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Guardian Life doubles profit to $1.4b

Published:Monday | May 7, 2012 | 12:00 AM

Sabrina Gordon, Business Reporter

Insurance provider Guardian Life Limited doubled its net profit during its financial year ended December 31, 2011, moving to J$1.4 billion from J$645 billion the previous year, according to its recently released financial results.

The company has also recorded an underwriting profit from its insurance activities, coming from a loss position.

Guardian Life, a subsidiary of the Trinidad & Tobago-based conglomerate Guardian Holdings Limited, makes its money primarily from selling insurance policies and investment income.

But, with interest rates trending down, Guardian Lifes investment income, as with other financial institutions, has also been depressed.

For the financial year, the company recorded a marginal J$30 million decline in investment income to J$2.97 billion from J$3.1 billion the previous year.

However, with improvement in fee income, gains on financial instruments and despite a decline in investment contract benefits, net income from investing activities showed an overall marginal increase.

Net premium income remained relatively flat at J$7.2 billion for the year.

The company said it will be looking to improve the sales force productivity to drive premium income going forward.

"Despite the (economic) environment, the main pillars of our premium income growth for the year 2012 will be the enhancement of service delivery to our clients and sales force productivity," said Eric Hosin, chief executive officer of Guardian Life in e-mailed responses to Financial Gleaner queries.

Guardian Life also posted a net profit position from its core insurance activities, moving to J$533 million from a loss of J$209.8 million recorded the prior year.

"The recovery arose from the success of certain strategies to optimise asset liability matching, pricing and cost containment commencing in 2010," said Hosin, declining to elaborate.

Net insurance benefits and claims increased by a marginal J$700 million to J$4.3 billion from $3.6 billion the previous year. Of the J$4.3 billion, health benefits accounted for the bulk at J$2.6 billion, followed by death claims of J$625 million.

The company reported that there was a reduction in the net movement in actuarial reserves to J$1.3 billion, down by approximately 54 per cent from the previous J$2.8 billion at the end of 2010.

In 2010, there was a large increase in the net movement in reserves largely due to the sale of a large block of annuities of $2.2 billion. This resulted in the significant decline in the net movement in the actuarial reserves when compared to 2011.

Guardian Lifes account was, however, negatively affected by an associated company, Ocho Rios Beach Limited, a holding company for Guardian Holdings hospitality business, which contributed losses of J$140.7 million.

Guardian Life noted that in October 2000 it invested US$2 million in Ocho Rios Beach, which commenced operation in March 2002.

Since then the company has reduced its share ownership in Ocho Rios Beach to 24 per cent from 25 per cent.

Guardian Life also noted that Island Village, a shopping and entertainment attraction which is held by Ocho Rios Beach Limited reflected a significant decline in book value to US$12.25 million from US$25 million based on an external valuation.

A revaluation, Guardian Life stated, showed an assessed market value of the property of between US$18.5 million and US$19 million. This resulted in a restatement in the company's accounts to take into consideration the overstated value of the property.

But Hosin said "Guardian Life Limited is a minority shareholder in Ocho Rios Beach Limited (ORBL) and is currently examining possible options for the future treatment of its investment in that company.

Guardian Life, which competes with Sagicor Life Jamaica in the life insurance sector, grew its asset base to J$44.6 billion at the end of its financial year.

In the area of pensions, Hosin said that "like the rest of the players in this industry, we have had a number of pension plans that have been wound up for a variety of reasons, so for a period there was little or no growth.

He said this trend, however, is changing, and we have acquired new clients over the past two years and this has contributed to growth in our portfolio."

Funds under management grew by 12 per cent over prior year, he added.

Guardian Life, which entered the health insurance market in 2005, said the primary focus in that area would be on profitable growth, both from new and existing business.

"We continue to employ a combination of marketing and communication strategies networking, service enhancements, target marketing, stakeholder education, to name a few," said Hosin.

sabrina.gordon@gleanerjm.com