By McPherse Thompson, Assistant, Financial News Editor
Moore
LIFE OF JAMAICA (LoJ), the island's largest insurance company, has remained the local industry leader in terms of the provision of individual coverage, and last year outperformed its main rival, Guardian Life, in all areas expect the settlement of new annualised premiums.
Guardian Life has been somewhat hesitant to provide details on its overall performance, except for a few areas in which it surpassed the competition, and the Life Insurance Companies Association of Jamaica (LICA), declined to reveal data on individual industry players.
However, according to figures obtained by The Financial Gleaner, last year, LoJ settled $320 million in new annualised premiums, exceeding its projection of $280 million. Guardian Life, on the other hand, settled $529 million in new annualised premiums, the highest ever by a local insurance company, according to Earl Moore, the company's chief executive officer. Guardian Life also exceeded its $436 million projection by $93 million, having settled 18,140 cases.
GROSS PREMIUM INCOME
Last year, LoJ earned $2.4 billion in gross premium income, involving all businesses in the individual line - $900 million more than its main rival Guardian Life, which earned $1.5 billion.
Guardian Life has quoted data from LICA to show that in 2002 it held 50.78 per cent of the traditional insurance market and 36.87 per cent of the entire market. LoJ said that in terms of market share they were number one in terms of gross premium income, but in terms of new sales Guardian was ahead of LoJ in 2002.
LoJ was also the leader in terms of pension funds under management last year, with some $12.5 billion or about 54 per cent of the market, while Guardian Life held $6.6 billion.
In group heath, LoJ controls the market, with new annualised premiums of $1 billion. Guardian
Life does not sell group health insurance.
LoJ was also number one in terms of group life, the company having recorded annualised premiums of $245 million at the end of the third quarter of last year, compared with Guardian Life, which earned $74 million during the same period.
Although they are the largest insurance companies in Jamaica, both LoJ and Guardian Life are non-Jamaican owned entities.
SINGLE LARGEST STAKE
Barbados Mutual Life Assurance Society, which now has the single largest stake in the insurance sector in Jamaica, started its push into Jamaica in December 1999 when it acquired 64 per cent of the shares of Island Life for $260 million. Two years later, it won the bid to acquire the Financial Sector Adjustment Company's (FINSAC) 76 per cent stake in LoJ for $2 billion.
Principals of Barbados Mutual immediately announced their intention to merge Island Life and Life of Jamaica for increased efficiency, but it involved a tedious legal process that would continue until earlier this year.
Even through LoJ was facing a cash-flow problem at the time the Government decided to sell the company, Milverton Reynolds, the president both before and for some time after the Barbados company's acquisition, expressed confidence that there would be improvement in the firm's financial situation. Mr. Reynolds made the observation then against the background of what he said was a stable and growing economy, a restructured and stable insurance sector with consumer confidence returning, and an operationally sound and well-capitalised insurance company, which, he said, "will undoubtedly dominate the market and remain leader of the industry."
Mr. Reynolds eventually left LoJ and the insurance sector to head the National Housing Development Corporation (NHDC). He was succeeded by Maxine MacClure, former general manager for intervention and rehabilitation of the insurance sector at FINSAC.
Among the products offered by LoJ are:
- Universal Lifeline - Individuals with dreaded diseases such as cancer,
stroke and paraphlegia get coverage of up to $10 million.
- Investment Life - An investment instrument for individuals planning
for retirement.
- Universal Life - Provides good cash value and investment opportunities.
- Universal Educator - Provides for children's education.
Cancer Plan - Individuals can get up to $1.5 million of coverage without having to undergo a medical examination before opening the policy. The money is paid out if a policyholder has been diagnosed as having cancer within a specified period after buying the policy. It also gives the policyholder the option of undertaking free cancer screening every two years, courtesy of the Jamaica Cancer Society.
- Universal Home Owners Plan - Facilitates individuals to acquire their
own houses.
- Mortgage Investor Plan - Offers mortgages at rates between 9.75 per
cent and 13.75 per cent. Anybody can qualify under this plan even if they
are not LoJ policyholders. The policy offers mortgage loans of between $1.5
million and $10 million.
- US-dollar Guaranteed Investor policy - Gives holders tax-free benefits
on investments, which must be held for at least five years.
- Jamaican-dollar Guaranteed Investor - Gives holders a guaranteed
rate of return tax-free. Investments must be for a minimum of five years.
- Purple Shield - Covers death, terminal illnesses, hospitalisation,
etc.
Key indicators:
- Assets under management - $23 billion.
- Return on equity for 2002 - 64 per cent.
- Debt-to-equity ratio - the company has no debt at this time.
- Earnings per share - $0.50.
- Goodwill - this was not assessed for 2002. Assessment will be done
for 2003 when the merger with Island Life is legally completed.
REHABILITATED INSTITUTION
Guardian Life, which is owned by the Triniadian company Guardian Holdings, is itself a rehabilitated institution that arose came out of the financial sector meltdown of the 1990s. The company represents the merger of Jamaica Mutual Life, Crown Eagle, Dyoll Life and Horizon Life insurance companies, the portfolios of all of which were acquired by the Guardian Holdings group in February 1999.
The company is headed by Earle Moore, a former Jamaica Mutual Life executive.
Last year, Guardian Life recorded profits of more than $300 million, 55 per cent more than the previous year, while its revenue increased by 32 per cent, exceeding projections by 22 per cent. The company also achieved an average rate of return on investment of 18 per cent, and a 16 per cent increase in its asset base. It reduced its expense ratio by 17 per cent compared with 2001.
For more on both Guardian Life and Life of Jamaica see this week's Sunday Business.
