NCB Capital Markets expands into general insurance

Correction & Clarification

The article, stated that "a company cannot list on the JSE if its parent is already listed". However, the Jamaica Stock Exchange is clarifying that a parent company and its subsidary company can be listed on the mainmarket, but that in the case of the junior market, if the parent company is listed on the main market then a subsidary (where ownership is 50 per cent or more of the shares) cannot be listed on the junior market.

We regret the error

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Steven Jackson, Business Reporter

Acquires 96% of Lee-Chin's Advantage General

NCB Capital Markets announced plans to acquire over 96 per cent of Advantage General Insurance (AGI) but declined to reveal the purchase price.

The other four per cent is owned by Donovan Lewis, the Financial Gleaner understands.

The acquisition of the insurance company, which has a net worth of J$2.58 billion, would result in a windfall for AGI majority shareholder, Canadian-Jamaican investor Michael Lee-Chin who had initially planned to raise up to J$650 million from listing an undisclosed fraction of AGI on the Jamaica Stock Exchange.

Lee-Chin also owns 63.9 per cent of National Commercial Bank of Jamaica, the parent company of NCB Capital Market.

The Financial Gleaner was advised that the acquisition, subject to regulatory approval, would be funded from internal capital.

"AGI products and services fit well into the NCB Group's strategic objectives of offering the customer end-to-end financial solutions, and we also believe the acquisition will allow us to earn a good rate of return on capital," said NCB group managing director Patrick Hylton in a staff advisory dated July 5.

The acquisition represents an expansion of NCB group's insurance holdings. It already operates in the life market through NCB Insurance Company Limited, and will now have a presence in general insurance.

AGI announced plans in February to list on the Jamaica Stock Exchange in a move aimed to raise between J$450 to J$650 million.

Well-placed sources inside NCB banking group and Advantage General said the IPO application, which had been sitting at the Financial Services Commission since last year, has been withdrawn.

"The listing is off, because NCB Capital Markets acquired the shareholding in AGI." said a key AGI source up to press, who requested anonymity to respect company protocol.

A company cannot list on the JSE if its parent is already listed.

The ordinary shares of NCB is currently listed on the Jamaica and Trinidad & Tobago stock exchanges. NCB Capital was also once traded on the exchange but its listing was confined to redeemable preference shares that matured several years ago.

The NCB banking group is Jamaica's largest and most profitable banking and financial services company. Last year, the bank made J$13-billion net profit to also make it the most profitable of all stock market companies.

For the six months ended March 31, 2012, profit dipped 22.1 per cent to J$4.7 billion.

Lee-Chin's Portland Holdings acquired the UGI Group in 2006, which was then rebranded as Advantage General. The acquisition was done through AIC Barbados. Advantage General is licensed to write motor, property, pecuniary loss, liability and accident classes of business.

AGI made $867.9-million profit for its 2011 financial year or 278 per cent higher than 2010. Advantage General has a network of 11 branches and over 260 employees nationwide.

business@gleanerjm.com