Fire, Sandy and motor claims squeeze General Accident
HURRICANE Sandy and a fire that damaged a large commercial property helped squeeze General Accident Insurance's underwriting profit last year.
The insurance company saw a 28 per cent increase in its claims expense for the year ended December 31.
It was $540.7 million during the period under review, or $120 million more than the same period in 2011.
An increase in the frequency and severity of its motor vehicle claims also pushed up claims expenses.
The company cited a trend in which more Jamaicans are suing for personal insurance.
"In fact, our combined ratio worsened from 88 per cent in 2011 to 94 per cent in 2012," the statement added.
Combined ratio is the proportion of net premiums earned that is represented by the sum of claims and management expenses.
Underwriting profit, which is the income generated from the company's core business of underwriting insurance, came to $118 million in 2012, or 27 per cent less than the year before.
Gross written premiums grew to $3.7 billion for the year ending December 31, an increase of three per cent.
This was as a result of General Accident's heightened presence in the market, said Lochinvar Lungren, financial controller.
"We strengthened our alliance with our brokers and had promotions," he said.
Net premiums earned on the other hand grew by 14 per cent to $932 million as its motor vehicle portfolio outpaced growth in our other lines of business, the company said.
The company, which listed on the Jamaica Junior Stock Exchange last year has a portfolio mix of seven classes, with property and motor being the primary ones, according to Lungren.
Property constitutes 62 per cent, while motor is 22 per cent, he said. Other classes include marine, liability, and burglary.
"Typically, we retain a greater share of premiums (and risk) in our motor business as compared to our commercial property, homeowners and liability businesses," General Accident said.
The insurance business has its risk, but Lungren said much has been done to mitigate those expenses.
But, it posted $285 million in net profit during the period under review, 29 per cent more than the same period in the previous year, when a one-off sale of assets in 2011 was excluded.
Though its statement indicates a net profit of $1.28 billion for the comparative period, that amount included over $1.06 billion of gains from the sale of long-term equity investments and real estate that occurred before its initial public offering (IPO), the company said.