Big gain for NCBCap from Advantage General deal
NCB Capital Markets is selling its stake in Advantage General Insurance Company for nearly 50 per cent more than it shelled out for the acquisition seven years earlier, at least in US-dollar terms.
The investment house struck a US$50.5-million deal to sell Advantage General to Sagicor Investments Jamaica Limited and two other parties. The transaction is subject to regulatory approval.
Sagicor Group Jamaica President & CEO Christopher Zacca says there are no plans to rebrand the company as Sagicor at this time.
NCBCap paid US$34 million for Advantage General in 2012. The sale price is 48.5 per cent higher. At both times, the company was sold essentially for its book value.
NCBCap said the sale was meant to shed risk within the NCB Financial Group, relating to the size of its general insurance assets, which amounts to $15.4 billion of NCB Financial’s total assets of $941 billion.
“As a result, NCB Financial Group took the decision to adjust its exposure to the Jamaican general insurance market as well as to focus on the integration of Guardian Holding Limited and its subsidiaries,” said NCBCap CEO Steven Gooden in response to Financial Gleaner queries.
Last month, NCB Financial Group completed a takeover of Guardian, in which it now holds a 62 per cent stake, up from just under 30 per cent. The acquisition gave NCB increased exposure to Guardian General Insurance, a large insurer operating in Jamaica and the region.
NCBCap acquired Advantage General from Michael Lee-Chin’s company Portland. Lee-Chin is also principal owner and chairman of NCB Financial Group.
Over the years under NCBCap’s ownership, Advantage General has increased in profitability, which, in turn, has improved its book value. Under the new deal, NCBCap will sell 60 per cent of Advantage to Sagicor Investments; 34 per cent to an entity called Fundy Bay Holdings to which the insurance company’s CEO, Mark Thompson, is connected; and six per cent to Research In Motion, which is controlled by investor Donovan Lewis.
“PricewaterhouseCoopers was engaged to manage the divestment process. Coming out of that process, the consortium consisting of Sagicor, Mark Thompson and Research in Motion emerged as the preferred bidder,” said NCBCap.
Sagicor Group, the parent of Sagicor Investments, operates the largest life insurance company in Jamaica, but holds no general insurance assets locally. The Advantage acquisition gives it majority ownership of the largest general insurance company in Jamaica.
“We not only insure their lives, provide for their health, help to build their wealth during their lives, and assist in their retirement financial planning and pensions, but now also protect their property,” Zacca told the Financial Gleaner.
Advantage General holds $6.7 billion in shareholders equity, reflecting its net worth, as at December 2018, its financials indicate. The US$50.5 million paid by the consortium equates to J$6.6 billion at the current exchange rate.
Last year, Advantage made $904 million in net profit on revenues of $5.6 billion.