Home' Trinidad and Tobago Guardian : April 20th 2014 Contents APRIL 20 • 2014 www.guardian.co.tt SUNDAY BUSINESS GUARDIAN
STOCKS | SBG 15
Despite higher levels of premium income,
GHL s earnings were clobbered in 2013 by
lower investment returns, increased operating
expenses and a substantial fair value adjust-
ment on its investment in Pointe Simon.
A new CEO has just started his tenure and dividends to
shareholders have been maintained at the 2012 level of $0.52.
Let us see how GHL fared last year.
Total assets expanded by an almost imperceptible 0.3 per
cent to reach $22.06 billion from the 2012 level of $21.99 bil-
The combination of financial assets ($12.39 billion) and
that of its mutual fund holders ($1.11 billion) was $13.5 billion
as at December 2013. This aggregate improved by almost 2.0
per cent from the 2012 level of $13.24 billion ($12.06 billion
represented by the company own assets with $1.18 billion
representing that of its mutual fund investors.)
These total holdings are further classified as being either
"fair value through profit and loss" or "held to maturity".
In the case of the former, the total valuation declined from
$6.41 billion in 2012 to $6.28 billion as at year-end 2013, with
the equity portion increasing at the expense of the debt com-
With the latter grouping, the total valuation increased by
5.7 per cent, or from 2012 s $6.83 billion to $7.22 billion last
year-end. This grouping contains an overwhelming concen-
tration of government debt (71.4 per cent) and has no equity
Loans and receivables are another significant asset. This
line item improved by 11.4 per cent to close 2013 at $1.75
billion from the prior year s figure of $1.57 billion. Two of the
largest components were mortgages and other loans and
The value of mortgages declined marginally to $393.4
million; a year earlier, this figure was $395.4 million. On the
other hand, the value of other loans and receivables increased
from $565.6 million in 2012 to last year s $633.8 million, rep-
resenting an increase of 12.1 per cent.
The value of in-force life insurance business improved by
5.2 per cent; this measure closed at $924.7 million from the
2012 level of $879.1 million. This figure was negatively impacted
by exchange rate adjustments of $38.2 million. On the other
hand, the increase for 2013 was only $83.8 million; in 2012,
this increase was a more robust $158.3 million.
GHL s stock of cash and equivalents rose to $2.03 billion
from the 2012 level of $1.9 billion. Cash on short-term deposits
(on which some interest is paid) declined by $76 million or
from $826 million in 2012 to $750 million last year. On the
other hand, non-interest bearing cash increased to $1.28
billion from $1.08 billion as at year-end 2012.
Total liabilities increased by almost 2.0 per cent to $19.16
billion from 2012 s $18.79 billion. The major component,
insurance contracts, rose by 4.4 per cent to $13.1 billion from
$12.5 billion as at December 2012.
Life insurance contracts were the largest component rep-
resenting $11.1 billion as at December 2013. This figure was
6.7 per cent greater than the $10.4 billion December 2012
The largest component, at $6.3 billion, was contracts with
fixed terms and without discretionary participation features
(DPF). The company is gradually phasing out those policies
that have a DPF rider. The biggest year-on-year change
occurred in long term insurance contracts without fixed terms.
The year-end values increased from $3.74 billion to $4.25
billion or by 13.5 per cent.
The year-end value of short-term insurance contracts
declined by 6.9 per cent; this measure moved from $2.11
billion in 2012 to last year s $1.97 billion.
Total financial liabilities (borrowings) increased to $1.92
billion from $1.76 billion a year earlier. The current portion,
inclusive of interest payable of $35.7 million, was $602.1
million. The non-current portion, inclusive of a derivative
element of $17.4 million, was $1.31 billion.
Investment contract liabilities declined to $1.58 billion from
$1.61 billion at year-end 2012. Premiums received declined
to $229 million from $254 million in 2012. In addition, interest
credited fell from $79.4 million in 2012 to $69.7 million last
year. The result was further impacted by an increase in
exchange rate adjustments to $92.1 million (2012: $49.2 mil-
Shareholders equity contracted by almost $143 million to
end 2013 at $3.1 billion from the previous year s $3.24 billion.
Share capital increased marginally to $2.042 billion from the
2012 level of $2.036 billion.
On the other hand, negative reserves increased from the
2012 figure of negative $344.6 million to negative $396.5
million. A positive property valuation reserve of $31.7 million
was more than offset by a translation (currency) charge of
The retained earnings declined by $96 million to close 2013
at $1.45 billion. This reduction was due primarily to the
dividend payment of $120.6 million and only partially offset
by the modest profit for the current period.
Based on those changes, the book value of each share
declined to $13.35 from $13.97 as at December 2012.
Income and profit
Fuelled by a strong 14 per cent increase in insurance premium
income, the net results from insurance operations improved
to $579.4 million from $529 million in 2012; this represents
an increase of 9.5 per cent.
Short-term insurance contracts rose by a strong 16.2 per
cent to $2.9 billion from 2012 s 2.5 billion. In contrast, long-
term contracts increased by a less robust 7.5 per cent to $2
billion; in 2012, this value was $1.87 billion.
The proportionally lower profit result was substantially
influenced by an 18 per cent increase in policy acquisition
costs, which mostly comprises of commissions to agents; this
figure moved from $523 million in 2012 to $617.9 million last
Total net income from investing activities contracted to
$857.9 million from 2012 s $922.3 million. The decline was
widespread across most major components. For example,
investment income (interest and dividends) declined to $807.4
million from the $838.5 million earned in 2012.
In addition, GHL incurred losses on its disposal of both
debt and equity securities totalling $37.5 million. Included in
this figure is a loss of $1.25 million on its sale of shares in
Servus Ltd. During 2012, the company earned a net $7.35
million on similar transactions.
On a brighter note, fee income more than doubled to reach
$82.2 million from $41.3 million in 2012. Here, the biggest
improvement was recorded in the "other" line, which jumped
to $46.2 million from $6.3 million in 2012.
Other income also exhibited strong growth, moving from
$72.3 million in 2012 to $104.8 million last year. On the one
hand, foreign exchange gains, which are unpredictable and
very variable, jumped to $71.3 million from $23.5 million in
2012. On the other hand, GHL incurred a net loss on its
pension plan assets of $23.8 million; in 2012, the loss was
Total operating expenses rose by 16.2 per cent to $916.7
million from $789 million in the previous year. Staff costs
rose by12.5 per cent to $501.7 million from $445.9 million in
2012. The "other expenses" component jumped by 24.6 per
cent or from $274 million in 2012 to $341.3 million last year.
After making an adjustment for Pointe Simon of $457.1
million and including $28.6 million as its share of profit from
associated companies, GHL recorded a pre-tax loss of $35.3
million. Taxation consumed a further $101.6 million, bringing
the after-tax loss to $136.9 million.
Then, the loss from continuing operations increases to $154
million when the surplus of $17.1 million from participating
policyholders is withheld. Next, after including a gain of $24.3
million from discontinued operations, the net loss comes in
at $129.8 million. Of this total, non-controlling interests
accounted for a loss of $175.3 million; this left shareholders
with a modest profit of $45.5 million.
Due to the turn of events, the net profit attributable to
shareholders from its discontinued operations of $24.3 million
was greater than that attributable to its continuing operations
GHL groups its various subsidiaries along three major head-
ings, life, health and pension; property and casualty; and
asset management. The table above highlights data for these
segments for both 2012 and 2013.
Guardian Holdings Ltd 2013:
Is it poised for a resurgence?
GHL's stock of cash and
equivalents rose to
$2.03 billion from the
2012 level of $1.9 billion.
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