Keith Collister, Contributor
FIRST JAMAICA Investments Limited, formerly known as First Life Insurance Company Limited, had its 33rd Annual General Meeting on August 23rd.
In a confident presentation, newly appointed CEO Stephen Facey (who is also CEO of First Jamaica holding company Pan Jamaican Investment Trust) described this AGM as the end of "a very dynamic and interesting chapter in their company's history", coming as it did after the completion of the Life of Jamaica (LoJ) transaction merging First Life's insurance business with LoJ. He pointed out that over the last five years, group profit had moved from $265.8 million in 2000 to $1,576.2 million in 2004, or an overall annual compounded rate of growth of 56%, which had driven the growth in market capitalisation from $1.2 billion in 2000 to over $13.75 billion at the end of December 2004.
However, the growth in profit of 2004 over 2003 was somewhat distorted by a "gain on dilution of shareholding in subsidiary' of $351.9 million as a result of the merger of Pan Caribbean and Manufacturers' Investments Limited, which reduced First Life's stake from 77% to 38% of PCFS (this stake was of course subsequently sold to LoJ).
CONFIDENCE
Mr. Facey pointed out that as a result of the amalgamation of the financial services businesses of the former First Life, namely the insurance company and Pan Caribbean, LoJ's position as market leader in the Life Insurance industry (and as a major player in the financial services industry overall through Pan Caribbean) had been cemented. Mr. Facey expressed every confidence that LoJ's management team, led by First's Life's former CEO Richard Byles, would continue to deliver strong growth in profits and a dividends from First Jamaica's 25% stake in the new LoJ.
According to Mr. Facey's presentation, property revenue (essentially rental income) was nearly $500 million in 2004, and including revaluation gains (under IFRS the year to year movement in property values is transferred to profit) was nearly $600 million. Mr. Facey pointed out that in the last five year period property valuation increases had been fairly minimal (in 2002 it was actually negative).
In fact, valuation increases over the period had been at a level well below inflation, with the result that their property values were less than 50% of replacement cost (as of end December the property portfolio was valued at $1.85 billion on a market basis). He ascribed this moderation in revaluations in recent years as due to a combination of factors including the financial sector crisis, a relatively stable Jamaican dollar, low inflation and the high interest rates of the period. Historically, he advised that revaluation increments had been well in excess of 20%, contributing up to 4 to 5 times the rental income levels.
FIRST HALF PERFORMANCE
The first half performance for 2005 was also very strong, with profits of $2,277.4 million compared with $837.3 million, up 172%. Excluding non-recurring items of $1,697 million in 2005 resulting from the transfer of the Banking and Insurance Operations to LoJ (and the 2004 dilution of subsidiary referred to earlier), profits at $589.7 million were up 21% over 2004's first half of $485.4 million, on a non-recurring basis, an improvement driven by the property division.
