Home' Trinidad and Tobago Guardian : July 19th 2015 Contents JULY 19 • 2015 www.guardian.co.tt SUNDAY BUSINESS GUARDIAN
STOCKS | SBG11
The St Lucian domiciled
Hamilton Financial Ltd
owns 51.4 per cent of the
Insurance Corporation of
Barbados Ltd (ICBL). In
turn, Hamilton Financial
Ltd is a subsidiary of the
Bermuda based BF&M
Ltd, which has assets of Bermudan $1.763
billion (TT$11.2 billion).
More than 2,000 Barbadians own shares
in ICBL while only four Trinidadians own a
total of 125,100 shares in the company or 0.32
per cent of the outstanding shares.
The company writes all classes of life and
non-life policies. ICBL s sole subsidiary is its
72.35 per cent stake in Weymouth Corporate
Centre with the Barbados NIB owning the
We will now review ICBL s performance
for the year ended December 31, 2014.
Changes in financial position
Total assets advanced by less than one per
cent to Bds$428.5 million (about TT$1.35 bil-
lion) from the 2013 level of Bds$424.5 million.
The largest component, investments,
declined from Bds$240 million to Bds$229.7
million. This mainly reflected its lower holdings
of bonds and fixed income securities, which
fell to Bds$207.5 million from Bds$223 mil-
While cash and equivalents declined to
Bds$10 million from Bds$12.6 million, restrict-
ed cash balances increased to Bds$26 million
from Bds$19.73 million. The restricted cash
relates to pension plans and uncollected div-
Insurance receivables and other assets
climbed by 43.6 per cent to Bds$50.8 million
from Bds$35.4 million. This growth reflects
the increased challenges and uncertainties in
collecting those sums as the Barbados econ-
omy experienced economic difficulties last
Reinsurance assets declined to Bds$43.3
million from Bds$45.4 million; this mainly
reflected the lower levels of claims reported
and adjusted expenses.
Investment properties primarily represent
the Weymouth property and some smaller
holdings; the decline in value from Bds$39.3
million to Bds$35.9 million represents a fair
value decline of Bds$2.1 million and a disposal
of Bds$1.3 million.
Total liabilities increased by 1.7 per cent to
Bds$273.5 million from Bds$268.8 million.
The largest component was insurance con-
tract liabilities of Bds$140.2 million (2013:
Bds$138.4 million). The short-term contract
portion declined marginally to Bds$126.2 mil-
lion from Bds$126.4 million. In contrast, the
life and health portion advanced to Bds$14
million from Bds$12 million. Within this cat-
egory, group life contracts climbed by 24.4
per cent to end 2014 at Bds$6.4 million.
Investment contract liabilities consist solely
of guaranteed interest pension liabilities. These
values increased to Bds$109 million from the
previous level of Bds$106.5 million. The main
contributor to the net increase was a reduction
in the amount of benefits paid.
Stockholders equity fell to Bds$147.4 million
from the previous level of Bds$148.4 million.
The retained earnings component contracted
to Bds$51.77 million from the previous year-
end Bds$53 million. The current year s profit
of Bds$7.99 million boosted this figure while
dividends to shareholders of Bds$7.1 million
lowered the net result. In addition, a transfer
to catastrophe reserve of Bds$1.78 million and
a transfer to surplus reserve of Bds$0.425
million further reduced the year-end balance.
During the year, an additional 39,714 shares
were issued and sold to staff members on
August 19, 2014; this brought the total number
of outstanding shares to 39,223,758.
At the December 2014 year-end, each share
had a book value of Bds$3.76 (2013: Bds$3.79).
Income and profits
Gross premiums written advanced by 3.5
per cent to reach Bds$115.4 million from 2013 s
Bds$111.5 million. On the other hand, premi-
ums ceded to reinsurers declined to Bds$44.5
million from Bds$46.2 million.
Consequently, net premiums written
increased by 8.6 per cent to Bds$70.95 million
from Bds$65.3 million. After adjusting for the
net change in unearned premiums (see box),
the net premiums earned came in at Bds$70.6
million versus Bds$66.25 million in 2013.
Investment income fell to Bds$8.38 million
from the previous year s Bds$8.84 million.
The most prominent decline occurred in the
interest from bonds and fixed income secu-
rities, which decreased from Bds$8.26 million
to Bds$7.73 million.
Commission and other income advanced
to Bds$14.24 million from Bds$12.98 million.
Both commissions and fees registered increas-
es.The fair value adjustment on investment
properties was Bds$2.1 million versus Bds$2.4
million in 2013.
Total rental income was flat at Bds$2.4 mil-
lion for both periods. Rental from the Wey-
mouth Corporate Centre was given as Bds$2.34
million while associated expenses were
Bds$2.162 million; in 2013, rental income was
Bds$2.378 million with applicable expenses
of Bds$2.137 million.
These changes saw total income for 2014
register at Bds$93.5 million; this was 6.3 per
cent greater than the Bds$88 million recorded
Total benefits and expenses climbed by
almost 17 per cent to Bds$83.4 million from
Bds$71.4 million previously.
The most notable movement was in the
short term claim and adjustment expenses,
which climbed by 29.7 per cent to Bds$24.9
million from the previous year s Bds$19.2 mil-
lion. The 2013 figure benefitted from a Bds$9.4
million reduction in insurance contract lia-
Operating expenses increased by 10.9 per
cent to Bds$32.4 million from Bds$29.2 mil-
lion. Here, there were several long-term proj-
ects and one-off items that contributed to
this growth. For example, IT maintenance
contracts increased from Bds$833k to Bds$2.74
million while other expenses climbed from
Bds$3.3 million to Bds$6.5 million.
These changes pulled down pre-tax income
to Bds$10.1 million from the previous year s
After allowing for taxes and excluding non-
controlling interests, the profit attributable
to shareholders came in at Bds$7.99 million
versus Bds$13.38 million for 2013.
These results translated into 2014 EPS of
Bds$0.20 compared with Bds$0.34 for 2013.
The largest segment, property premiums,
grew by 10.1 per cent. However, most of its
premiums were ceded to other reinsurers,
which accounts for the low premiums earned
figure. Nevertheless, helped by a mild hur-
ricane season, underwriting profits were 25.7
per cent greater than in 2013.
The life and health segment also reported
higher premiums and improved underwriting
results. These results reflect the effects of re-
pricing of its life products as well as the roll-
out of new products and riders.
Other property and casualty include such
risks as marine, hull and cargo, aviation and
other miscellaneous accidents. Also insured
are travel and public liability risks. Despite a
decline in premium income, profits surged
by more than 23 per cent.
Motor premiums were Bds$411, 000 lower
than the previous year. The national road
fatalities in Barbados for 2014 was only 14
deaths, of which five related to ICBL; in 2013,
ICBL dealt with only three road fatalities. The
39 per cent increase in net claims incurred
pulled down profits by more than 33 per cent.
Dividends and share price
Despite the significant drop in its profits
in 2014, the company maintained its dividends
at Bds$0.18 for both 2013 and 2014. The final
dividend of Bds$0.11 was paid in May 2015.
As at December 31, 2013, ICBL s share price
was Bds$2.60 and it closed at Bds$2.41 on
December 31, 2014. By mid-July 2015, the
price had recovered to Bds$2.60.
Based on that price, the dividend of
Bds$0.18 gives investors a generous yield of
6.92 per cent. Using its 2014 EPS of Bds$0.20,
that price reflects a P/E multiple of 13.
In the same way that Suriname-based
Assuria has lapped up two Trinidad compa-
nies, other regional insurers are probably
eyeing this market.
While ICBL may not be interested in the
larger and more dynamic Trinidad market, it
is conceivable that its parent company, BF&M
might consider this market as a possible can-
didate for expansion, possibly via an appro-
In addition to Barbados, BF&M Ltd operates
in Bermuda, Cayman Islands, Netherland
Antilles, Puerto Rico and Canada.
In April 2015, BF&M sold its offshore life
insurance business to Valor Group Ltd, fol-
lowing the company s decision to "focus its
full attention on our core domestic insurance
and investment advisory businesses in Bermu-
da and the Caribbean."
Perhaps, that might include taking a closer
look at any opportunities that may be available
in the Trinidad market? Customers should
benefit from well-capitalised new competi-
Unearned premiums adjustment
Most premiums cover a one-year period,
which may not coincide with a company s
financial year. Consequently, it is necessary
to make premium adjustments to their month-
ly and annual accounts. For example, a com-
pany s accounting period is January to Decem-
ber; however, a customer s annual premium
is due on July 1.
This means that six months relates to the
current year and six months is "unearned",
that is, it relates to the next financial year.
These adjustments are made for all policies
on a monthly basis.
of Barbados 2014 results
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