Tue | Jul 7, 2020

GHL acquires Fidelity insurance brokerage

Published:Friday | April 3, 2020 | 12:20 AM

GUARDIAN HOLDINGS Limited, GHL, and one of its associates have taken over a Cayman-registered insurance broker in a deal struck back in October but which was just disclosed in the regional insurance conglomerate’s audited financial results published last week.

Guardian acquired 67.74 per cent of the issued shares of Fidelity Insurance Cayman Limited for cash of TT$70.89 million (US$10.5 million), while Royal Star Holdings Limited, acquired the other 32.26 per cent. Royal Star – which operates as a property and casualty insurer and is registered in The Bahamas – is itself an associate company of GHL, which holds a 26 per cent stake in it.

The identity of the seller of the brokerage wasn’t immediately clear.

Fidelity’s net asset value, or book value, was stated as TT$3.13 million.

In accounting for the transaction, Guardian, which is majority owned by Jamaica’s top ranking conglomerate NCB Financial Group, booked TT$68.48 million (US$10.13 million) in goodwill, which is the difference between the purchase price and the net tangible assets.

“The nature of the brokerage business is that their core asset is a block of customers with which they have deep client relationships. Hence, there is always substantial amount of goodwill generated in purchasing a broker. The key is to retain and grow this customer base,” said NCB Financial, whose President & CEO Patrick Hylton is chairman of Guardian Holdings.

“A few years ago, we took the strategic decision to enter into the brokerage arena and develop fee/commission income as an additional income stream. In other words, we moved vertically down our value chain,” the bank said.

GHL, a regional insurance conglomerate, projects a 10 per cent growth rate for Fidelity, whose largest tangible assets are its loans of US$161,000 and cash of US$922,000.

“None of the loans and receivables has been impaired, and it is expected that the full contractual amounts can be collected,” said Guardian.

Other acquisitions by Guardian last year included the portfolios of two insurance brokerages in the Netherlands through its subsidiary Thoma Exploitatie BV, a deal worth TT$11.89 million (US$1.76 million).

At year ending December 2019, Guardian reported TT$30 billion (US$4.4 billion) in total assets for the group, with equity of TT$3.96 billion (US$590 million). The company made a profit of TT$692 million last year, up from TT$534 million.

The insurance conglomerate, which is based in Trinidad & Tobago, operates in 22 markets, including Barbados, Jamaica, Curaçao, Aruba, St Maarten, Bonaire, and now the Cayman Islands. Additionally, the group’s products and services are marketed in the Eastern Caribbean, Bahamas, Belize and the US Virgin Islands, according to the company’s investors section on its website. GHL is owned 62 per cent by NCB Financial Group.