth largest shareholder in General Accident Jamaica with 9,337,457 ordinary shares or 0.9055 per cent of the company. Michael Conyers is the deputy chairman of AS Bryden and owns 90,103,014 ordinary shares or 6.48 per cent of the company.

GENAC Trinidad posted insurance revenue of $1.31 billion (TT$56.80 million) in 2023, a 69 per cent improvement, but net profit was compressed by 82 per cent to $42.10 million (TT$1.83 million). GENAC Barbados was able to grow insurance revenue by 51 per cent to $564.97 million (BDS$7.29 million) and cut its net loss down to $12.17 million (BDS$156,940).

With 2023 being the transition year for the implementation of IFRS 17 which replaced IFRS 4 for the reporting of insurance revenue, performance results can come out higher or lower compared to 2022.

At the Mayberry event, Donaldson-Levine revealed that the company has set its sights on Guyana.

“Like everybody else, since Guyana has found oil and it’s supposed to be booming in a little while, we would love to go into Guyana. We actually would want to go to the rest of the Caribbean islands. So, we’d like to look at St Lucia; we like St Lucia a lot. We also like Grenada a lot. The [general] insurance companies in Grenada do really, really well. They have excellent underwriting techniques in Grenada. Those are two additional countries that we’d like to expand to,” Donaldson-Levine said.

GENAC’s standalone insurance revenue rose 22 per cent to $6.75 billion with a net insurance service result of $585.58 million in 2023. However, the net insurance and investment result was flat at $816.01 million with net profit dipping 13 per cent to $524.43 million. Its Jamaican asset base improved to $7.87 billion with $2.02 billion in investment securities and $661.04 million in cash while its capital base improved to $3.57 billion.

While the potential acquisition target isn’t known, the opportunity could also lie within Jamaica and the other 10 general insurers in the market. Though the stock price traded down to $6.90 last Thursday, the stock is up 42 per cent in 2024 with a market capitalisation of $7.12 billion.

An acquisition doesn’t necessarily have to involve GENAC raising new equity capital from an equity raise, it could also involve the company issuing shares to the sellers of the acquisition target. A similar transaction was done with Productive Business Solutions Limited (PBS) and PBS Technology Group Limited in September 2021.

Musson Group and related entities have been actively doing several acquisitions in 2024 with AS Bryden acquiring 44.8 per cent of Caribbean Producers (Jamaica) Limited, a business with a St Lucian subsidiary, on July 9.

Additionally, PBS acquired 45 per cent of Trinidad Systems Group Limited in early 2024.

Scott and Donaldson-Levine both joined the board of directors of Atlantic Hardware and Plumbing Company Limited earlier this year.

GENAC’s half-year results showed its consolidated insurance revenue rising by 15 per cent to $5.37 billion, but increased insurance service expenses and reinsurance costs saw the net insurance service result slipping 53 per cent to $174.65 million. Despite higher investment income and other operating income, GENAC’s consolidated net profit decreased 35 per cent to $159.11 million with net profit attributable to shareholders of $150.53 million.

GENAC’s consolidated asset base was up 23 per cent over the six months to $12.04 billion with investment securities at $3.50 billion and cash at $1.47 billion. Total liabilities and equity attributable to shareholders was $7.92 billion and $3.76 billion, respectively.

On September 13, 2024, General Accident Jamaica sold its Eppley Caribbean Property Fund Limited SCC – Value Fund shares to Eppley Fund Managers Limited for $46 for gross proceeds of $440.25 million, a gain on the $42.99 it paid in July 2023 for the shares from Musson Investments Limited. GENAC is also a top 10 shareholder in Stanley Motta Limited, the company which owns 58 Half-Way-Tree Road, and PBS, another Musson-controlled company.