GHL reports 6% decrease in nine months net profit

November 8, 2021

Guardian Holding Limited (GHL), for the nine months ended September 30, 2021 reported gross premium written of TT$5.37 billion, 8% higher than the TT$4.99 billion reported for 2020. As a result, net written premium increased by 4% to TT$3.39 billion from TT$3.27 billion for the nine months ended September 30, 2020.

The Company noted that, “As  with the prior  two  quarters  in  2021, integration  of  the  life  insurance  and annuities portfolio acquired by Guardian Life Limited at the end of 03  2020  from NCB Insurance  Company  Limited  has  contributed to the increase in this segment’s results for the  year to  date.”  For the quarter ended September 30, 2021, gross written premium amounted to TT$1.64 billion (2020: TT$1.47 billion) and net written premium totalled TT$1.14 billion (2020: TT$1.05 billion).

Net results from insurance activities for the nine months fell 37%, year over year, from TT$998.20 million in 2020 to TT$630.44 million in 2021, whereas for the quarter, net results from insurance activities amounted to TT$213.43 million (2020: TT$447.25 million). Management stated that, “Much of this reduction is related to the temporary effects of the COVID-19  pandemic.  Our life insurance operations in   Jamaica   have   been   experiencing   an   increase   in   mortality claims  on  account  of  the  low  COVID-19  vaccination  rate  of  the population.  Our  life  insurance  operations  in  Trinidad  &  Tobago are experiencing persistency challenges on account  of depressed economic   activity   triggered   by   COVID-19   related   lockdowns.”

Net income from investing activities increased to TT$1.15 billion in 2021 from TT$580.75 million in 2020, a 98% increase. For the quarter, net income from investing activities rose 44% to TT$382.67 million (2020: TT$265.12 million).

GHL noted that, “This increase  was  primarily   on  account  of  net fair  value gains which recorded  a favourable  movement  of  $491 million, from a loss of $358 million in the prior period to a gain of $133  million in this period, driven  by  net  positive  movements  in the  Group’s  regional  equity  portfolios.  Your Group  continues  to closely  monitor  the  investment  markets  and rebalance  portfolios as necessary .”

Fee and commission income from brokerage activities for the nine months rose 2% to TT$109.42 million (2020: TT$106.83 million).  Whereas for the quarter, fee and commission income from brokerage activities rose 10% to TT$37.44 million (TT$34.09 million).

Net income from all activities for the nine months rose 12% to TT$1.89 billion (2020: TT$1.69 billion). Net impairment losses on financial assets the period under review was TT$76.47 million in 2021 relative to a loss of TT$24.79 million in 2020.

Operating expenses for the nine months ended September 30, 2020 rose 16% to close at TT$1.07 billion relative to TT$922.76 million in 2020. Whereas, operating expenses for the third quarter closed at  TT$305.12 million relative to TT$304.28 million in 2020.  Management also stated that, “The  Group  continues  to   closely  monitor  expenses  as  it continues  to  incur  costs  associated  with  the  implementation  of IFRS 17  (Insurance  Contracts)  as  well  as  with  our  Group  wide transformation initiatives.”

The Company also booked finance charges of TT$149.97 million for the nine months (2020: TT$110.01 million).

Operating profit for the nine months ended September 30, 2021 amounted to TT$592.28 million relative to an operating profit of TT$628.22 million booked for the comparable period last year. Operating profit for the third quarter ended September 30, 2021 amounted to TT$263.75 million relative to an operating profit of TT$404.78 million, a 35% decrease.

Share of after tax profits of associated companies amounted to TT$16.56 million (2020: TT$18.95 million).

Profit before taxation amounted to TT$608.84 million relative to a profit of TT$647.16 million in 2020. For the quarter, profit before taxation totalled TT$271.30 million (2020: TT$413 million).

Following taxes of TT$136.32 million in 2021 (2020: TT$170.99 million), net profit after tax totalled TT$472.52 million for the nine months ended September 30, 2021, compared to a net profit of TT$476.17 million reported last year.   For the third quarter, net profit after taxation amounted to TT$212.23 million (2020: TT$322.62 million).

Deficit attributable to participating policyholders was TT$12.31 million relative to a surplus of TT$13.88 million in 2020. Therefore, profit for the period amounted to TT$460.21 million relative to a net profit of TT$490.05 million in 2020 and for the quarter, profit amounted to was TT$202.41 million (2020: TT$322.64 million).

The Group noted that, “this  performance  comes  in the  face  of the  quarter  being marred by   a  US$10  million  loss  in  Guardian  Re,  our  Bermuda   based reinsurance  company.   Guardian  Re  pools  the  Group’s  hurricane and  earthquake  risk  and  reinsures  the  bulk  of  the  aggregate  to external,  professional   reinsurance   companies.   As a  corollary to   this  activity,  Guardian  Re  also  accepts   inward  reinsurance from  external  reinsurance  companies.   The  risks  accepted  are  a diversified  pool of global  risks. It  is unfortunate  that  from  within this  diversified  pool a  loss  of  US$10  million  emerged  relating  to the German floods that have received widespread news coverage. The  performance  in  the  face  of  this  event  is  testimony  to  the diversification  of  the  Group’s  profit  streams  by  line  of  business and  geography,   reflecting  our  deliberate  strategy  to  create  a Group  able  to  produce  steady  profits  allowing  for  the  natural volatility  of insurance  business.”

Net profit attributable to shareholders amounted to TT$457.08 million relative to a profit attributable to shareholders of TT$485.23 million in 2020. For the quarter, net profit attributable to shareholders was TT$200.94 million (2020: TT$320.63 million).

Total comprehensive profit amounted to TT$244.31 million (2020: TT$384.73 million) for the nine months ended September 30, 2021. For the quarter, total comprehensive profit amounted to TT$268.12 million (2020: TT$339.35 million)

As such, earning per share for the period amounted to J$42.96 (TT$1.97) relative to an EPS of J$43.96 (TT$2.09) in 2020. EPS for the third quarter amounted to J$19.00 (TT$0.90) relative to an EPS of J$29.00 (TT$1.40) in 2020. The trailing twelve months EPS amounted to J$70.15 (TT$3.22). The stock traded at J$563.08 as at November 5, 2021 with a corresponding P/E ratio of 8.03 times. The number of shares used in our calculations amounted to 232,024,923 units.

Balance Sheet at a Glance:-

Total assets amounted to TT$34.43 billion as at September 30, 2021. ‘Investment securities’ and ‘cash and cash equivalent’ contributed the most the assets base amounting to TT$21.57 billion and TT$3.37 billion, respectively.

Shareholder’s equity as at September 30, 2021 stood at TT$4.87 billion  resulting in book value per share of TT$20.99 (J$457.74).


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