GENAC reports 128% increase in year end net profits

February 14, 2020

General Accident Insurance Company Limited (GENAC), for the year ended December 31, 2019 reported gross premium written of $10.73 billion, 23% higher than the $8.74 billion reported for 2018. Reinsurance ceded rose 21% to close at $8.15 billion relative to $6.75 billion booked in 2018. Excess of loss reinsurance trended up by 2% to $130.18 million (2018: $127.75 million).

As a result, net premium written increased by 31% from $1.86 billion last year to $2.45 billion for the year ended December 31, 2019. Net premium written for the fourth quarter amounted to $801.35 million relative to $543.67 million booked for the corresponding period in 2018.

Net changes in unearned premiums totalled $212.39 million, 8% lower than the $231.86 million recorded last year. Consequently, net premiums earned, for the year ended December 31, 2019, grew by 37% to a total of $2.23 billion compared to $1.63 billion for the prior year. For the quarter, net premium earned totalled $698.90 million compared to $432.26 million booked for the similar quarter of 2018. The Company mentioned, “Premium growth was driven by strength in our property and other commercial lines business and the expansion of our motor business across both the General Accident and Autosmart brands. This growth is a function of investments in our agent network, broker relationships and technology.”

Commission income grew by 23%, year over year, from $695.67 million in 2018 to $857.54 million in 2019, while commission expenses increased by 35% from $334.25 million to $451.86 million.

Claims expenses saw an increase of 18%, closing the period at $1.21 billion (2018: $1.02 billion), while management expenses climbed by 25% to total $991.99 million compared to 2018’s total of $794.06 million.

Underwriting profit for the year totalled $442.14 million, this compares to a profit of $174.77 million in 2018. The company also made an underwriting profit of $333.50 million relative to a profit of $202.46 million within the fourth quarter.

Investment income closed at $229.89 million, an increase of 32% when compared with last year’s $174.68 million, while other income totalled $202.18 million, relative to $47.04 million in 2018. The movement in other income was due mainly to a ‘Gain on acquisition – negative goodwill recognized’ of $129.79 million relative to nil in 2018.

Other operating expenses grew by 120% to $96.47 million relative to $43.92 million in 2018. The Company also booked finance charges of $7.57 million for the year ended December 31, 2019 (2018: nil).

Profit before taxation amounted to $770.15 million (2018: $352.57 million). Following taxes of $118.60 million (2018: $67.20 million), net profit totalled $651.56 million for the year ended December 31, 2019, an increase of 128% compared to the $285.37 million reported last year. Net profit for the quarter was $459.02 million, 225% more than the $141.19 million booked in the corresponding quarter in 2018.

Total comprehensive income amounted to $700.96 million (2018: $291.95 million) for the year ended December 31, 2019, a 140% uptick. For the fourth quarter, total comprehensive income amounted to $460.23 million (2018: $165.80 million).

As such, earning per share for the period amounted to $0.63 (2018: $0.28), while EPS for the quarter amounted to $0.45 compared to $0.14 in 2018. The stock traded at $4.02 as at May 07, 2020. The number of shares used in our calculations amounted to 1,031,250,000 units.

Notably, GENAC stated, “We acquired 55% of Motor One Insurance Company Limited (“Motor One”) in September of 2019. Motor One is a Trinidadian motor insurer with over 20,000 direct motor insurance policies and large branch network. We look forward to working with our local partners and executive team to grow Motor One and instill General Accident’s underwriting philosophy, culture and best practices.”

Management further stated, “General Accident produced the largest premiums and net profits in our history last year and generated a return on average equity for shareholders of 19%. While our base of property and commercial lines business remains strong, we now also have a growing share of the Jamaican motor insurance market and a presence in Trinidad.”

Balance Sheet at a glance:-

Total assets increased by 56% to $11.04 billion as at December 31, 2019 from $7.06 billion a year earlier. ‘Investment Securities’ and ‘Due from reinsurers and co-insurers’ contributed the most to the growth in assets with a 92% increase to $4.75 billion (2018: $2.47 billion) and a 35% increase to $2.22 billion (2018: $1.64 billion), respectively.

Shareholder’s equity as at December 31, 2019 stood at $2.53 billion (2018: $2.06 billion) resulting in book value per share of $2.45 (2018: $1.99).

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