Home' Trinidad and Tobago Guardian : April 13th 2014 Contents For a new CEO discussing an 87 per
cent decline in net profit after tax,
Guardian Holdings (GHL) boss Ravi
Tewari exudes remarkable confi-
At 44, Tewari is one of the youngest chief
executives of a local, listed company and he
is also the most recently appointed, having
taken over from retired GHL CEO Jeffrey Mack
at the beginning of this year.
Before being appointed to occupy the corner
office at the GHL headquarters in Westmoor-
ings, he served as Guardian Life of the
Caribbean s actuary, then as president of the
company, which is a 100-per cent-owned sub-
sidiary of GHL and most recently as GHL s
group president of Life, Health & Pension
Last year, GHL s after-tax profit was $46
million, a sharp decline from the $353 million
the group reported in 2012.
GHL s performance in 2013 was still sub-
stantially better than the staggering loss of
$821 million that the GHL group suffered in
2009, when it absorbed trading losses of $355
million and non-cash accounting losses of $592
million related to Zenith Insurance Group, the
failed United Kingdom motor insurance busi-
The decline in profitability last year was
largely due to a $457 million writedown that
GHL took on a Martinique property develop-
ment named Pointe Simon. Last year s write-
down followed a $150 million non-cash pro-
vision that the group took in 2012.
The adjustments on the Pointe Simon proj-
ect---which comprises a 22-storey office tower,
a seven-storey condominium unit and a eight-
storey, mixed-used boutique hotel---are due to
the "longer expected absorption period and
lower than anticipated future revenue than we
originally forecasted," according to GHL s 2012
Canadian-owned RBC Caribbean, which
was GHL s partner in the project when it started
construction in 2007, exited Pointe Simon in
2010. At the time, both T&T-based companies
had about 40 per cent of the equity in the
project, which was partially funded by a loan
from RBC. As part of the terms of their exit,
RBC agreed to accept a lower amount than
what was contractually due in full settlement,
according to a GHL spokesman last week.
Tewari said GHL could have withdrawn from
the project as RBC did, but that the board of
the company took a business decision to com-
plete the project as it felt that there would have
been reputational risk from withdrawing.
Speaking in an interview last week, Tewari
disclosed that the project was delayed but not
significantly over budget and that much of the
delay resulted from GHL taking about a year
to decide whether to complete the project.
GHL put $1 billion of shareholders money
into the Martinique project, which now has a
carrying value of about $600 million and a
running yield of between 3 and 4 per cent.
Tewari stressed that no policyholders funds
was used in the Pointe Simon project.
Tewari concedes that Pointe Simon has been
a drain of GHL s cash and management focus,
but he is confident that there are no more
skeletons in the group s closet with regard to
the Martinique project.
Asked about the long-suffering GHL share-
holders, whose share price has declined from
$18 five years ago to $13.25 this week, Tewari
said: "I think that like all shareholders, the
GHL shareholder is looking for the best return
on their investment.
He said: "The Guardian share has under-
performed in the recent past, but what I can
see going forward--- having dealt with our non-
core issues and being left with a core portfolio
of very strong companies---I think that augurs
very well for future increases in shareholder
Having bitten the bullet in the UK and Mar-
tinique in 2012 and 2013, GHL can now focus
on its "very strong portfolio of insurance com-
panies spanning the whole Caribbean."
He said the group has the number one life
insurance company and property and casualty
provider in T&T and "a company that shares
a duopoly in the Dutch Caribbean, which is
Fatum." In Jamaica, GHL has the number one
property and casualty provider and the second
largest life insurance firm.
Tewari said: "What s interesting is that we
control the Trinidadian insurance industry,
which is the strongest market and the only
investment grade economy in the region.
"From 2014, we have the opportunity to
focus on our core businesses, which, if you
look back at the history, have grown by leaps
and bounds in profitability over the years."
The insurance executive said that GHL
believes there is room for organic growth in
its core insurance business.
"Last year, we grew new business sales in
life insurance in the Trinidad market by 50 per
cent and in 2014 we are trending ahead of
2013," said Tewari, explaining that Guardian
Life of the Caribbean, the group s life insurance
subsidiary concentrates on the sale of protection
and long-term pension products.
In an obvious jab at Clico, the insurance
company that collapsed in 2009, Tewari said:
"We have never been a company that has dab-
bled in those short-term, one-year products.
So when you buy a Guardian product, it is
until you are 65."
On the issue of the possibility of GHL acquir-
ing Clico s traditional insurance portfolio, Tewari
said: "We see our core business as insurance
and we see our core market as T&T. So nat-
urally, acquiring the Clico portfolio, sanitised
properly, is something that would always have
appeal to us."
Speaking of inorganic growth, he also referred
to acquisitions made by the group in December
2012. GHL acquired three companies for about
US$68 million: a brokerage business in Holland
and two Caribbean property and casualty com-
panies. The acquired companies were Holland s
Thoma Exploitatie BV, Globe Insurance Com-
pany of Jamaica, Royal & Sun Alliance, which
when combined with Fatum General, made
GHL the largest general insurance operation
in the Dutch Caribbean.
Of the Dutch brokerage firm, the GHL chief
executive said the group "wants to increase
our exposure to risk-free income. As an insur-
ance company, most of our business is risk
related, but the nice thing about the brokerage
business is that it is just fees. There is no risk
associated with it."
Last year, he said that the three companies
acquired at the end of 2012, we successfully
integrated into GHL s operations "and despite
integrations costs, they generated a profit in
As a result of the acquisitions and the con-
tinuing growth in the T&T market, Tewari said
the group is "comfortable" that it will generate
both organic and inorganic growth in 2014 and
The other significant focus for GHL in 2014
is in deepening the synergies between and
among the insurance companies in the group.
Tewari explained: "There is a great deal to
be gained from synergising our operations,
which is happening at GHL and needs to hap-
pen on a scale across the economy."
He said that this meant eradicating duplicate
systems, standardizing processes, doing activ-
ities in the jurisdiction in which the group has
competitive advantages and outsourcing some
activities while insourcing others.
"There is a tremendous amount of oppor-
tunity, given our scale and diversity, to generate
tremendous shareholder value from synergies,"
he said, adding: "The beauty about extracting
shareholder value from synergies is that it is
entirely under our control."
He made the point that organic growth
depends on the customer making a decision
to buy, while inorganic growth depends on the
opportunities that may arise to acquire other
"But with growth through synergies, all it
takes is the will and the execution."
He said 50 per cent of the group s revenue
comes from property and casualty and 50 per
cent from life, health and pensions. More than
50 per cent of the group s revenue comes from
Asked about the impact of low interest rates
on the company s operations, Tewari said that
from a consumer perspective, a low interest
environment is not helpful for someone saving
for their retirement. From a shareholder per-
spective, the low interest rate environment is
not good either, he said, because part of the
group s profits is derived from the spread
between what the group takes in and what it
Tewari said: "But, we have positioned our-
selves to benefit as interest rates rise as we
would be able to deploy our cash at higher
rates. We have a considerable cash component
in our investment portfolio. This is partly tac-
tically because we think that interest rates will
rise and we don t want to lock in too much
at low interest rates.
"But, part of the reason for the amount of
cash we are carrying is out of necessity. We
are interested in long-dated issues and if we
tried to use up all of our cash on long-dated
issues, we cannot find it.
"Because of the scarcity of long-dated assets,
our assets are shorter term than our liabilities.
That means that when interest rates rise, the
impact on our liabilities will be more pro-
nounced than on our assets. So our asset value
will increase relative to that of our liabilities."
APRIL 13 • 2014 www.guardian.co.tt SUNDAY BUSINESS GUARDIAN
COVER STORY | SBG3
New CEO sees blue skies at GHL
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