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Jamaica strikes insurance brokerage deal with Bajans
published: Sunday | December 14, 2003


Matalon

Denis St. Bernard, Contributor

THE PRESIDENT of Barbados' CGM Insurance Brokers, William Tomlin was first out the gate, with the announcement of the largest ever insurance broker merger in the region.

International Insurance Brokers Limited (IIB), currently the most profitable general insurance brokers in Jamaica, (based on recent figures submitted to the Financial Services Commission) has merged with CGM, a company with over 30 years trading in the Eastern Caribbean, to form the CGM Group, which will now be the largest insurance brokers in the region.

From all appearances this marriage seems to be one made in CSME heaven. The Joseph M. Matalon-led IIB, has quietly distinguished itself in Jamaica as a heavyweight in the corporate insurance market, having obtained three separate licences from the FSC, that of Retail Broker, Reinsurance Broker and Facultative Broker.

BAJANS FLY THE GATE

Mr. Tomlin, who first went public with the deal, a week before a response from their Jamaican partner IIB, confirmed that the deal had actually been signed seal and delivered. When contact was made with IIB's officials, after it was made public by the Bajans, in the Nations News, IIB were still awaiting board confirmation on the new CGM Group deal.

The CGM Group will now account for BDS$150 million (US $75 million) in premiums annually and will have a staff complement of 120.

"We have received permission and encouragement from the respective insurance regulators in Jamaica and Barbados to allow a holding company to purchase the respective companies in Jamaica and Barbados," explained Mr. Tomlin in a recent interview with the Business Authority, in Barbados.

He added: "Shareholders in the individual companies will in turn be shareholders in the holding company. The holding company is already looking at other potential insurance brokerages across the Caribbean."

Mr. Tomlin is very excited about the future of the company. He explained that the merger was in response to continuing consolidation in the general and life insurance industries.

The strategy, he said, fits exactly the model put forward for the CARICOM Single Market and Economy (CSME), allowing Caribbean investors to move quickly to build organisations that will be strong enough to meet the competitive environment which they will need to confront in the near future with the FTAA soon to become a reality.

The regional insurance brokerage market has already been exposed to the threats of the large international insurance brokers. The life insurance industry in the Caribbean has moved quickly to become pan-Caribbean with a few major players such as Sagicor, Guardian and Clico already dominating the regional market and looking further afield.

PAN-CARIBBEAN MODEL

Mr. Tomlin said the general insurance market was now consolidating with companies like Guardian taking the lead. "The insurance brokerage market has until now remained primarily localised in each territory. CGM is the first of the insurance brokerage organisation to strategically move to a pan-Caribbean model.

"We are preparing for competition and trying to do what Government has been talking about with the CSME because sooner rather than later, the market is going to be opened up and we have to be stronger to be able to stand up to what is coming," he stressed.

As a result of the corporate changes, shareholders of CGM will now become shareholders in the holding company with all the entities becoming part of the new pan-Caribbean firm. According to Mr. Tomlin: "The shareholders of CGM will hold shares in the holding company so in other words we are turning the value of our company into shares in a holding company."

He made it clear that while the local insurance broker will be sold, its 45 employees will not be disadvantaged by the plan. In fact, he said CGM is in the process of hiring additional staff as a result of the planned expansion.

WIDER RANGE OF PRODUCTS

"The merged group will allow both IIB and CGM to provide their customers with superior service and a wider range of products and access to sophisticated risk management techniques," he added.

The new brokerage firm is already exploring expansion plans in the Bahamas and Trinidad.

IIB has also indicated that it sees the tremendous benefit such a merger will bring to the Group, in terms of market access and consolidation for global preparedness.

IIB's chairman Matthew Prag-nell, noted that with the greater critical mass now available to the new group, both IIB and CGM would be able to combine and compete with the traditional global brokerage houses looking to establish a foothold in the region.

SIGNIFICANT ADVANTAGE

"Local presence and knowledge allows us to leverage our resources to the significant advantage of our clients throughout the region. With the islands' committed embrace of the CARICOM Single Market and Economy (CSME), it is important that our industry responds accordingly", said Mr. Pragnell.

Joseph M. Matalon, explained that the process was now on a fast track and with the continued support of the regulators, and continued dialogue with its present and future customers, he was very excited at the prospects for the regional insurance powerhouse.

Denis St. Bernard is a regional insurance & business consultant based in Jamaica. He is also a director of the Association of Insurance Institutes of the Carribean (AIIC). Feedback at email pri@kasnet.com

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