GTM makes whopping $1.1B payout in claims

The Guyana and Trinidad Mutual Fire Insurance Company Limited (GTM) last year paid out a whopping $1.1 billion in insurance claims, even as its profit margin declined by a little less than half compared to the previous year.

This was the dire state of affairs reported by re-elected Chairman of the Board of Directors, Ram Singh.

The Board of Directors met with policyholders on Wednesday at the Georgetown Club for the 136th Annual General Meeting (AGM), where Chairman Singh reported that after-tax profit for the company in 2015 was $82 million, as against the $160 million earned in 2014.

Fire losses

Speaking to the $1.1 billion payout in insurance claims, Singh told policyholders, this was primarily as a result of large fire losses incurred for the third consecutive year.

He sought to reassure policyholders, however, that “since the beginning of 2014, your company has taken steps to prevent a reoccurrence by implementing more stringent underwriting guidelines”.

Singh was optimistic in his pronouncements as he told policyholders in his report that despite the increase in claims that had to be met, the company still performed “fairly well despite fierce competition from existing insurance companies, new entrants, a decline in premium rates and a reduced demand for insurance coverage”.

Speaking on the company’s asset base, Singh told those in attendance that GTM did record an increase in its holdings, totalling $6.65 billion in 2015, up from $5.92 billion the previous year.

He said given the 2015 performance, the company has declared a final dividend of 4.6 per cent for ordinary scrip, preferent scrip and first preferred stock holders.

The resolution for the dividend payout was unanimously approved by the policyholders in attendance.

Regional performance

The GTM Chairman also used the opportunity to provide an update on the performance of its regional branches.

He told policyholders that in Grenada, total premiums grew by G$20 million. Singh recalled too that at the beginning of 2014, that country’s Government commenced the rollout of its three-year home-grown economic recovery programme of fiscal adjustments and reform – supported by the International Monetary Fund – and this programme at the end of 2017 is expected to stimulate the economy and reduce unemployment.

In St Lucia, Singh lamented, the country’s economy shrank by almost two per cent and its “general insurance sector continues to face intense competition, high policy attrition (erosion) and declining growth”.

According to Singh, in an effort to maintain market share and profitability, competitors engaged in discounting of premium rates, but these factors negatively affected the performance of the St Lucia branch.

He said the sister branch in St Vincent and the Grenadines faced similar challenges to those experienced in St Lucia, but has fared better with marginal growth in premiums.

Investment returns

The GTM Chairman’s spate of bad news continued, as he reported on the company’s investments, highlighting that they have seen a decline in the rate of returns being earned.

He sought to reassure, however, that “cognisant of the need to improve the yield on investment in order to avoid volatile or toxic investments, the Board’s first priority “is to protect your company and its investments by seeking only secured and guaranteed investments”.

Singh used the opportunity to lament that the motor insurance aspect of GTM’s business portfolio did not fare well in 2015.

This, he said, resulted from insurance companies across the territories, “underwriting at rock-bottom rates with very large excesses”.

According to Singh, “on the surface, this may seem beneficial; however, the client ultimately loses more at the time of a claim”.

This practice, according to Singh, will not be entertained by GTM.

He told policyholders, “Any policy or practice that leads ultimately to the client being placed at a disadvantage will not be adopted by your company.”

The GTM Chairman also used the opportunity to provide policyholders with an update on some infrastructural works undertaken in 2015.

1962 roof

According to Singh, the company utilised $51 million in renovations and repairs in 2015, most of which went into replacing the entire roof of the original GTM building in addition to upgrading its outdated electrical systems.

He told policyholders that the repairs were deemed necessary, since “the building was last roofed in 1962 and had developed a number of leaks”.

Singh also reported that the company renovated a property which it had leased in D’Edward Village in Berbice and has since relocated its Rosignol office there.

“Other renovations included constructing a roof to cover the entire fifth floor of the Head office building to improve utility of the roof garden.”

Superstar achiever

Sticking to tradition, the company also used the opportunity to reward its outstanding employees.

Hansraj Singh was the top awardee copping a number of prizes, including Salesperson of the Year, the Superstar Achiever Award and the Chairman’s Award – the highest award across the branches.

The company also presented bursaries to a number of students who recorded creditable performances in their examinations.

All of the Directors, inclusive of the Chairman, were re-elected to serve on the company’s Board of Directors for another year.