Profitability dwindles as total comprehensive income declines

Durrant Pate/Contributor

Jamaica-based insurance company General Accident Insurance Company Limited (GENAC) went through a rough 2021, given its just-released audited financial report for the year.

GENAC for the year ended December 31, 2021 saw its profitability dwindle, as total comprehensive income went south. Profit before taxation amounted to J$259.70 million (2020: J$259.54 million).

Following taxes of J$110.46 million (2020: J$65.72 million), net profit totalled $149.24 million for the year, a 23 per cent decline when compared to the $193.81 million reported last year.

The company went through a poor fourth quarter in December 2021, which reversed much of the gains made earlier in the year. Net loss for the quarter amounted to J$201.72 million, erasing the profit of J$160.33 million booked in the corresponding quarter in 2020.

Total comprehensive income for the year amounted to J$143.80 million (2020: J$255.54 million). For the fourth quarter, total comprehensive loss amounted to J$289.77 million in comparison to the income of J$163.31 million in 2020.

Higher gross premium written

GENAC reported gross premium written of J$13.96 billion, 16 per cent higher than the J$12.04 billion reported for 2020. Reinsurance ceded also rose by 16 per cent to close at $10.49 billion relative to J$9.07 billion booked in 2020.

Excess of loss reinsurance trended up by 30 per cent to J$216.99 million (2020: J$167.31 million). As a result, net premium written increased by 16 per cent from J$2.81 billion 2020 to J$3.25 billion for the year ended December 31, 2021.

Net premium written for the fourth quarter amounted to J$906.63 million relative to J$822.05 million booked for the corresponding period in 2020. Net changes in unearned premiums totalled J$221.21 million, 211 per cent higher than the J$71.05 million recorded last year.

Consequently, net premiums earned, for the year grew by 11 per cent to a total of J$3.03 billion compared to J$2.74 billion for the prior year. For the quarter, net premium earned totalled J$802.80 million compared to J$710.01 million booked for the similar quarter of 2020.

Commission income rose by 16 per cent, year over year, from J$771.22 million in 2020 to J$892.86 million in 2021, while commission expenses increased by 10 per cent from J$465.63 million to J$511.03 million for the period under review. Claims expenses saw a decline of four per cent, closing the period at J$1.75 billion (2020: J$1.82 billion), while management expenses climbed by 29 per cent to total J$1.58 billion compared to J$1.23 billion in 2020.

Decline in investment income

Investment income closed at J$226.53 million, a decrease of 23 per cent when compared with J$293.89 million in 2020, while other income totalled J$124.59 million, relative to J$95.59 million in 2020. Other operating expenses grew by 41 per cent to J$164.66 million relative to J$116.74 million in 2020.

The company also booked finance charges of J$7.08 million for the year end (2020: J$14.64 million). Total assets increased by 12 per cent to J$12.50 billion as at December 31, 2021 from J$11.17 billion a year earlier.

 ‘Cash & Short-Term Investments’ and ‘Due from Reinsurers and Co-Insurers’ contributed the most to the growth in assets with a 91 per cent increase to J$1.44 billion (2020: J$756.55 million) and a 43 per cent increase to J$3.28 billion (2020: J$2.30 billion), respectively.

Shareholder’s equity, as at December 31, 2021 stood at J$2.63 billion (2020: J$2.58 billion) resulting in book value per share of J$2.55 (2020: J$2.50).