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Stabroek News

Life of Jamaica posts 3Q earnings record - Joins big banks with quarterly earnings above the $1 billion mark
published: Wednesday | November 7, 2007

Sabrina N. Gordon, Business Reporter

Richard Byles, president and cEO of Life of Jamaica. - File

Life of Jamaica has released record-breaking results for the quarter ending September 2007 that reported net profit that broke through the one billion-dollar mark in the three-month period.

The insurance company reported net income of $1.2 billion in its third quarter, a strong 68 per cent increase compared to the $721 million posted for the same period last year.

"This is the best quarterly performance," said Mark Croskery chief executive officer of Stocks and Securities Limited. "The results are much improved and favourable."

He pointed to significant growth in net investment income. For the quarter net investment income increased to $1.04 billion from the $741 million it reported for the 2006 quarter.

"This represents a 40 per cent jump and could very well be that LOJ has booked gains from its investment in the Winchester Business Center," said Croskery.

Eclipsing second quarter

LOJ's current performance eclipses the $946 million made in the second quarter of 2005, and puts LOJ among big commercial banks NCB and BNS, as companies whose profits had topped $1 billion in a given quarter. It comes behind some trouble in its earnings per share performance over the past six quarters, which have been flat.

For this quarter the company recorded earnings per share of 27 cents, up 80 per cent over the September 2006 period. Its EPS over the nine-month period was 58 cents, reflecting profit of $2.6 billion, up from 46 cents per share in 2006.

"By way of success in the number of policies on book and efforts to remain efficient in terms of productivity, the company has reaped benefits in this quarter," said Richard Byles, president and chief executive officer of Life of Jamaica, speaking with Wednesday Business.

Byles said LOJ's performance has been steady and growing, with strong core earnings running throughout the quarters. In that regard, September's performance was no surprise, he said.

The bigger profits reflect significant gains from the trading of securities and growth in its individual life portfolio, and enhanced by containment of operating cost.

During the quarter LOJ launched a new product - the Protector Series - which the company reported to be doing well on the market.

In October, the company increased its share ownership by 24.2 per cent in Sagicor General Cayman Limited, moving from 51 per cent to 75.2 per cent. While not revealing how much more the additional 24.2 per cent share in Sagicor General cost, Byles said it was not a big investment.

The remaining 24.8 per cent of Sagicor General is held by the Cayman government.

LOJ's real interest in Sagicor General lies in health insurance, said Byles, pointing out that it is one of several insurance companies that operate in the Cayman Island and captures a reasonable share of the market.

Gross premium revenue rose 14 per cent increase, moving from $3.08 billion to $ 3.54 billion for the quarter under review, while net premium revenue grew marginally by 8 per cent and now stands at $2.77 billion. Total revenue for the quarter was $4.29 billion, a 14 per cent increase over the corresponding quarter for 2006.

With year-to-date revenue also up by 14 per cent amounting to $12.43 billion from $10.93 billion, Byles says that this is the performance which signals where that company is heading.

Individual life earned premiums rose by 16 per cent in the nine months of 2007, while employee benefits earned premiums also improved from $4.35 billion to $4.69 billion.

Continue at same pace

Their main non-life subsidiary, Pan Caribbean, also contributed to a strong performance with reported net profits of $905.4 million for the period.

LOJ remained the dominant pension fund manager, growing its pension assets under management by 10 per cent to $133..3 billion. Its own balance sheet grew nine per cent, reflecting growth in assets to $85.8 billion.

Croskery expects LOJ's profit performance to continue at about the same pace into its financial year end December, with expected earnings from the Winchester Business Centre and gains from the company's efficiency drive.

Stocks and Securities maintain LOJ as a buy at $7-$7.50, saying the stock is likely to continue trading at a minimum of 10 times its earnings.

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