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.
General Accident nearly doubles profit
Motta for income & long term gain
The Musson Group is disposing of all their interest in Stanley Motta Limited in a scheduled sale of all the 757,818,862 ordinary shares currently owned.
Our source states that the business which is a solely a real estate venture is not part of Musson’s core business. If the shares are listed it would be the fifth company connected to the group to do so.
The offer has 227,348,547 shares reserved mostly for family members of the majority shareholders of the Musson group and 529,970,315 units for the General Public for purchase at $5.31 per share. All the net proceeds will be payable to selling Shareholders. Sources indicates that General Accident Insurance will make be taking up a large block of the shares that offered to the public.
The Company intends to apply to the Jamaica Stock Exchange for the listing on the Main Market of all the Shares and to make such application as soon as is conveniently possible following the close of the offer. The offer opens on July 6, with July 20 set as the closing date.
A business process outsourcing and technology park consisting of five buildings totalling over 200,000 square feet of rentable commercial office space at.
The company owns 58 Half Way Tree Road in Kingston, next door to the new Kingston, comprising 200,000 square feet of rentable space that is fully leased with the lease quoted in US dollar. Tenants are responsible for all expenses arising by reason of occupation, including insurance, property tax and maintenance expenses. The weighted average tenor and annual rent per square foot are 4.7 years and US$12.09, respectively.
The anchor tenant is Jamaica Agent Services Limited, the local subsidiary of Alorica Inc. Alorica is a US based global business process outsourcing firm and the third largest provider of customer experience solutions in the world. The company has over 100,000 employees and operates from 140 locations in 16 countries around the world in North America and the Caribbean, Latin America, Europe, China, the Philippines, and Japan. Alorica serves over 600 clients many of which are on the annual list of the 500 largest companies in the United States as compiled by Fortune magazine. Under the terms of Stanley Motta’s two leases with Alorica, who took possession of Units 2, 3 and 4 each as a “cold hard shell” and paid to complete the buildings at its own expense including all interior walls, ceilings and finishes.
The complex will be managed by Felton Property Management Services Limited, a subsidiary of Musson. Felton will be responsible for all day-to-day on-site property management, administration and accounting services.
The property is a designated Free Zone, accordingly, Stanley Motta is exempt from corporate income tax on the rental income of Free Zone property.
The Board expects to distribute approximately 90% as dividends subject change from time-to-time if circumstances dictate.
The Projected Valuation obtained from an independent appraiser, using the income capitalization approach, for Unit 4 at completion is US$21.3 million or approximately $2.63 billion using rates of exchange as at December 31, 2017 and $2.79 billion using the weighted average selling rate according to the Bank of Jamaica as of June 19.
The Company’s sole source of direct income is from the rental of units in the technology park. Its only other source of income is from dividends from Unity Capital, whose sole income is derived from the rental of office space in its building at 58 Half Way Tree Road. The lack of diversification means that the Company is particularly exposed to risks affecting the property market.
The Invitation is underwritten by the Underwriter up to a maximum of the equivalent of US$21 million.
The stock is not for all investors in the short term. Investors looking for relatively high return in US dollars with modest capital appreciation over time may find this an attractive offer. While most investors may view the income in US dollars as a big positive, they ought to be aware that continued devaluation of the local currency going forward is not guaranteed. Of note is that the rental income for a full year is likely to be in the order of US$2.5 million with most expenses picked up by tenants, it should net out around the same amount tax free. The yield on investment will translate to just under 7 percent. The property has room for some amount of expansion which is done could increase the revenues and profit. The new leases while priced at $12 per square foot is set to rise to $14 dollar at renewal in 5 years and should go higher on renewal thereafter.
With Jamaica, on target to lower the fiscal deficit to 60 percent of GDP and with government maintaining balanced fiscal operations inflation going forward is likely to remain low and should result in low interest rates, against this back drop ground, the income from this operation could see investors ultimately acquiring the stock as a good income play and then drive up the price over time.
JSE indices jump in early trading Friday
Activity on the Jamaica Stock Exchange on Friday morning was subdued, resulting in 18 securities trading changing hands at 11 am with a volume of 547,500 units, with 6 stocks declining and 6 rising.
Trading activity resulted in the JSE Market Index gaining 135.03 points to 98,104.66. The JSE All Jamaican Composite index rose 150.90 points to 108,593.77, the JSE combined index climbed 387.38 points to be at 101,690.73 and the junior market is up 29.10 points to 1,015.19.
General Accident Insurance traded 65,186 shares at $1.45 and Lasco Manufacturing had 280,424 units trading at a new all-time high of $2.30, to be the largest volumes to trade.
Carib Flavours dominates juniors
At the close, 5 securities ended with no bids to buy, while 5 had no stocks being offered for sale and 4 stocks closed with bids higher than the last traded prices and 2 with lower offers.
Stocks trading are, Caribbean Flavours traded 1,221,984 units firm at $2.70 in three trades, Caribbean Producers traded 159,738 units at $2.50, after the company reported good full year’s results on Tuesday. Dolphin Cove traded 2,100 shares at $12.90, a fall of 10 cents, General Accident Insurance ended with 81,279 shares trading unchanged at $1.42 at the close. Honey Bun had 17,080 shares trading at $3.95 but lost 30 cents, Lasco Distributors was up 14 cents to $1.94, with 9,030 units changing hands, after trading at $2 and Medical Disposables traded 137,035 shares to close unchanged at $2.50.
More junior stocks up Friday
At the close of the market, there were 4 stocks with bids higher than their last selling prices and only 4 with lower offers. The junior market ended with 3 securities closing with no bids to buy and 8 securities that had no stocks being offered for sale.
Stocks trading in the junior market are, Access Financial ending with 38,164 shares changing hands to close higher by 10 cents at $17.10, Cargo Handlers finished with 36,944 units to close at $22.28, Caribbean Cream had just 800 shares trading, lost 1 cent to end at $1.19, Caribbean Flavours ended trading in 8,000 shares with the price falling 10 cents to $2, Consolidated Bakeries closed with a 15 cents increase as 307,613 units traded to land at $1.15. General Accident Insurance concluded trading with 79,105 shares changing hands 7 cents higher at $2.17, Knutsford Express traded just 100 shares at $6, Lasco Distributors traded 5,500 shares, 5 cents higher, at $1.70. Lasco Financial Services finished trading with 184,648 units, the price slipped 1 cent to $1.30 and there was dealing in 13,000 Lasco Manufacturing’s shares to close at $1.30.
Junior market set to slip more
The market seems set to fall on Friday with several stocks closing with lower asking prices than the last selling prices. At the close of the market, there were 3 stocks with bids higher than their last selling prices and 7 with lower offers. The junior market ended with 3 securities closing with no bids to buy 6 securities that had no stocks being offered for sale.
Stocks trading in the junior market are, Caribbean Cream finishing with 8,500 units to close with a gain of 1 cent at $1.20 but ended with the offer at $1.15, to sell 130,000 units. Caribbean Producers with 93891 shares trading, closed lower by 15 cents at $3, Consolidated Bakeries finished trading with 3,334 shares to closed unchanged at $2.04, General Accident Insurance concluded trading with 2,000 shares changing hands to close 7 cents lower at $2. Lasco Distributors traded 219,108 shares at $1.65, Lasco Financial Services finished trading with 181,412 units at $1.31. There was dealing in 57,726 Lasco Manufacturing’s shares as the stock traded lower by 7 cent to $1.30.