Sabrina Gordon, Business Reporter
Guardian Holdings' acquisition of Globe Insurance Company of Jamaica Limited will give it control of one-fifth of the market.
The Trinidad conglomerate struck a US$38-million (J$3.4-billion) deal with Lascelles deMercado and Company for Globe last Friday. The transaction is expected to close at the end of November.
The acquisition will now increase Guardian's business in the property, casualty and motor insurance business in Jamaica to about 20 per cent of the general insurance market, according to chairman Arthur Lok Jack.
"I think it's a good acquisition. It will give us more ability to win business and offer more to customers," Lok Jack told Wednesday Business.
Guardian also owns West Indies Alliance (WIA), which is primarily involved in the commercial and industrial insurance business.
Asked about possible consolidation and rebranding, both Lok Jack and Jeffrey Mack, chief executive officer of Guardian Holdings, said the assessment is still ongoing.
"We do plan on working with the management teams of both West Indies Alliance and Globe Insurance in order to seek out both operational cost and revenue synergies with the goal of adding as much shareholder value as possible from this important acquisition. Both organisations have excellent people, and we plan on building the best general insurance company in Jamaica from these two fine organisations," said Mack via email to Wednesday Business.
"From a legal standpoint, we are still assessing if the ultimate structure will lead to a merger of the two legal entities, or if we simply do a portfolio transfer from one entity to the other. That decision will guide us as what the ultimate trading name will be," he said.
Lok Jack said a rebranding exercise is being planned for the entire Guardian Holdings group across the Caribbean to be executed over the next three to six months.
"We will rebrand, but in some cases we have to be careful because we do have some strong brands already - so in that case, why rebrand?" the chairman said.
However, he said there are opportunities for synergy and rationalisation.
"There are synergies, yes. It will put us in a more competitive position with more economies of scale, but the whole issue of how we bring them together is still being looked at," Lok Jack said.
One advantage he pointed to, however, in putting the companies together is getting better deals in how the company buys reinsurance, among other deals.
Globe is the first of several assets being sold off by Lascelles ahead of its acquisition by Gruppo Campari. Lascelles is also selling off its equity investments in companies like Carreras; and its transport businesses - AJAS Limited, Transport Agencies Limited, Henriques Brothers Limited and subsidiaries; Suntours Car Hire Limited; Sterling Motors Limited; Cars & Commercials Limited; Kingston Industrial Garage Limited; John Crook Limited and subsidiaries; and Turks Islands Importers Limited.
Globe represented more than J$6.5 billion of Lascelles' J$37 billion of assets. WIA has an asset base half Globe's size at J$3.5 billion at year end December 2011.
Globe is currently underperforming WIA in gross premium income. Last year, Globe earned J$2.4 billion in gross premiums compared to J$2.5 billion in 2010. WIA earned J$3.1 billion and J$2.4 billion in the respective periods.