Nov 2010 Financial News

GHL nets $211 million

Nov 16, 2010

Shareholders’ “unanimous approval” of Guardian Holdings Ltd’s (GHL) transaction with the International Finance Corporation (IFC) investing (US)$25 million into the common equity of GHL has led to the company booking a net realised gain of $28 million. Chairman Arthur Lok Jack stated that the transaction, which closed on September 2, also saw IFC converting its (US)$0 million subordinated debt into common equity. “All of the new equity was issued at a substantial premium above GHL’s market price and reflects the confidence the IFC has in the future growth of our Group,” Lok Jack stated.

“Consequent to this transaction, 29,695,313 common shares were issued to the IFC. This had positive effects both on our income statement and on our balance sheet. “The issuance of new common shares at a premium boosted our profits as we booked a net realised gain of $28 million. On the balance sheet side, shareholders’ equity was increased by $397 million. “Together with the reduction in debt, this lowered both our debt to total capital ratio, from 43 per cent to 34 per cent, and our debt to equity ratio from 75 per cent to 51 per cent,” Lok Jack stated in third quarter results.

He said that GHL’s year-to-date after-tax profits amounted to $211 million, compared with a loss of $663 million in the comparable period in 2009. The group was forced to take a sizeable write-down as a result of the sale of Zenith Insurance, which the group recorded in the third quarter of 2009. Lok Jack stated that upon disposal of the Jamaican asset management business, the group took a non-cash accounting charge of $65 million. Lok Jack said that GHL’s operating profits before fair value movements amounted to $293 million, down $28 million from last year.

“The decrease in operating profits was driven solely from our international property and casualty business, which produced an operating loss of $89 million. “This loss arose primarily from the Chilean earthquake and the need to strengthen our loss reserves in our Lloyds of London motor business. “The board of directors of this group has taken the decision to cease writing this line of business,” he said. Regarding tropical storm Tomas, Lok Jack said while it affected many islands in the Caribbean, fortunately, the storm packed more rain than wind, and GHL does not expect losses from this event to have a “material effect” on its year end profits.


Source:
Trinidad Guardian
Tuesday November 16, 2010

http://guardian.co.tt/business/business/2010/11/16/ghl-nets-211-million