The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Two of the Bahamas’ largest insurance brokers have partnered in a deal that will see one exit the Exuma market via the sale of its $0.5-$1 million portfolio, allowing the other to become the island’s “company of choice”.

Warren Rolle, NUA Insurance Agents & Brokers’ president, yesterday said it was selling its almost-1,000 policy portfolio to BISX-listed J. S. Johnson because maintaining an Exuma branch presence was not “economically viable”.

He added that J. S. Johnson would be the “best fit” for NUA’s former clients in terms of service, while the sale would enable the wholly-owned Bahamas First subsidiary to concentrate on its core geographical locations.

J. S. Johnson, for its part, will see the gross written premium (GWP) value of its Exuma insurance portfolio double as a result of the NUA deal.

Charles Johnson, a senior manager at the BISX-listed broker, told Tribune Business that the portfolio transfer, which takes effect from tomorrow, should make J. S. Johnson the major player in the Exuma insurance market.

He estimated the current GWP value of J. S. Johnson’s existing Exuma insurance book at around $0.5 million, meaning it will be picking up a portfolio of at least equal size.

Meanwhile, explaining the rationale for NUA’s Exuma exit, Mr Rolle told Tribune Business: “Our expenses associated with the operation of a branch just didn’t make it economically viable for a continued presence.

“It’s a bit of a shame, because we’ve had a presence down there for some time.”

NUA opened its Exuma branch in 2005 at a time when the economy was doing well, having previously operated on the island via a 30-year relationship with a sub-agent.

“The business we wrote in Exuma really represents only 1 per cent of the total amount of revenue,” Mr Rolle added. “It’s not a huge impact in terms of gross written premium, but it was an important part of our business.

“You’re looking at just under 1,000 policies.... We prefer to concentrate on other areas of our business at this time.”

The NUA president said further: “We thought they [J. S. Johnson] were the best fit. We looked at a number of different options, and looked at what would be the most seamless transition for our clients, and they offered the best option.”

Mr Rolle indicated that the GWP worth of NUA’s Exuma portfolio was between $0.5-$1 million, with auto and homeowners coverage accounting for the bulk of its in-force policies.

Apart from its three New Providence service centres, NUA also has a direct presence in Grand Bahama and Eleuthera, and operates in virtually all other Bahamian islands through sub-agents.

Implying that NUA had taken a strategic decision to focus on these markets, Mr Rolle said: “The market is very saturated, so retention is our major focus.

“We’ll take a look at any opportunities that come along, including any acquisition opportunities.”

Both Mr Rolle and J. S. Johnson’s Mr Johnson declined to specify the purchase price the latter was paying, although the normal industry benchmark was said to be twice the selling company’s commission income.

However, Mr Johnson indicated that the consolidation resulting from the deal would likely leave J. S. Johnson as the major broker in the Exuma insurance market.

“That is our line of thinking,” he told Tribune Business. “That we will be able to retain 100 per cent of the NUA clients, and our office down there is staffed fully by two Exumians, so they’re familiar with a lot of clients coming over from NUA.

“We don’t anticipate problems retaining the business. We’ve been the two largest companies doing property and casualty business in Exuma, so it stands that once NUA is no longer there, it makes J. S. Johnson the company of choice.”

Mr Johnson acknowledged that the former NUA clients would be able to choose whether to remain with J. S. Johnson, but pledged that premium prices and coverage terms would change little following the transfer.

“It’s a small portfolio, and a small portion of the premium value for both companies,” he added. “We’ve been able to sustain our portfolio, and have quite a number of second home residents in Exuma. We serve quite a number of their insurance needs, and do quite a number of vehicles.”

Several industry sources yesterday expressed surprise that NUA had chosen to exit Exuma, given that the island’s economy and growth prospects appeared to be on an upward trend, especially if the foreign direct investment (FDI) projects counted on by the Government come through.

Mr Rolle, though, expressed scepticisim that all these projects would “pan out at the end of the day”. Mr Johnson, though, expressed hope that J. S. Johnson would have ”a very good chance” of securing any extra insurance business generated by this growth.

Insurance industry sources yesterday said the deal “seems strange” from NUA’s perspective, given that it was selling to one of its major competitors.

They also pointed out that the Exuma exist contrasted with the ‘rapid growth’ strategy employed by its owner, Bahamas First.

“It makes no sense,” one source said. “It’s just very surprising news. I don’t know what’s behind it. It seems strange.”