Guardian Life premium income up 18.6 per cent
Published:Wednesday | May 1, 2013 | 12:00 AM
Guardian Life Insurance company saw its gross premium income increased to $8.9 billion for the year ended December 2012, an 18.67 per cent improvement over the $7.5 billion it recorded in the previous year.
But with $279.6 million being ceded to reinsurers, that brought the company's net premium income to $8.6 billion for the reporting period. Of Guardian Life insurance portfolio, the value of life and critical illness risk that is ceded or reinsured amounts to approximately $27 billion.
In terms of gross premium income, ordinary life policy renewals, which was valued at $3.2 billion, accounted for the major portion, followed by the health line of business which contributed $3.1 billion. Group life, annuities and ordinary life first-year policies contributed the remaining $2.6 billion.
For the review period, all business lines reflected growth. Insurance policies within their first year grew by approximately 7 per cent, while the annuities business showed a significant jump to $1.4 billion, up from $385 million.
"Our performance may be affected by the reduction in investment earnings," said Eric Hosin, chief executive officer of Guardian Life, in emailed responses to questions posed by Wednesday Business.
"These challenges are not entirely new to us and, over time, Guardian Life has been focusing more and more on our core business of life, health and pensions, making an underwriting profit and controlling costs in these areas, as well as practising prudent investment management," he added.
LOWER INTEREST RATES
With the lowering of interest rates a keener focus will now be placed on underwriting margins, according to Guardian Holdings Limited, parent company for Guardian Life, in its financial report for the year ended December 2012.
Both companies and their respective subsidiaries participated in the Government's recent National Debt Exchange programme.
The group is expected to be impacted by reduced income of TT$35 million as a result of the debt exchange, but Guardian Holdings said it has already identified a number of mitigation strategies which will reduce the overall impact to around TT$10 million.
Guardian Life reported increased income from investing activities for the year amounting to $3.3 billion, compared to $2.97 billion the previous year.
"It is unlikely that the strategies that we will employ will negate the total impact of the reduction in interest rates," said Hosin. "Notwithstanding, in addition to those previously mentioned we will seek to increase our new business and further diversify the assets in our investment portfolio," he added.
$4.5 billion in claims
Underwriting expenses grew from $6.8 billion to $8 billion, resulting in net profits from insurance activities falling to $510 million, $23 million less than the $533 million it recorded the previous year.
"We will continue prudent underwriting of risk, including appropriate pricing and maintaining adequate policy reserves," said Hosin.
For the year, Guardian Life paid out approximately $4.5 billion in claims and insurance benefits, about $200 million more than the $4.3 billion it paid in 2011.
The company has an asset base of $49.7 billion, and cash and cash equivalent of $3.6 billion at the end of the year.
Guardian Life is one of the top insurance companies operating in the local life insurance market. It has been offering life insurance products on the local market since 1999 and is engaged in the underwriting of all classes of long-term insurance business.
It has 10 branches across the island with more than 20 insurance products offerings.