After recording a decline in the previous financial year, the Guyana and Trinidad Mutual Fire Insurance Company Limited (GTM) in 2017 saw its profit after-tax skyrocketing to a whopping $235 million. This represents an increase of $169 million or 255 per cent from 2016’s $66 million after-tax profit.
A section of the shareholders at the AGM
Speaking at the company’s Annual General Meeting on Friday, Chairman Ram L Singh explained this surplus is largely due to the savings recorded for reinsurance premiums and a reduction in claims expense.
“Your company continues to enhance its underwriting procedures thus ensuring careful screening of each risk it insures. As a result of our efforts to strength underwriting procedures, your company has not only seen a significant improvement in its claims ratio from 31 per cent at the end of 2016 to 26.5 per cent at the end of 2017, but has also benefited from lower reinsurance payments of $123 million when compared to 2016,” he told shareholders.
However, the Chairman posited that the company continues to face many challenges within Guyana and the Eastern Caribbean territories.
“Marginal economic growth and fierce competition resulting in the steady decline of rates has impacted on its ability to attract new and retain existing business. These factors, among others, have led to a decline in insurance premiums for the year 2017 by $60 million when compared to 2016. However, after payment of reinsurance, the company’s growth in net premiums was $63 million in 2017 over 2016,” he detailed.
Furthermore, Singh related that of the $2.5 billion in gross insurance premiums written, Guyana accounts for $1.6 billion or 65 per cent; followed by Grenada with $445 million; St Lucia with $341 million; and St Vincent with $87 million.
He said that despite the challenges face in the Guyanese market, the company still managed to maintain the largest market share for property insurance. However, this did not obtain in the other Caribbean markets where growth, he said, has been difficult as there are many more companies competing in far smaller markets.
To this end, Singh assures that GTM is working to ensure its viability despite strong competition.
“You company continues to focus on ensuring that the business remains viable and therefore will not adopt the less than prudent strategies including rate-selling used by its competitors to secure more market shares at the expense of long-term viability. Therefore, the Board of Directors working in conjunction with management remain committed to proactively managing expenditures to contain costs while seeking new opportunities to enhance existing products and the development of new packages,” he asserted.
The Chairman went on to outline that during 2017, GTM wrote new business amounting to $33 billion, with annualised premiums of $155 million. He added that at the end of the year, the total business in force amounted to $373 billion in sums insured with annualised premium income of $1.8 billion.
Singh further revealed the motor insurance premiums last year amounted to $1.014 billion when compared to $1.096 billion in 2016 – a reduction of $82 million or eight per cent.
“This decline is largely as a result of lower premium rates, lapses and the conversion of comprehensive to third party policies. Notwithstanding the decline in premium income, the motor portfolio has recorded a significant reduction in claims expenses net of reinsurance recoveries from $551.96 million at the end of 2016 to $396 million at the end of 2017. This has improved our overall net claims to premium ratio from 53 per cent to 41 per cent,” he said.
The Chairman outlined that in Guyana, the majority of the claim payments are for damages to the clients’ vehicles and to those of other parties. He added too that GTM has met its claim obligations to clients with claims amounting to some $666 million at the end of last year when compared to $812 million in 2016, a reduction of $147 million or 18 per cent. Singh credited this to the company’s improved underwriting guidelines, particularly as it relates to property insurances.
At the end of December 2017, the company’s asset base stood at $7.8 billion, an increase of 16 per cent over the previous year. Additionally, GTM will be making a declaration of a cash profit return of 50 per cent of premiums on profit policies.
In his report, Singh noted that while GTM is implementing requirements under the new Anti-Money Laundering and Countering the Financing of Terrorism Act, which some clients are facing challenges to comply with, the company is being face with yet another International Financial Reporting Standard (IFRS). He explained that IFRS 17 was issued in 2017 and takes effect in 2021. However, he noted that this new standard will have a significant and far-reaching impact on how insurance companies account for their revenues, insurance contract liabilities and profit recognition.
Moreover, at Friday’s AGM, a number of staff members were recognised for their contributions and achievements while GTM also distributed bursary awards to 12 students who excelled at this year’s National Grade Six Assessment exams.
