GTM records $16M decline in after-tax profit for 2016

– compared to previous year
By Lakhram Bhagirat

The Guyana and Trinidad Mutual Fire Insurance Company Limited (GTM) recorded an after-tax profit of $66 million for the year 2016, compared to $82 million in 2015.
This decrease, according to Chairman of the Board of Directors, RL Singh is a direct result of a reduction in gross premiums as well as an increase in reinsurance cost.
In presenting the Chairman’s report at the Company’s 137th Annual General Meeting, Singh noted that it has been a difficult year for GTM, adding that the decline in insurance premiums was caused by a number of factors inclusive of fierce competition and a decision not to renew a number of policies due to non-compliance and adverse claims.
“The increase in reinsurance costs was as a result of your Company’s reinsurers having to pay a number of large fire claims at the end of 2015 and the first half of 2016 emanating from Guyana. As a result, net premiums totalled $1.95 billion or $196.26 million less than the previous year,” Singh told shareholders at the AGM on Wednesday.
He noted that the ‘yes vote’ on Brexit caused the Company to sustain severe currency exchange loss since the Pound Sterling was devalued. However, he noted although the Company saw a decline in its premium income, it remains the largest non-life insurance company in Guyana.
The Chairman said that the Eastern Caribbean States continue to experience limited economic growth coupled with high levels of unemployment, ultimately resulting in business being affected. He added that the Company’s investment was limited to deposits, Government-backed bonds, treasury bills and mortgages to sales and administrative staff.
“During the year 2016, your Company wrote new business amounting to $41 billion with annualised premiums of $158 million. At the end of the year, the total business in force amounted to $374 billion in sums insured with annualised premium income of $1.74 billion,” he told shareholders.
Singh revealed that for the year 2016, motor insurance premiums increased by $25 million (two per cent) on account of lower premium rates.
“We are in agreement that 2016 has been a very difficult year not just for the GTM Fire Insurance Company but for most insurance companies across the Region in terms of premium growth. The Board and management have already put in train steps to improve production, manage claims costs and contain expenditures,” he explained.
He further stated that they have already taken steps to review and strengthen the company’s underwriting and its management policies and procedures. Singh told shareholders that the Company would continue to seek out new niche markets while improving its business retention strategies.
He informed that the Company was now utilising a new accounting software, Microsoft Dynamics GP, to improve its cost management. Singh stated that the Company’s assets totalled $6.7 billion, an increase of $50 million when compared to 2015.
“I am pleased to announce that your Company will be making a declaration of a cash profit return of 50 per cent of premiums on profit policies…we are pleased to declare a final dividend of 4.7 per cent for the period to Ordinary Scrip, Preferent Script and First Preferred Stock Holders,” the Chairman informed.
GTM would be constructing a new office in Le Choc, St Lucia, which is expected to be completed by the end of April 2018.
Meanwhile, a number of staff members were recognised for their contributions and achievements at the AGM.