May 2010 Financial News

Guardian Holdings posts stellar profits

May 14, 2010

AFTER shedding loss-making entity Zenith Insurance Company at the end of last year, Trinidadian insurance conglomerate Guardian Holdings Limited (GHL) rebounded with stellar first-quarter results of 484 per cent increase in net profit over the comparative period last year.

Chairman of Guardian, Arthur Lok Jack said in a statement that "all in all, the quarter was very satisfying". "We legally transferred ownership of Zenith in February and, without that drag on our earnings, we were able to deliver stellar results which translated to earnings per share on continuing operations of TT$0.72 as compared to TT$0.12," he said.

Before the sale of the entity, GHL was making losses in the hundreds of millions. At the end of December last year, the entity made a loss of TT$821 million. "The frustrating part of this result is that it masks the strong earnings power of the rest of the businesses," Lok Jack said following those results.

However, with a net profit of TT$150.3 million ($154.3 million) for the quarter, TT$141.5 million ($145.5 million) of which is attributable to shareholders, the owners of GHL can bask in the glow of a solid rebound up from the TT$18.7 million net profit for the comparative period last year.

"All our core businesses are performing very well, continuing what is now a solid trend despite the fact that our regional economies have yet to fully recover from the effects of the global financial crisis," Lok Jack said.

GHL's core business continues to contribute significantly to operating results. Life Health and Pensions (LHP) accounted for the majority of total segment revenues for the group. Caribbean Property and Casualty (CPC) and Asset Management business lines also performed well, "exceeding budget and exceeding last year's first quarter results", according to Lok Jack, even though 'extraordinary' occurrences stalled profit growth in its property and casualty segment.

LHP recorded operating profit of TT$32.4 million, up from TT$37.7 million compared to last year's quarterly results. Asset Management increased operating profits to TT$89 million up from a loss position of TT$553,000 quarter on quarter, while operating profit from CPC was TT$28.7 million. This reflected a 45 per cent reduction over the corresponding period in 2009. Lok Jack noted that the quarter's operating results for its International Property and Casualty (IPC) division, of which the CPC is a part, was affected by the "two extraordinary and non-recurring events".

"First, TT$50 million of catastrophe losses related to the Chilean earthquake and the European windstorm. Both events were written through our LLoyds business and our Bermudian reinsurer, Guardian Re. Secondly, TT$20 million in life reserve strengthening which we took in our Dutch Antillean insurer, Fatum," Lok Jack explained.

GHL's cash flows from operations nonetheless increased significantly quarter on-quarter from a loss of TT$392 million to a profit position of TT$144.2 million in 2010, reflecting solid operating performance.


Source:
ALICIA ROACHE
roachea@jamaicaobserver.com
Jamaica Observer
Friday, May 14, 2010

http://www.jamaicaobserver.com/business/Guardian-Holdings-posts-stellar-profits_7612158