Delivered revenue growth but was hit by increasing reinsurance costs
Durrant Pate/ Contributor
Trinidad-based insurance giant, Guardian Holdings has seen its first quarter shareholders’ profit trimmed in half but delivered revenue growth year-over-year.
Shareholders’ profit for the March quarter amounted to TT$61 million, a decline of TT$68 million or 53 per cent compared to the TT $129 million profit recorded in the same period last year. Correspondingly, earnings per share decreased to TT$0.26 versus TT$0.55 in the comparative period.
However, Guardian delivered revenue growth year-over-year but this was partially offset by increasing reinsurance costs, higher operational expenses, due to sales activities and IFRS 17 implementation and growth of finance expenses partially due to interest rate movements on the liabilities. The Patrick Hylton led Board reiterated its commitment to delivering strong results and continues to explore and action opportunities to maximize financial performance.
Insurance service results increased by TT$45 million or 30 per cent to TT$192 million during the quarter under review, up from TT$148 million in 2022. Favourable contributions came from both Life, Health and Pension (LHP) and Property and Casualty (P&C) segments from growth in the company’s revenue lines.
Overall insurance revenue, net of claims and insurance-related expenses, increased by TT$128 million partially offset by increased reinsurance expenses of TT$83 million due to higher reinsurance costs from P&C lines. Net income from investing activities also increased by TT$71 million or 31 per cent over the prior year of TT$229 million.
Lower fair value losses of TT$50 million mainly from equities and growth of investment income on financial securities plus dividend income of TT$16 million were the main contributors to the favourable result. Hylton reports that the management “continues to closely monitor volatile markets and rebalance portfolios as necessary.”
Net insurance finance expenses increased by TT$137 million from TT$63 million in Q1 2022 mainly from LHP segments. Among other items, finance expenses include the impact of interest rate movements and the returns earned by policyholders who hold insurance products with an investment component.
Impact of interest rate movements
According to the Guardian Chairman, “In Q1 2023, the impact of those interest rate movements was less favourable to the Group’s insurance liabilities. Further, policyholders earned higher investment income in this quarter, due to the growth in the policyholders’ underlying funds, which results in higher expenses for the Group.”
Fee and commission income from brokerage activities increased by TT$12 million or 30 per cent year-on-year mainly due to brokerage activities in the Dutch Caribbean. The Asset Management segment also reported growth in after-tax profit during the quarter of 35 per cent over the prior year.
The management continues to focus efforts on developing this segment through third-party business and product offerings. Operating expenses increased by TT$26 million or 15 per cent year-over-year and are mainly related to investment in people, sales-related expenses, and growth strategies across the Group’s business segments, coupled with continued investment in our IFRS 17 implementation activities.
The management says it continues to action efforts to perfect and protect its core business, which remains at the heart of its operations. In concluding Hylton remarked, “We are excited about the opportunities that exist in our markets and continue to invest and focus on building other phases of our transformation journey geared toward further digital technology, exploring new markets and products and services. As we continue to implement planned changes, the Group remains steadfast, resolute and prepared to successfully face the road ahead.”