General Accident's investment portfolio amounts to one-tenth of its asset base, and the insurance company is assuring shareholders that the National Debt Exchange will have minimal impact on its operations.
The general insurer, which trades as GENAC on the junior market, is coming off a successful financial year, which closed December 2012, with net profit of J$286 million.
In its NDX disclosure made alongside the release of its financial results, General Accident attributes the expected minimal impact to the composition of its assets, the largest block of which is held as cash and near cash.
"Given the composition of our portfolio, we expect the direct impact on our financial performance to be immaterial," the company said.
General Accident, led by guidance of Managing Director Sharon Donaldson, closed the year with J$3.9 billion of assets, up 11.4 per cent over the previous year's J$3.5 billion.
Cash and short term investments account for J$1.4 billion or 36 per cent; funds due from reinsurers and co-insurers J$1 billion or 25 per cent; while investment securities accounts for 10.6 per cent or J$410 million.
The insurance company otherwise warns that the economy could hurt business this year.
"As we enter 2013, we expect the negative economic headwinds we face to continue. However, by continuing our disciplined underwriting principles and sticking to our conservative approach to risk management, we also expect to generate satisfactory returns for our shareholders over the long term," stated the report to shareholders.
The company has headed into 2013 with near flat revenues of J$3.7 billion in gross premiums, compared to J$3.6 billion in 2011.
Net premiums earned on the other hand grew by 14 per cent to J$932 million, driven by growth in company's motor portfolio.
General Accident, a subsidiary of Musson Jamaica Limited, offers property casualty and general insurance products and related claims and other services to both individual and commercial customers.
It underwrite insurance risks such as house and content, motor, fire and allied perils, loss of money, computer insurance, among others.
Despite the growth in its premiums, underwriting profit fell to J$118 million last year, well below the previous J$161 million.
In fact, the company said its combined ratio — which is a measure of insurance underwriting performance calculated by the sum of claims and management expenses divided by net premiums earned — worsened from 88 per cent in 2011 to 94 per cent in 2012.
Impacted by Hurricane Sandy, a large commercial property claim and an increase in the frequency and severity of motor claims, General Accident said its loss ratio also worsened from 51 per cent last year to 58 per cent in 2012.
For the financial year, net profit amounted to J$286 million or $0.28 per share. The previous year's profit of J$1.28 billion was fattened by a one-off gain in investment income of J$1 billion, which resulted from the sale of long-term equity investments and real estate before the company went public.
The stock, GENAC, currently trades on the JSE Junior Exchange at J$1.60, valuing the company at J$1.65 billion.