Profit climbed for Guardian Holdings for 2014, resulting in a profit after tax attributable to shareholders of $401 million, an increase from only $20 million in 2013.
Based on the improved results the company announced an increase in its dividend. The 2013 profit was negatively affected by a write down of $457 million in the assets of Pointe Simon development. Consequently, earnings per share for 2014 are $1.73 as compared to 20 cents in 2013. Profit before the 2013 write down of Pointe Simon asset, increased by 14 percent to $481 million. Net income before operating expenses was flat at $1.469 billion. Operating cost fell slightly to $905 million and finance cost rose moderately to $130 million. Net Income from Insurance Underwriting Activities fell from $581 million in 2013 to $546 million in 2014.
For the December quarter, profit before tax rose 49 percent from lower underwriting profit, higher investment and other income and a 13 percent reduction in operating cost.
“The drop in net Income from Insurance Underwriting Activities is as a result of adverse claims experience in our health and general insurance business as well as actuarial strengthening of reserves in some lines. It should be noted that neither of these factors is structural and we expect that they would have no material impact on performance going forward as they resulted from normal statistical volatility in our business the group’s” management said in a statement accompanying the results.
Our portfolio of financial service companies diversified across lines of insurance and geographies together with our diversified investment portfolio has withstood operating volatility and provided strong overall performance, generating a Return on Equity of 13.7 percent.
Looking forward, investment income should benefit from interest rates that are on the increase in Trinidad and should be up in the USA before long. Operating cost should decline for the year based on the out turn for the December quarter that should carry over into 2015. The company states that it has moved away from investment type insurance to the traditional type cover and that the shift will generate higher margins for them.
“Confident in the fact that our negative legacy issues which have plagued us over recent years have been resolved, and given our solid business franchises and significant market positions throughout the region, your board of directors, after many years of flat dividend payment, has decided to increase the total dividend per share by 9.6 percent to fifty-seven (57) cents. Consequently, further to the interim dividend of seventeen (17) cents, the final dividend will be forty (40) cents and will be paid to shareholders on record on March 25, 2015” Management concluded.
The stock at $13.50 on the Trinidad Stock exchange is undervalued and ought to be priced higher. IC Insider’s Buy Rating remains in place with earnings likely to reach $2.50 per share in 2015.