- FileByles
Andrew Green, Staff Reporter
AFTER a good performance in the last five years year, FirstLife Insurance Company is preparing to sustain this growth, says its chairman and chief executive officer, Richard Byles.
Net profit for 2001 rose to $385.1 million, up 45 per cent in the last financial year ended December 31, said the FirstLife chairman. Group revenues increased by 16 per cent to $2.4 billion.
"This caps off a successful five-year period," Mr. Byles said at the company's annual general meeting at the Hilton Hotel in Kingston on Thursday. Over that five-year period, revenues grew by 20 per cent per year and profits increased even faster at 23.5 per cent per year.
Over that five-year period, the distribution of equity has shifted substantially. In 1997 the company had $1.453 million of its equity in property, $59 million in banking and $86 million in insurance. By the end of 2001, equity in property had been nudged up to $1.519 million, while banking had reached $570 million, and insurance stood at $485 million.
Along with this shift, the distribution of group profit has changed. Property contributed 36 per cent of profits in 2001, down from 85 per cent in 1997. Banking profits contributed 29 per cent, up from six per cent and insurance contributed 35 per cent, up from nine per cent.
Still, "the bulk of our equity is in property," Mr. Byles said. But the property portfolio has not performed as well as banking or insurance in profit terms.
With 59 per cent of the company's equity invested in property, only 36 per cent of the profits came from this source.
"We need to raise the return on our property assets," Mr. Byles said. One way to do that might involve increasing fee income.
Achieving this increase will be essential if the company is to increase its return on equity from 19 per cent currently to a target of 24 per cent. Mr. Byles said FirstLife plans to grow profits at 25 per cent per year and reach $1 billion in net profit by 2005.
And the goal of maintaining a dividend payout ratio of 20 per cent should please shareholders "who have been patient over the years," Mr. Byles said.
A resolution was passed at the annual meeting for a dividend payment of 25.3 cents per stock unit be paid to stockholders on register at June 20, 2002. The money is to be made payable on July 4.
When questioned by Sunday Business some analysts queried the capacity of FirstLife to sustain its growth momentum, given Jamaica's slow economy and weak property market.
In his presentation to the annual meeting, Mr. Byles noted that the company had sustained its growth in an economy which had shown marginal improvement in the last five years.
The FirstLife Growth targets for the next five years require investments in technology and improvements in staff productivity, the chief executive said. The return on Trafalgar Development Bank assets will also have to be raised and appropriate mergers and acquisitions pursued.
"Greater efficiency is the name of the game," Mr. Byles said at the meeting where retiring directors Maurice Facey, W.G. Bryan Ewen and James E. Morrison were re-elected.
