Guardian Holdings rocked by higher reinsurance premiums but still able to increase profitability

While the Caribbean region did not suffer from any significant losses due to hurricanes last year, regional insurance giant Guardian holdings Limited has been rocked by higher reinsurance premiums.

In spite of the dormant hurricane activity in 2020, international property reinsurers significantly increased rates for the Caribbean following heavy losses incurred as a result of hurricanes Irma and Maria in 2017 and Hurricane Dorian in 2019. This had a significant adverse impact on the finances of Guardian, which is based in Trinidad & Tobago but also operates in Jamaica, where it purchased the life and annuity portfolio of NCB Insurance last year.

The purchase of reinsurance to cover its exposure to earthquakes and catastrophic hurricanes is one of Guardian’s largest expenses, which significantly affected its bottom line. Given the spike in reinsurance premiums, Guardian has been able to overcome the volatility that dogged the insurance market last year.

2020 was a year fraught with tremendous challenges for guardian

Guardian reported in its just-completed annual report that, “Indeed, 2020 was a year fraught with tremendous challenges for our group. It is in this context at I am very happy to report that we overcame these challenges and produced another very satisfactory year. Our staff and agents demonstrated commitment and resolve in quickly instigating digital channels to service our customers and make new sales.”

The robustness and flexibility of the new technological infrastructure in which the company had invested over the past few years has paid off and “provided the bedrock for securely enabling our digital channels of sales and service”. As have been done over the years, the insurance conglomerate has been able to absorb risk with the associated volatility in returns.

This was achieved by “deploying a deliberate strategy to dampen this inherent volatility by diversifying our revenues by line of business and geography and our asset portfolio by asset class and geography”. This strategy has served the company well in dealing with the challenges of 2020.

strong continuation of growth in profitability

Profit attributable to equity holders for the year was TT$774 million, which signifies a strong continuation of the pattern of growth in profitability. The performance is 12 per cent above the 2019 profit attributable to equity holders of TT$692 million.

Guardian has more than doubled profits, giving great confidence and enthusiasm to systematically deploy its strategy of creating a robust company of outstanding financial performance that provides world-class employment opportunities. This is of significance given that it has taken place at the five-year period since the deployment of the strategy in December 2015.

Gross written premium has increased by 3 per cent from TT$6.36 billion in 2019 to TT$6.55 billion in 2020. The contribution from life, health and pensions business has stayed flat from TT$3.73 billion in 2019 to TT$3.70 billion in 2020. While Guardian would have preferred growth in this business line, the company is, however, satisfied with the efforts in sales and premium conservation given the economic slowdown and the lack of mobility of customers and sales advisors, due to restrictions related to the pandemic.

Contribution from property and casualty business (general insurance) has increased by 8 per cent from TT $2.63 billion to TT$2.85 billion. All of the major property and casualty subsidiaries have contributed to this increase.

drivers of growth within the group

This growth by Guardian has been driven by rate increases in the northern Caribbean, growth in its Dutch business, enhancements to sales channels and new product offerings. During 2020, across all lines of business, Guardian started to deploy initiatives to increase product density, cross sales and sales through digital channels and is expecting that this will contribute to significant future growth.

The company has also highlighted that 2020 was an unprecedented year in recent human history, as COVID-19 emerged as a calamity on a global scale inflicting death and economic malaise as it spread.