Guardian shows signs of recovery
Published:Friday | May 14, 2010 | 12:00 AM
Guardian HoldingS Limited's decision to sever ties with its loss-making European business is paying off for the company whose bottom line in the March quarter sported a robust TT$150 million in profit, net of write-offs from discontinued operations.
The company was hit by in-creased claims from regional and other catastrophes, on which it paid out TT$50 million for the Chilean earthquake and European wind-storm - both of which contributed to the 24 per cent spike in benefits and claims payout of TT$740.6 million in the quarter, up from TT$599 million in the comparative year-prior period.
The company also made a TT$20-million investment in Fatum, its Dutch Antillean subsidiary, for "reserve strengthening", which Guardian Chairman Arthur Lok Jack explained was "a one-time occurrence related to bringing a new computerised software system online".
Those expenses cut Guardian's operating profit to TT$88 million, or about half last year's quarterly out-turn of TT$168 million.
But the Jeffrey Mack-run insurance group, though its Q1 investment income was marginally lower at TT$223 million, compared to TT$234 million in the prior year, delivered fair value gains (from the company's restructured portfolio) of TT$145 million, an outcome that more than doubled 2009's full-year gains of TT$57 million.
The gain positioned the company to grow net profit eightfold, from the restated TT$18.7 million in the March 2009 quarter - amended to reflect a TT$14-million write-off of discontinued operations.
Last year, Guardian wrote off a total TT$1.19 billion largelyfrom its loss-making Zenith UK operation, on which it closed a sale deal earlier this year. The terms were not disclosed.
Guardian made what appears to be the final write-off of TT$4 million in the review quarter resulting from the discontinued operations.
"All in all, the quarter was very satisfying," said Lok Jack in a statement to shareholders.
"We legally transferred ownership of Zenith in February, and without that drag on our earnings, we were able to deliver stellar results."
improved revenue
Earnings per share on continuing operations rose from 12 cents to 72 cents, delivered from improved revenue and cuts in the cost of writing new business.
Net revenue rose from TT$851 million to TT$971 million.
"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," said Lok Jack.
"Guardian's core business segment of life, health and pension, Caribbean property and casualty and asset management all performed well in the quarter, exceeding budget and last year's first-quarter results."
The life, health and pension segment grew profit sixfold to TT$104.5 million net of taxes; Caribbean property and casualty delivered TT$34.8 million, while the asset-management business made TT$67.7 million after tax.
In three months, the company has also managed to move its net cash into black, at TT$144 million, from negative TT$246 million at December 2009.
At the end of March, Guardian's total assets stood at TT$22 billion, inclusive of segregated funds of TT$1.7 billion.
The company's investment subsidiary Guardian Asset Management Limited oversees a portfolio of TT$1.4 billion, which Lok Jack said reflected 17 per cent growth in the first quarter.