The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A property and casualty insurer is mulling whether to exit the Bahamian market by seeking a buyer for its existing portfolio almost a decade after being licensed by the Insurance Commission.

Multiple industry sources, speaking on condition of anonymity because they were not authorised to speak publicly, revealed that NAGICO (Bahamas) has been testing the market to see whether rival underwriters have any interest in acquiring its existing insurance book of business.

Vibert Williams, NAGICO (Bahamas) managing director, did not deny that the pan-Caribbean property and casualty insurer is seeking to exit this market while not confirming it either. “If NAGICO has something to communicate, we’ll do it via press release. The company’s position is if there’s something to be said, it will be said via press release,” he told told this newspaper, declining to comment further.

However, one well-placed contact confirmed that a circular has been sent to several Bahamian insurance industry players as part of an approach to feel out if there is any interest in buying the company. “Are you aware that NAGICO, just the Bahamian operation, is up for sale?” they asked. “They have a flyer out there.”

Another added: “Someone said to me: ‘Have you heard that NAGICO is leaving?’ This market doesn’t lend itself to their business model. We’ve had things like Dorian and other storms, but I don’t think they had a huge loss from Dorian. Logic says that if you’re going to exit, try to get the book off and get something for it, but I’ve heard nothing about that.”

“It wouldn’t surprise me,” another insurance industry source said of a potential NAGICO exit. “I know that one of their agents, for the last month or two, have been remarketing their NAGICO business with other carriers. I wasn’t exactly sure why, but one reason could be that they’re planning an exit.

“They’ve never really done much business here. They’ve never really penetrated the market in any meaningful way. With all the indications within the last three to four months that the market is hardening and capacity is becoming more constrained, it will be difficult to think of anyone wanting to take on a new portfolio particularly in the peak of hurricane season.”

NAGICO (Bahamas) financials for the year to end-December 2021 show it had an accumulated deficit at that point of $6.186m, representing the total losses it has incurred since becoming licensed to write business in this nation by the Insurance Commission in 2012. It received its permits in October that year, and publicised its launch the following year in 2013.

The latest financials show more than half the accumulated deficit was incurred in the years 2020 and 2021, which were non-hurricane years and are typically when general insurers seek to generate profits that build capital reserves so they can cope should a catastrophic storm equivalent to Dorian strike.

NAGICO (Bahamas) suffered a $1.338m loss in 2020, which grew to $2.051m last year. Top-line gross premium revenues declined year-over-year to $10.086m in 2021, from $11.735m in 2020, and the carrier also incurred a $240,071 net underwriting loss from its core insurance business last year.

The Bahamian property and casualty market is largely dominated by five locally-based underwriters. Apart from Bahamas First, there is RoyalStar Assurance, Security & General, Insurance Company of the Bahamas and Summit Insurance Company. The latter two are effectively ‘tied carriers’ through which J. S. Johnson and Insurance Management, respectively, place their general insurance business.

The sector is seen as relatively mature, and largely a competition for market share, with many of the five and their brokers having expanded outside The Bahamas and are now seeking further opportunities through which to grow. NAGICO, which stands for Netherlands Antilles General Insurance Company, itself is in some 20 other Caribbean countries bar The Bahamas.

Mr Williams, in an interview with Tribune Business in 2013, said the company’s long-term goal was a 10 per cent share of the $350-$400 million property and casualty market. He added that despite efforts by established underwriters to marginalise it, the “start-up” already had seven Bahamian agent/brokers writing business for it.

Disclosing then that NAGICO (Bahamas) ultimately wanted to have a 10-strong broker force, Mr Williams said it would take 10 years for NAGICO (Bahamas) to hit its market share target and pledged that the Caribbean-based underwriter was in this nation “for the long-term”.

“The business has performed the way we expected it to perform,” Mr Williams said. “We will make our targets for this year, and do so easily. We have modest goals for 2013, and are still in start-up mode. We needed to do this formal launch, but expect to write in excess of $2 million in gross written premium for 2013.

“I think for a first year start-up that will be encouraging, and we should see exponential growth thereafter, particularly when we start marketing and branding the company more widely. We’re going to start publicly to get our name out.”