General Accident stock is undervalued.
Profit at General Accident Insurance rose 88 percent to $144 million, in the nine months September from $77 million in the similar period in 2017 even as profit for the quarter to September 2018 slipped 29 percent from $68 million to $49 million.
Earnings per share amounted to just 5 cents in the September quarter and 14 for the year to September and IC Insider.com estimates 40 cents for the full year and possible 80 cents for 2019. The stock last traded at $4, just less than twice net book value of $2.05. Annualized return on average equity of 9.45 percent up from 5.2 percent in 2017.
Gross premium for the year to September, grew 20 percent to $7.4 billion, while growth for the quarter was up an extremely strong 69 percent to $2.75 billion over the same periods last year. The company that is also looking to branch out to other parts of the region, also earned 51 percent more commission that the year before with nine months’ earnings rising to $495 million and it grew 104 percent for the quarter to $159 million but commissions paid grew 32 percent for the nine months to $212 million and by 44 percent for the quarter to $96 million. Net earned premiums grew 24 percent, for both the nine months to $1.20 billion for year to date and $531 for the quarter. Investment income including of foreign exchange gains is up 158 percent for the quarter to $144 million and 56 percent for the first nine months to $228 million.
Net claims grew by just 10 percent to $866 million for the nine months but jumped 42 percent for the quarter to $353 million. “Administrative expenses increased by 19 percent compared to the same period prior year, due to new hires to drive the strategic plan” management stated. Management expenses rose 35 percent to $554 million in the nine months and by 47 percent for the quarter to $201 million.
“General Accident ended the third quarter with a book value of $2.05 billion and generated annualized return on average equity for shareholders of 9.45 percent. Despite, low interest rates and increased competition in a very challenging operating environment. For the first nine months of the year, we were able to improve on our performance when compared to the similar period for 2017. The board and management team are committed to ensuring that General Accident’s financial performance continues to improve for the remainder of the year,” Paul Scott, Chairman and Sharon Donaldson, Managing Director said in their report to shareholders that accompanied the quarterly results.
The company ended the period with equity capital of $2 billion with $4 billion in insurance reserves. Assets total $6.7 billion and comprise liquid funds of $3 billion with amounts due from re-insurers and co-insurers of $1.5 billion representing a big jump from $875 million in 2017.
