The Development Bank of Jamaica (DBJ), the government agency that manages public-private partnerships and privatisation, has opened an invite for registered general insurance companies to bid on the mortgage insurance portfolio currently administered by the Jamaica Mortgage Bank (JMB).

The sale of the mortgage portfolio is one step in JMB’s transition towards privatisation and eventual listing on the Jamaica Stock Exchange.

“Details of the Mortgage Insurance Portfolio along with details of the divestment opportunity and process are available in the Request for Proposal (RFP) and Confidential Information Memorandum (CIM) now available to qualified investors,” the recently published public notice said.

Both documents will only be made available to general insurance companies registered with the Financial Services Commission.

In response to queries from the Jamaica Observer, DBJ said that the sale is expected to be finalised in the first quarter of the 2025/26 financial year and will be subject to the identification of a suitable general insurance provider following the tender process and Cabinet approval of the final terms.

While an important component of JMB’s operations, the mortgage insurance portfolio is not the bank’s primary revenue driver. JMB generates most of its income from financing construction and infrastructure development; as such, officials do not expect the sale to disrupt JMB’s core lending activities. Instead, the divestment is anticipated to enhance efficiency, with the proceeds going directly to the Government of Jamaica (GOJ) rather than being reinvested into JMB’s operations.

“The JMB only administers the mortgage insurance portfolio on behalf of the GOJ; therefore, the proceeds from the sale of the Mortgage Insurance Portfolio will go to the GOJ,” the DBJ said in an e-mailed response.

The divestment process is expected to attract interest from established insurance entities looking to expand their mortgage indemnity offerings. However, the sale’s completion hinges on key regulatory approvals, including the repeal of the Mortgage Insurance Act and the Jamaica Mortgage Bank Act.

JMB has also assured policyholders that their contracts will remain secure.

“At present, the operations of JMB remain unchanged as it still issues and administers insurance policies under the Mortgage Insurance Act and, therefore, entities are free to continue to contract with the JMB on that basis. In the event the proposed sale of the portfolio is finalised, all policyholders under the portfolio will be advised,” the bank stated. “Thereafter, the buyer shall take over and continue the administration of the insurance policies under the Mortgage Insurance Portfolio,” it continued.

JMB is adjusting to shifting market conditions ahead of its privatisation. The bank has scaled back its loan targets for housing units from 100 in 2023/24 to 75 in 2024/25, while new mortgage indemnity insurance commitments are projected to decline from $260 million to $220 million. Additionally, JMB’s acceptable threshold for bad debt is set to rise from 2.8 per cent to below 6 per cent.

Despite these changes, the bank expects to maintain a strong financial position. Its projected pre-tax net surplus for 2024/25 is $217.34 million, slightly above the $211.31 million recorded in the previous fiscal year. However, total revenue is expected to decline from $897.39 million to $750.42 million due to lower interest earnings and administrative cost reductions.

The privatisation of JMB aligns with the GOJ’s objective to deepen Jamaica’s financial mortgage market and broaden the ownership base of its privatisation vehicle, JMB Developments Limited (JMBD). While the proceeds from the sale will provide funds to the GOJ, it will also enable JMBD to refine its strategic focus, potentially leading to an expansion of its product offerings.

At the same time, JMB is seeking to diversify its revenue streams beyond traditional mortgage financing. The bank is actively developing new income sources, including technical and project management services, and is engaging the Diaspora by offering construction monitoring services to overseas financiers investing in Jamaica’s housing sector. These efforts position JMB to evolve beyond its historical role and better serve Jamaica’s changing real estate landscape.