Company not exposed like CLICO, Stanford – Chairman
By Leonard Gildarie
New regulations limiting overseas investments for local insurance companies are among the major challenges facing the industry, according to Demerara Mutual.
The comments came yesterday as the insurance company announced a $338M after tax profit in 2008 with total revenues at $1.3B
The profits had dropped almost $80M from 2007 but according to Company Chairman, Richard Fields, this was because in 2007 there was a profitable land sale in Grenada, where there is a branch.
At the insurance company’s 117th Annual General Meeting (AGM) yesterday at the Robb Street office, Fields also assured that the company is strong with assets to support policy liabilities in the four territories it operates.
Demerara Mutual’s main sources of income which were premiums and investments, showed increases of 1.8 percent and 30 percent respectively in 2008 with claims paid out at $192M, less than the $214M in 2007.
“The premium and investment income generated in each of our operations in Grenada, St Lucia and St Vincent was also satisfactory, exceeding the projections as well as the actual 2007 income,” the Chairman told the gathering comprising of policy holders, staffers and Board of Directors.
The company subsidiary, Demerara Fire and General Insurance, however, only declared a small profit of $379,332 last year but according to Fields, in his Chairman’s Report, it is expected that the fortunes would improve significantly by the end of this year.
Of the four territories, Guyana lead with 597 policy sales with Top Producer being Branch Manager, Charles Clarke, whose branch alone sold 580. Clarke himself sold 142 life policies in 2008 and has been the lead performer for the company for the past 12 years.
New strategies to keep customers have seen that 88.4 percent of all policies sold in 2008 are still in force.
For Demerara Mutual, the development and maintenance of its pieces of real estate continued to be a priority in terms of investments.
However, the Chairman stressed that investments were protected by not participating in high risks ventures which could become detrimental to the company’s financial position if they fail.
“Achieving this was a major challenge especially because the company had to adhere to new regulatory restrictions in all of the territories where we operate. One of these restrictions places a cap (or a limit) on overseas investments. The difficulty is that in Guyana, local investment opportunities are not widely available.”
According to Fields, Demerara Mutual achieved the positive results in 2008, even in the midst of the global economic challenges.
“We have faced and are still grappling with serious economic turmoil and contraction of global economic growth. At the beginning of 2008, despite our hopes that the Caribbean would not be badly affected, the region did not escape the pains of this economic downturn.”
However, the Chairman was upbeat that new economic measures and regulations being implemented across the region should bring early economic recovery.
“I must say here that this global financial crisis, which has affected economies all over the world, has not done much harm to Demerara Mutual’s operations and our asset base. This company was not exposed to those institutions that went under, for example CLICO, the Stanford Group, and all of the giant companies in the United States which failed as a result of the economic recession.”
Several employees were honoured for long service. Clifford Reis, Hugh George and Jean Renwick were all returned as directors while Deloitte and Touche were retained as auditors.
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