By NEIL HARTNELL
Tribune Business Editor
A Bahamian insurer yesterday said it was “on track to have our best year for five years” until Hurricane Matthew intervened, dropping total comprehensive income by 61.7 per cent year-over-year.
Tim Ingraham, Summit Insurance Company’s president, told Tribune Business that the property and casualty underwriter’s performance for the first nine months of 2016 helped it “carry through” the impact of the Category Three/Four storm’s early October arrival.
Summit, the carrier through which Insurance Management places much of its general insurance business, saw its profits take a similar dip to its rivals, after having to deal with 1,500 claims totalling $38 million.
Pointing out that Matthew did not represent Summit’s peak payout for one event, Mr Ingraham said its “conservative reinsurance” programme had paid dividends by ensuring net equity closed 2016 at more than $25 million - barely changed from the prior year.
“We’re definitely satisfied that the year ended on a positive note for us,” he told Tribune Business, referring to Summit’s continued profitability. “We were having a fairly good year before the storm, and that helped to carry us through, despite the cost of Matthew. The work done in the early part of the year helped to support the year-end.”
Summit’s year-end total comprehensive income fell by almost two-thirds, a decline similar to that of its competitors, dropping from $3.066 million in 2015 to $1.176 million last year.
The near-$2 million drop was driven almost entirely by underwriting gains halving, or falling, 50.7 per cent year-over-year to $2.102 million compared to $4.263 million in 2015.
That, in turn, resulted from a combination of reduced net premiums and an increase in net claims from $3.854 million to $4.587 million year-over-year. The latter was driven by Hurricane Matthew.
Mr Ingraham said Summit’s greatest loss from a single event remains the $60 million it paid out for Hurricane Frances in 2004, with the $14 million in Jeanne claims resulting in a total $74 million payout that year.
“Prior to Matthew, we were certainly on track to have our best year for five years,” he told Tribune Business. “There’s nothing that we can do about that. We always say to our shareholders that we’re an insurance company, and you can build up quite a surplus, but until hurricane season is over you never know what’s going to happen.
“Prior to the storm, for the first three quarters of 2016 our net claims were down on the previous year. The deductible and reinsurance programme are reflected in the net claims.”
Summit’s net equity, or total net worth, was almost unchanged year-over-year at end 2016, declining by just under $50,000 to $25.235 million despite Hurricane Matthew.
Explaining that this reflected Summit’s insurance programme quality, Mr Ingraham said: “We don’t want to expose the equity of the company to any significant loss.
“We have a fairly conservative storm deductible. It does mean that we buy a lot of reinsurance, but we preserve the company and ensures we will be here to serve customers for future storms.”
Mr Ingraham added that Summit’s continued balance sheet strength post-Matthew confirmed that the underwriter’s reinsurance programme was properly structured to protect its capital.
“In this region, if you get your numbers wrong and don’t protect your capital, you can quickly find yourself in problems,” he said. “Summit is in a very good position with capital protection and ensuring the company remains viable going forward.
“We think we absorbed the blow from Matthew very well. We’ve absorbed bigger blows. I think this proves we’re a solid company, and people can certainly put their trust in us to protect their property.”