General Accident finalises expensive Caribbean reorganisation
Overhead costs to stabilise in 2021Wednesday, February 24, 2021
BY DURRANT PATE
General Accident Insurance Company has completed its expensive reorganisation and rebranding of its Caribbean subsidiaries in Barbados and Trinidad.
The company incurred heavy start-up cost for its Barbados subsidiary, which was launched last year. The expensive start-up cost was expected and provisions budgeted to meet these expenses.
The Jamaica-based insurance company expects that its Barbados subsidiary will be profitable in 2021.
Regarding its Trinidad subsidiary, unfortunately, the business did not receive approval to rebrand and to write property business until late in the December quarter.
Company Chairman PB Scott and Chief Executive Officer (CEO) Sharon Donaldson expects that the rebranding of the business and the introduction of classes of business that align to the parent company's traditional strengths will drive improved results for the Trinidad subsidiary in 2021.
As the reorganisation of its foreign subsidiaries is now fully completed, General Accident expects that overhead costs will stabilise in 2021. As the group continues to grow in size, the expectation is to achieve the scale and resilience projected by its business model.
BIG DROP IN PRE-TAX AND NET PROFITS
For 2020 the General Accident group produced a combined profit before tax of $317.3 million, significantly down from the $770.1 million made in 2019. The Jamaican segment of the group led the way with writing premiums of $11.6 billion and contributed profit before tax of $491.6 million.
The Trinidad business wrote premiums valued at $393.1 million. Net profit for the group came out at $283.2 million, also significantly down from the $651.6 million posted in 2019, while earnings per share was cut to $0.27 from the $0.63 posted in 2019.
The group wrote gross written premium of $12.05 billion, compared to $10.73 billion for prior year. Net earned premium improved by 2 per cent to $2.73 billion, while net claims costs grew by 48 per cent to $1.79 billion, a situation which is under review. Administrative expenses increased by 23 per cent when compared to the prior year. The group made an underwriting profit of $58.42 million.
The Jamaican portfolio produced an underwriting profit of $240 million in 2020, well below 2019's performance of $373.38 million.
The consolidated investment income saw an improvement for the year ended December 31, 2020 of $201.78 million compared to prior year of $172.20 million. Like all businesses in 2020 General Accident was impacted by the novel coronavirus pandemic.
To varying degrees, the pandemic continues to impact the Jamaican, Trinidadian and Barbadian markets in which the company operates. The board reports that the group will continue to rely on strong relationships with our clients, brokers, reinsurers and employees to serve policyholders and generate returns for our shareholders during this period of uncertainty.
As of December 31, 2020, the company remains in compliance with the capital adequacy and liquidity metrics prescribed by the Financial Services Commission and regulatory bodies of its subsidiaries. The outlook remains positive for 2021, with the expectation that profitability will improve in 2021 due primarily to premium growth in Barbados and Trinidad.
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