By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
Bahamas First’s chief executive was yesterday “not complaining at all” despite a 72 per cent fall in total comprehensive income for 2016, driven by a one-third increase in net claims stemming from Hurricane Matthew.
Patrick Ward told Tribune Business that the insurer was happy to still be “trading with an unencumbered balance sheet”, after the Category Three/Four storm produced by the largest gross payout in its history.
Despite total comprehensive income declining year-over-year from $8.982 million in 2015 to just $2.543 million, Mr Ward said the Bahamas First Holdings group had maintained shareholder dividends at two-thirds of the prior year figure.
“We were able to maintain the dividend payout at two-thirds of the prior year, which was particularly pleasing,” he confirmed. “In 2016 it was eight cents per share, compared to 12 cents in 2015.”
Bahamas First’s ability to maintain profitability despite such a catastrophic event was due to its geographical diversity, with the 2016 results showing the benefits its move into the Cayman Islands via acquisition several years ago.
While its Bahamas business produces a small loss of $158,283 for the 12 months to end-December 2016, a $6 million negative ‘reversal’ compared to 2015,the Cayman Islands more than compensated by generating $1.554 million in net profits for the year.
This took Bahamas First Holdings’ profits to $1.397 million for the year, still representing a sharp decline on the prior year’s $9.209 million.
The $2.543 million comprehensive income was achieve by adding in a $644,253 gain on property revaluations, and a $502,441 increase in the value of securities available for sale.
Bahamas First’s bottom line was also boosted by a near-$3 million increase from an ‘unrealised gain’ on its investment in Commonwealth Bank shares, due to an increase in the latter’s year-end price from $7.84 the year before to $10.50.
“The group’s net underwriting income reduced to $17.6 million, which is 38 percent below the prior year’s total of $28.5 million,” Mr Ward told Bahamas First shareholders in the annual report.
“The financial impact of the hurricane losses, whilst substantially mitigated by a strong reinsurance programme, was reflected in the decline in the group’s profit for 2016 to $1.4 million, compared to a profit of $9.2 million in 2015.
“The hurricane related claims, which slightly exceeded 2800, amounted to a gross loss of approximately $80 million and, when combined with the other property and casualty (P & C) and health account claims, produced a total gross claims incurred of $131 million for 2016.”
Mr Ward described this as “an unprecedented level of claims spend” for Bahamas First, but reinsurance coverage dropped its net claims - money it pays out - to $36.4 million.
That still represented a 33 per cent increase over the prior year’s net claims of $27.3 million, with Mr Ward attributing the increase entirely to Hurricane Matthew.
Breaking down storm-related claims, the Bahamas First annual report said: “We adjudicated over 2,300 homeowners’ claims, over 200 commercial property claims, 232 motor claims and over 50 claims from various other lines of business.
“Just over 70 per cent of these claims were related to risks in New Providence, while Grand Bahama accounted for the second largest total, at 23 per cent.
“As at February 28, 2017, over 90 per cent of the claims reported had been paid and closed, and we expect to have virtually all of the remaining claims concluded by the end of the first quarter of 2017.”
Mr Ward yesterday confirmed to Tribune Business that Bahamas First was “more than 95 per cent complete” on settling Hurricane Matthew claims,
“We’re happy we’ve dealt with that and closed off the vast majority of claims,” he added, explaining that those outstanding were the bigger, more complex ones that “hopefully will be done in the next month or so”.
Mr Ward, though, reiterated that property premium rates within its portfolio were likely to be impacted by “localised events”, meaning Hurricane Matthew, going forward.
“We have put forward rate revisions for New Providence and Grand Bahama, particularly with a focus on properties that had hurricane damage or places we think are overly exposed,” he told Tribune Business.
Mr Ward said it was “impossible” to give any numbers or “range” for properties that may be impacted by a premium rate increase, although he emphasised that the exercise was confined to the Matthew-hit islands of New Providence and Grand Bahama only.
Going forward, the Bahamas First chief told shareholders via the annual report that the group will have to “continually ensure that we have the capacity to handle major natural catastrophe events that trigger a coverage response for our policyholder base both in the Bahamas and Cayman”.
He added that the carrier “had to marshal considerable human and financial resources” to respond to Hurricane Matthew, which produced a “sharp increase” in Bahamas First’s loss ratio.
This rose to 63 per cent in 2016, compared to 46 per cent and 43 per cent in the prior two years, respectively. This also drove Bahamas First’s combined ratio to 107 per cent, compared to 89 per cent for 2014 and 2015.
“The group’s expense ratio increased slightly, partly as a result of the additional administrative expenses incurred in handling the hurricane claims, when compared to our original expectation,” Mr Ward said.
“While the 38 per cent ratio is higher than the prior year level of 37 per cent, it should be noted that the dollar value of the expenses measured by this metric are actually lower in 2016 than in 2015.”
He added: “The 2016 Return on Equity (ROE) is 4.2 per cent, down from the prior year figure of 15.4 per cent, but the rolling three-year average remains at an attractive 12.5 per cent.
“The book value per common share dipped just slightly to $1.41 in 2016, compared to the prior year result of $1.44, with total equity remaining near the $60 million mark.”
Comments
TheMadHatter 6 years, 11 months ago
I guess they know better than to speak out and get locked up.
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