Paul Scott

General Accident acquisition to boost results

October 4, 2019 by IC Insider.com

General Accident head quarters

The junior Market listed General Accident acquired a 55 percent stake in Motor One Insurance, a Trinidadian based company, with a large branch network throughout Trinidad.
Motor One, is said to be one of Trinidad and Tobago’s smaller general insurance companies but the acquisition provides General Accident with a ready platform expand in the Trinidad market into motor vehicle and catastrophic insurance business in the Caribbean twin-island state which is said to be over 40 percent larger than the general insurance market in Jamaica. The acquisition will provide a platform for the local company to expand in the wider region and importantly, into Guyana where the economy is already growing strongly with the country set to benefit even more from the near term production of oil but that seems a bit off for now.
The acquisition, “is an important first step in our wider regional growth strategy which we believe will increase economies of scale, spread our risk and significantly enhance shareholder value,” General Accident’s chairman, Paul Scott stated in the release announcing the purchase.
General Accident is having a good two-year run, with rising income and profit, in 2016 revenues from core business hardly changed but investment income rose and helped to push pretax profit up by a third. In 2017, net underwriting revenues grew 28 percent over 2016 and by 22.6 percent in 2018 over 2017but profit declined 42 percent for 2017 and rose 50 percent in 2018 but was still below the pretax profit delivered in 2016. The company’s profit performance in the 2019 June quarter improved 31 percent to $104 million from $80 million in 2018 after tax and for the six months period by 42 percent to $135 million from $95 million in 2018.
Gross premiums written, rose 59 percent for the quarter to $4 billion from $2.4 billion and by 41 percent for the year to date to $7 billion from $5 billion in 2018.
Net premium earned rose 25 percent in the quarter to $503 million from $403 million and climbed 29 percent for the year to date to $989 million from $767 million in 2018. Commission expense increased 15 percent in the quarter to $116 million from $100 million and by 20 percent for the year to date to $260 million from $216 million in 2018 while commission income rose 14 percent in the quarter to $170 million from $149 million in 2018 and for the half-year, it rose 21 percent to $406 million. Investment and other income fell 18 percent in the half-year to $117 million from $143 million and rose 22 percent to hit $111 million.
Management expenses increased 26 percent to $227 million in the quarter and 19 percent in the six-month period to $419 million. Claims grew 28 percent to $339 million in the quarter and 23 percent in the half-year to $633 million. Other operating expenses increased in the quarter to $23 million from $11 million in 2018 and from $21 million to $35 million for the six-month period.
Gross cash flow from operating activities brought in $922 million, but net of amounts due to reinsurers and co-insurers and other working capital movements reduced cash provided by operating activities to $363 million. General Accident paid dividends of $150 million during the year and ended with cash and investments of $3.3 billion, up from $2.7 billion at the end of June 2018. At the end of June, shareholders’ equity stood at $2.2 billion. Total assets ended the period at $7.9 billion inclusive of dues from reinsurers and co-insures of $2 billion, cash and bank balances of $190 million and liabilities of $6 million.
Earnings per share came out at 0.10 cents for the quarter and 0.13 cents for the six months. IC Insider.com is forecasting 80 cents per share for the full year for a PE of 8 times earnings.

Filed Under: Buy Rated, Company News, Company Results Tagged With: General Accident Insurance, Paul Scott

Seprod profit up & dividend jumps

November 14, 2016 by IC Insider.com

Seprod announced a dividend of $2.63, driving the stock to a new 52 weeks’ high of $30.

Seprod looks set to pay out all of their 2016 profit in dividend in November, with a payment of $1.36 billion. Chairman Paul Scott told IC Insider that the payment was due to gains made from the sale of shares previously held in Grace Kennedy, giving rise to investment gains of $874 million to September.
The board approved a big pay out of two dollars and sixty-three cents ($2.63) per share on November 28, to all shareholders on record as at November 18. The stock will trade ex-dividend on November 16. The dividend will consume $1.36 billion of the company’s cash and investments which stood at $3.9 billion at the end of September.
Seprod reported profit before losses attributed to minority shareholders in its subsidiary of $127 million for the September quarter versus a loss of $66 million in 2015 and $943 million for the nine months period compared to $375 million in 2015. Earnings per share amounts to 39 cents for the last quarter and $2.09 for the nine months as sale revenues declined to $11.1 billion for the nine months from $11.2 billion in 2015 but with the last quarter rising by 10 percent to $3.5 billion.
According to Scott the future looks bright going forward. “We are breaking even in the sugar operations with 11,000 tonnes of sugar produced last crop, Seprod Group.

Seprod banking on growth in its dairy operations making big contribution to profit.

before interest charges and expectation of 16,000 tonnes of sugar being produced in 2017, which should be profitable,” Scott told IC Insider. There is also the expectation of higher price for sugar in 2017 than in 2016. The added tonnage if achieved could result in around $300 million more in revenues with most of it flowing to the bottom line of a The next three years should see a slate of new products being produced with the dairy operations being a major contributor to this thrust with the local and Caribbean markets being targeted. Seprod in it unassuming style quietly produced some of the better returns to shareholders of listed companies, in the last 5 or so years has seen profit stagnated with the tightness in the economy and gig losses in the sugar operation. Recent results and pick up in economic activity locally and with the rate of exchange of the Jamaican dollar having adjusted against the back ground of relatively inflation has given the company a competitive edge in a number of areas which it seems poised to take advantage of in growing the business.
The stock last trade at $27.50 on the main market of Jamaica Stock Exchange and looks like a buy for the further.

Filed Under: Buy Rated, Company News, Company Results Tagged With: Jamaica Stock Exchange, Paul Scott, Seprod

General Accident lousy results

August 27, 2015 by IC Insider.com

General Accident reported lousy first quarter results for 2015, with profit of $26 million and followed that up with even worse figures for the June quarter, just $457,000, and $26.6 million for the first half of 2015, compared with $88 million and $187 million respectively, in 2014. |
Investors were not pleased with the numbers and marked the stock down to a 52 weeks low of $1.30 from which it has made some recovery to $1.50 where it is now trading on the junior market of the Jamaica Stock Exchange.
“For the first half of the year, gross written premium grew to $3.8 billion, an increase of 10 percent over the same period last year despite a sharp contraction in property rates, operating costs also increased by 8 percent in line with our expectations”, management said in their report accompanying the results.
The report when on to state, “Nevertheless, claims charges saw a significant increase by 30 percent to $413 million from $316 and from $169 million for the June 2014 quarter to $228 million in 2015. This sharp increase in claims negatively impacted both our loss ratio and combined ratio which worsened from 86 percent (2014) to 106 percent for comparable periods, respectively”.
The company reported an underwriting loss of $59 million for the half year versus a surplus of $69 million in 2014 and for the Jun e quarter, a loss of $45.6 million compared to a surplus of $20 million.
Investment| Investments delivered reduced income for the first half of 2015 with $94 million earned, below the $125 million generated in 2014 and for the June quarter $50 million versus $68 million in 2014.
“Over short periods of time, our loss ratios may experience significant volatility. Nevertheless, we remain confident that the consistent application of General Accident’s standards and practices will continue to produce underwriting profits over the long-term. As a result, we expect our performance in the second half of the year to improve significantly” Paul Scott, Chairman and Sharon Donaldson, Managing Director reported to shareholders.
Looking forward, investment income could be under threat with lower inflation and interest rates locally and less likelihood of robust gain in the forex market. It will take good management of the various resources to grow income and profits going forward beyond 2015.
Earnings per share for the six months, came out at just 3 cents, down from 18 cents last year.