May 2004 Financial News

Grace taking stake in new St Lucia insurance company

May 20, 2004

Source: Jamaica Observer
http://www.jamaicaobserver.com/magazines/Business/html/20040518T230000-0500_60081_OBS_GRACE_TAKING_STAKE_IN_NEW_ST_LUCIA_INSURANCE_COMPANY.asp

Grace, Kennedy will partner with the holding company of the Bank of St Lucia to establish a new life and general insurance in that Eastern Caribbean island by mid-year, the Jamaican conglomerate confirmed yesterday.

The entity will start with a capital investment of EC$2.5 million ($55.5 million).

The new firm - EC Global Insurance - hopes to receive the go-ahead from St Lucia's regulators to begin writing business by July. It will sell both general and life insurance, which is allowed in that jurisdiction.

EC Global will be marketed as an associate of the Bank of St Lucia through five branches. Grace, which will initially have a 20 per cent stake in the parnetship, will bring to the venture; information technology support, assistance with staff training; and advice on risk management and underwriting and reinsurance.

"It fits in with Grace/Kennedy's strategic plans of expanding in the Caribbean, and also to expand its financial services divison," said Andrew Levy, the managing director of the group's insurance subsidiary, Jamaica International Insurance Company.

EC Global will begin operation with the general insurance side of the business and aims to capture EC$8 million, or just under 10 per cent, of St Lucia's EC$85 million general insurance market, within the first three years of operation. It will focus initially on motor vehicle and residential property insurance. The firm will seek another St Lucian partner with which to launch its life insurance operations, roughly a year later.

St. Lucia has a population of 160,000, and its total market premium for both the general and life segments in the insurance market is EC$130 million per year.
Levy said Grace has confidence in its St Lucia partner, East Caribbean Financial Holdings, Bank of St. Lucia's parent company.

"It is a well-established, professionally run financial organisation with a very good reputation in the St. Lucian market", he said. "They are seeking to expand in St Lucia and the broader Caribbean, which we are too. It is a good fit between like-minded organisations".

Levy did not give a time-line for the insurance companies' expansion in the region, but explained: "It will take a year or two to ensure that everything is running smoothly before we expand outside of St. Lucia".

Established in July, 2001, the Bank of St. Lucia is the merged entitiy of the former National Commercial Bank of St. Lucia and the St. Lucian Development Bank. The bank is St Lucia's largest commercial bank and its holding company - East Caribbean Financial Holdings (ECFH) - is listed on the EC Securities Exchange. Along with its commercial bank, ECFH has merchant banking, investment, and property managment divisions.

In a Grace's finance director Don Wehby said that the conglomerate had targeted 20 per cent real growth per annum from the financial services division's overseas operations.

During 2003, the division increased its contribution to group profits to 43.6 per cent from 39 per cent in the previous year. During the period, revenues jumped by $1.81 billion or 50.84 per cent to reach $5.37 billion. Profits also swelled by $302 million or 43.8 per cent, totalling $991.3 million.

Within the past eighteen months, the division has established First Global Insurance Agency - a wholly-owned general insurance company in the Turks & Caicos Islands; Signia Merchant Bank in Barbados - a partnership with Cave Shepphard and British Shipping & Trading; and Grace Kennedy Capital Services in Cayman - mutual fund managers. GKCS will launch five new mutual funds before year-end, two of which will be in partnership with Ray Chang's CI Funds.