ANALYST BRIEFING GUARDIAN HOLDINGS LIMITED 1 GUARDIAN...
Transcript of ANALYST BRIEFING GUARDIAN HOLDINGS LIMITED 1 GUARDIAN...
+ + INVESTMENT INSURANCE RETIREMENT =
I NSURANCE RETI REM ENT I NVESTMENTS
ANALYST BRIEFING
GUARDIAN HOLDINGS LIMITED
1 GUARDIAN DRIVE
WESTMOORINGS • TRINIDAD
+ + INVESTMENT INSURANCE RETIREMENT =
Financial Results –Year Ended 31st December 2015
Analyst Briefing
15 March 2016
+ + INVESTMENT INSURANCE RETIREMENT =
RAVI TEWARI GROUP CHIEF EXECUTIVE OFFICER
+ + INVESTMENT INSURANCE RETIREMENT =
3
A new T&T Insurance Act is anticipated that will enact a new reserving methodology called CPPM. We implemented this method in our 2015 Financial Statements, which also resulted in removing accounting for Embedded Values
In accordance with IFRS, we restated our 2014 results due to the adoption of CPPM and elimination of embedded value accounting, so as to make a proper comparison for these two items
CHANGES IN ACCOUNTING POLICY
+ + INVESTMENT INSURANCE RETIREMENT =
CHANGES IN ACCOUNTING POLICY
4
Benefits of Moving to CPPM It belongs to a class of reserving methods considered international best
practice Greater consistency between asset and liability valuations, as interest
rates move in the future. If interest rates rise in the future, bond values will fall and so will CPPM reserves. It therefore dampens the volatility on our Income Statement
CBTT has no objection to an immediate adoption of CPPM. Adopting this reserving basis for IFRS reported results leads to less complex reporting
More consistent reserving across the Group, as CPPM is similar to the methodology used by Guardian Life Limited (Jamaica)
Improved comparability with our peer group internationally Better acceptance of reported reserves by rating agencies
+ + INVESTMENT INSURANCE RETIREMENT =
5
RESTATEMENT OF 2014 INCOME STATEMENT
Changes in accounting policy: a) CPPM adopted as
the actuarial reserving methodology for long-term insurance contracts
b) Cessation of embedded value accounting in all life insurance subsidiaries
Consolidated Statement of IncomeAs previously
reported
Change in accounting
policy
Re-classifications
Restated balances
$'M $'M $'M $'MInsurance activitiesNet underwriting revenue 3,841 (154) 1 3,688 Underwriting expenses (3,295) 97 – (3,198) Net result from insurance activities 546 (57) 1 490
Net income from investing activities 923 – (53) 870
Income from brokerage activities - - 52 52
Net income from all activities 1,469 (57) 0 1,412 Operating expenses (905) – – (905) Finance charges (130) – – (130) Operating profit 434 (57) 0 377 Share of profit of associated companies 22 – – 22 Taxation (91) 5 – (86) Profit/(loss) after taxation 364 (53) 0 312 Amount attributable to par. policyholders (2) (7) – (9) Profit/(loss) from continuing operations 362 (60) – 303 Profit attributable to equity shareholders 401 (60) – 341
+ + INVESTMENT INSURANCE RETIREMENT =
6
Changes in accounting policy: a) CPPM adopted as
the actuarial reserving methodology for long-term insurance contracts
b) Cessation of embedded value accounting in its life insurance subsidiaries
RESTATEMENT OF 2014 BALANCE SHEET
Consolidated Statement of Financial Position
As previously reported
Change in accounting
policyRestated
$'M $'M $'MFinancial assets 13,933 – 13,933 Reinsurance assets 696 (30) 666 Cash and cash equivalents 2,340 2,340 Value of inforce life insurance business 1,046 (1,046) – Other Assets 4,562 (8) 4,554 Total Assets 22,577 (1,084) 21,493
Total Equity 2,956 (345) 2,611
Insurance contracts 13,510 (732) 12,779 Financial liabilities 2,160 – 2,160 Other liabilities 3,951 (7) 3,943 Total Liabilities 19,621 (739) 18,882
Total Equity and Liabilities 22,577 (1,084) 21,493
+ + INVESTMENT INSURANCE RETIREMENT =
7
SUMMARY CONSOLIDATED FINANCIALS
Note 1
Note 2
Note 1 Driven by LHP segment (mainly GLOC and GLL net reserve release) Note 2 -$94MM negative swing in fair values mainly from bonds and overseas equities Note 3 -$27MM higher operating expenses mainly from GLL special levy and asset tax
Note 3
TT$'MMYear Ended
Dec 2015
Year Ended Dec 2014
(Restated) Var $ Var %
Net income from insurance activities 662 490 172 35%
Net fair value (losses)/gains (7) 87 (94) -108%
Net income from other investing activities 796 783 12 2%
Net income from other brokerage activities 8 5 2 43%
Net income from all activities 1,458 1,366 93 7%
Operating expenses (excl brokerage exps) (886) (859) (27) 3%
Finance charges (141) (130) (11) 8%
Share of associate results 17 22 (4) -20%
Net profit before tax - continuing ops 449 398 51 13%
Taxation & other (115) (95) (20) 20%
Net profit after tax - continuing ops 334 303 31 10%
Net gain on discontinued operations 2 26 (23) -90%
Profit/(Loss) attributable to NCI 2 (12) 14 -113%
Profit to equity shareholders 335 341 (6) -2%
+ + INVESTMENT INSURANCE RETIREMENT =
LIFE HEALTH AND PENSION
ASSET MANAGEMENT
STRATEGIC ALTERNATIVE INVESTMENTS
GLOC (100%)
GLL (100%)
FATUM LIFE
(100%)
RGM (33%)
ECGPC (15%)
LAEVULOSE (100%)
GGTL (100%)
BUSINESS SEGMENTS
8
GAMISL (100%)
PROPERTY & CASUALTY
ROYALSTAR ASSURANCE
(26%)
FATUM GENERAL
GGI (OECS) (54%)
CURACAO (100%)
ARUBA (100%)
TRINIDAD (100%)
BARBADOS (100%)
BOOGAARD GROUP (100%)
GUARDIAN RE
(100%) THOMA & KRUIT (100%)
GGIL (100%)
GGIJL (100%)
GAM MUTUAL FUNDS
+ + INVESTMENT INSURANCE RETIREMENT =
• We have the premiere portfolio of non-bank financial institutions in the Caribbean
• Number one market position in Trinidad and Tobago
• Either number one or number two market position in all other markets
• Diversified by line of business: life, health, pensions; general insurance;
and asset management
• Judiciously diversified by country
• Diversified investment portfolio
DIVERSIFICATION OF BUSINESS UNITS PRODUCES CONSISTENT RETURNS AND GROWTH
9
+ + INVESTMENT INSURANCE RETIREMENT =
4,007 4,365 4,911 5,011 5,152
0
1,000
2,000
3,000
4,000
5,000
6,000
2011 2012 2013 2014 2015
GPW ($million)
GROSS PREMIUMS WRITTEN
10
YTD 2015 GPW increase mainly from: i. LHP higher $0.2Bn ii. P&C lower mainly
due to lower premiums from multi-national partners and fall in global premium rates
7% CAGR
+ + INVESTMENT INSURANCE RETIREMENT =
GEOGRAPHIC DISTRIBUTION OF REVENUE
Geographic distribution continues to be stable, with approximately 55% earned in Trinidad and Tobago
11
Excludes realized and unrealized gains
+ + INVESTMENT INSURANCE RETIREMENT =
ANAND PASCAL PRESIDENT GUARDIAN LIFE OF THE CARIBBEAN
Life, Health and Pensions (LHP)
+ + INVESTMENT INSURANCE RETIREMENT =
LIFE, HEALTH AND PENSIONS (LHP)
13
LIFE, HEALTH AND PENSION
GLOC (100%)
GLL (100%)
FATUM LIFE
CURACAO (100%)
FATUM LIFE
ARUBA (100%)
FATUM HEALTH (100%)
The leading life insurer in the Caribbean: # 1 In Trinidad Over 600 dedicated life sales agents GLOC AM Best A- Excellent rating
# 2 In Jamaica Over 300 dedicated life sales agents
Fatum has approximately 50% of the Dutch Caribbean market Sales primarily broker-driven
+ + INVESTMENT INSURANCE RETIREMENT =
225 207
303 278 301
65 68
71 58
59 120 123
120 116
108
-
100
200
300
400
500
600
2011 2012 2013 2014 2015
Settled API ($million)
GLOC GLL FATUM
ANNUALIZED PREMIUM INCOME
14
3.5% growth over 2014 Strong 2015 by GLOC
Shift to higher margin protection business in 2014
Shift away from bulk annuity business in 2014 in Jamaica
+ + INVESTMENT INSURANCE RETIREMENT =
1,347 1,427 1,762 1,836 1,983
552 631
557 490 498
403 471
476 496 542
2,302
2,529
2,794 2,821 3,023
-
500
1,000
1,500
2,000
2,500
3,000
3,500
2011 2012 2013 2014 2015
GPW ($million)
GLOC GLL FATUM
LHP – GROSS PREMIUMS WRITTEN
15
CAGR 7%
GPW showed an overall increase of 7% over 2014
Fatum grew 9% and GLOC grew 8% over 2014
+ + INVESTMENT INSURANCE RETIREMENT =
1,589 1,737 2,030 2,154 2,005 2,111
806 925
832 747 728 703
635 751
714 732 722 806 3,029
3,413 3,576 3,633
3,455 3,619
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2011 2012 2013 2014 2014 Restated 2015
Revenue ($million)
GLOC GLL FATUM
LHP – REVENUE
16
Excludes realized and unrealized gains/losses
Revenue is largely driven by premiums Investment income continues to be pressured by the low interest rate environment, especially in Trinidad 4.7% growth over 2014 (restated)
6% CAGR 5% CAGR
+ + INVESTMENT INSURANCE RETIREMENT =
RICHARD ESPINET EXECUTIVE DIRECTOR / GROUP PRESIDENT PROPERTY & CASUALTY
Property & Casualty (P&C)
+ + INVESTMENT INSURANCE RETIREMENT =
PROPERTY & CASUALTY (P&C)
18
PROPERTY & CASUALTY
ROYALSTAR ASSURANCE
(26%)
FATUM GENERAL
GGI (OECS) (54%)
CURACAO (100%)
ARUBA (100%)
TRINIDAD (100%)
BARBADOS (100%)
BOOGAARD GROUP (100%)
GUARDIAN RE
(100%) THOMA & KRUIT (100%)
GGIL (100%)
GGIJL (100%)
An established and distinguished P&C Insurer, long recognized as the largest and strongest indigenous Caribbean Insurer
Profitably underwrites in every English-speaking Commonwealth country in the Caribbean and the Dutch Antilles
Market Leader in the following territories: Trinidad & Tobago; Jamaica; Dutch Antilles; Grenada; and overall Caribbean
Boogaard – new broker acquisition in the Dutch Antilles is an additional source of fee income (together with Thoma & Kruit)
Financial strength and consistently applied underwriting discipline are competitive advantages Consistently delivers high profit margins Successfully manages the underwriting cycles Reputable claims service Good geographic spread Robust reinsurance program Strong global network
“A-” Excellent rating reaffirmed by AM Best
+ + INVESTMENT INSURANCE RETIREMENT =
1,120 1,267 1,315 1,387 1,316
287 238
402 431 457 228 257
326 297 294
70 75
74 75 62
1,705 1,837
2,117 2,190 2,129
-
500
1,000
1,500
2,000
2,500
2011 2012 2013 2014 2015
GGIL FATUM GGIJL GRE
P&C – GROSS PREMIUMS WRITTEN
19
6% CAGR
GPW of $2.1Bn decreased 2.8% compared to 2014 mainly due to: Premium
reductions on multinational accounts obtained through our global network partners
Fall in regional
and international premium rates
+ + INVESTMENT INSURANCE RETIREMENT =
COMBINED RATIO - PROPERTY & CASUALTY
20
Combined Ratio is consistently below 90%, reflecting the P&C’s:
Strong technical underwriting discipline: Strong net claims ratio of 44% (2014: 44%)
Operating expense discipline: Expense ratio of 35% (2014: 33%)
Distinctive reinsurance strategies
+ + INVESTMENT INSURANCE RETIREMENT =
BRENT FORD GROUP CHIEF INVESTMENT OFFICER / GROUP PRESIDENT ASSET MANAGEMENT
Asset Management (AM)
+ + INVESTMENT INSURANCE RETIREMENT =
ASSET MANAGEMENT
22
ASSET MANAGEMENT
GGTL (100%)
GAMISL (100%)
Acts as investment manager for the group
Offers investment opportunities to retail and institutional market
13 independent mutual funds – covering all asset classes Financial advisory services to high net worth individuals –
Discretionary Private Wealth Service Non-Discretionary Trading Accounts – client directed trades
Effective July 1, 2015, GAM was reorganized as follows:
Guardian Group Trust Limited – (CBTT & SEC) will perform trust services and non-bank finance activities
Guardian Asset Management & Investment Services Limited – (SEC) will perform roles as investment adviser, broker-dealer and underwriter
GAM MUTUAL FUNDS
+ + INVESTMENT INSURANCE RETIREMENT =
8.2 8.9
9.3 9.7 10.4
-
2.0
4.0
6.0
8.0
10.0
12.0
2011 2012 2013 2014 2015
(TT$Bn)
ASSETS UNDER MANAGEMENT
23
* GAM plus GAM Mutual Funds
6% CAGR
Assets under Management show an increase of 7% in 2015. Captive Funds 7% NDS Funds 34%
+ + INVESTMENT INSURANCE RETIREMENT =
AM – GAM REVENUE & AUM MIX
24
Third Party Business contributes largest portion to revenue, represents 18% of AUM
82%
18%
Captive Third Party
AUM Mix
44%
56%
Captive Third Party
Revenue Mix
+ + INVESTMENT INSURANCE RETIREMENT =
AM – GAM REVENUE & PROFITS
25
Revenue for 2015 was marginally higher by 1% from 2014
Profit After Tax for 2015 was lower by 8% from 2014
60.0 61.9 60.4 58.9 59.5
19.7 23.1 20.6 20.7 19.0
-
10.0
20.0
30.0
40.0
50.0
60.0
70.0
2011 2012 2013 2014 2015
Revenue & Profitability
Revenue ($MM) PAT ($MM)
+ + INVESTMENT INSURANCE RETIREMENT =
INVESTMENT MIX
26
Group’s investment mix shows no major changes; more cash and deposits mainly due to lack of new issues coupled with net premium income growth
+ + INVESTMENT INSURANCE RETIREMENT =
QUESTIONS
27