GTM Fire Insurance records $324M taxed profit

GTM Chairman R L Singh
GTM Chairman R L Singh

The Guyana & Trinidad Mutual (GTM) Fire Insurance Company Limited has recorded a $324.8 million profit after tax for the 2018 financial year. This represents an increase of $73.8 million or 29.45 per cent over 2017’s $250.9 million.

This was revealed by Chairman Ram L Singh at the company’s Annual General Meeting (AGM) on Wednesday at the Georgetown Club.

He noted that during 2018, GTM Fire Insurance wrote new business amounting to $46 billion with annualised premiums of $175 million, representing an increase of 39% and 13 per cent respectively when compared to 2017. At the end of the year, the total business in force amounted to $397 billion, insured with annualised premium income of $1.8 billion.

As it related to motor insurance, gross revenue totalled $1.026 billion at the end of last year, reflecting an increase of 12 million over 2017.

Targeting of niche markets has over the years continued to have positive impact on the motor claims ratio which stood at 34% as at December 31, 2018, when compared to 41 per cent at the end of 2017,” the Chairman told shareholders.

He further revealed that at the end of the 2018 financial year, claims amounted to $637 million. This was a reduction of $29 million or four per cent compared to the previous year.

Meanwhile, GTM’s total comprehensive income for the year net of tax went up from $976.8 million in 2017 to $2.36 billion at the end of December last year. “This is a direct result of increased share prices for the companies in which your company invests, such as Banks DIH Limited and Republic Bank (Guyana) Limited,” the Chairman noted.

The company’s asset base grew by $2.17 billion to a whopping $9.96 billion by the end of last year. Further, the company will be making a declaration of a cash profit return of 50% of premiums on profit policies.

Moreover, GTM Fire Insurance also declared a final dividend of 4.50 per cent for the period to Ordinary Scrip, Preference Scrip and First Preferred Stock Holders.

With regards to the company’s overall performance, the Chairman revealed that in spite of ongoing challenges from strong competition, rate selling and sluggish economic conditions in the Eastern Caribbean, GTM Fire has recorded a growth in insurance premiums of $63.5 million and $75.8 million net of reinsurance premiums.

It was noted that of the $2.57 billion in gross insurance premiums, the Guyana Operations contributed $166 billion or 64.5 per cent; followed by Grenada with $456 million or 17.6 per cent; St. Lucia with $317 million or 14.5 million and St. Vincent and the Grenadines with $86 million or 3.4 per cent.

The reinsurance market remains ‘soft’, that is, there is excess capacity available when compared to demand. As a result, your company has been able to secure a lower reinsurance premium rate as is reflected in the lower reinsurance premiums paid in 2018 when compared to 2017,” Singh said.

Nevertheless, the Chairman went on to highlight that the availability of viable medium to long term investments remains elusive in Guyana and over subscriptions to bonds and treasury bills in the Eastern Caribbean owing to the excess liquidity in the financial systems which have driven down returns on these types of investments.

“These are key facts limiting your company’s ability to increase its investment portfolio… Your Board is cognisant of the need to seek out lucrative investments, and will do so once we are assured that there are in the best interest of your company,” he stated.

According to Ram, GTM Fire Insurance holds millions of shares in a number of ‘blue chip’ companies in Guyana and has benefited substantially from recent increases in share values.
“The company has every intention of holding these shares into the foreseeable future and will seek to acquire more when they become available,” he added.

However, the Chairman pointed out that the myriad of new requirements under Guyana’s Insurance Act 2016 has had and will continue to have significant and profound implications for the company operationally and financially well into the future.

Among these new regulations is a limited equity pledge of 20 per cent of the statutory fund. This means companies with more than 20 per cent, will have to dispose of millions of shares in companies. With the unavailability of alternative sources of viable secure long term investments, GTM has previously said liquidating these shares means the company would now have billions of dollars in deposits earning far lower rates of return.

Also at Wednesday’s AGM, the Chairman recognised the contributions of R Errol Cheong, who will complete 60 years of service to the Guyana and Trinidad Mutual Group of Insurance Companies in September.

In addition, Ram announced the appointment of Gregory Dean to the Board of GTM Fire Insurance with effect from December 1, 2019. Dean is a certified accountant and Chief Executive Officer of Digicel Guyana.

As customary to AGM, GTM also recognised its staff for their contributions and achievements over the past year.