By Al Edwards, Business Co-ordinatorLOCAL INSURANCE giant Life of Jamaica (LoJ) continues to go from strength to strength under the leadership of Maxine MacLure. According to its unaudited consolidated results for the six months ended June 30,2003, the company recorded profits at the end of the second quarter of the year, after adjustments to comply with International Financial Reporting Standards (IFRS), of $519 million, $252 million or 94 per cent higher than profits recorded for the same period last year of $267 million.
The profits for the period also reflect an exceptional item of $45 million which represents redundancy costs arising on completing the final staff restructuring for the merged LoJ/Island Life operations.
SIGNIFICANT EARNINGS GROWTH
The year to date performance, as well as the performance of the quarter, reflects significant earnings growth over the previous quarter, as well as the previous year, mainly due to strong investment performance resulting from a balance sheet appropriately hedged against currency risk, and good expense management evidenced by lower expense ratios.
LoJ continues to register strong performances particularly with its main operational lines despite some challenging economic developments, in particular, the introduction of a number of new tax initiatives. Notwithstanding, total sales for the period amounted to $388 million, higher than both the company's target and the level of sales for the same period last year ($287 million).
Its overseas subsidiary, Global Life, recorded and consolidated profits attributable to LoJ for the six months of the year of US$0.8 million, 99 per cent higher than profits for the same period last year of US$0.4 million.
The consolidated performance shows the level of net premiums written up 30 per cent over the level in the previous year. The total assets of the Group at the end of the period amounted to $11 billion, $4 billion higher than total assets at the end of 2002 of $6.8 billion, due mainly to the acquisition of Island Life. Total assets under management (including the segregated policyholder funds and pension funds) have grown to $26.6 billion from $22.4 billion at the end of 2002.
TOTAL SURPLUS
The company's total surplus grew by 124 per cent over the six months to $3.4 billion, due in part to the purchase of Island Life by way of an issue of Life of Jamaica shares. The performance of the quarter reflects an annualised return on equity of 42 per cent. In a release issued by LoJ, the company's chairman J. Arthur Bethell said:
"We are pleased by the company's performance to date and in the second half of the year we expect to achieve greater efficiencies through even stricter expense management while continuing to better the strong sales performance of the first quarter."
Speaking with Wednesday Business, LoJ's president and chief executive officer, Maxine MacLure explain some of the reasons for the company's good fortune: "The recent devaluation has helped us inadvertently because our assets are valued in United States dollars. Good claims experience, that is, less deaths has also played its part. Better persistence (the proportion of policies that stay on the books has increased) was also a contributory factor to a good second quarter performance.
The growth in assets was due in the main to Island Life's profits of $46.3 million registered in our accounts. What is particularly noteworthy is that we no longer have retained earnings deficit."
