The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

FamGuard Corporation has unveiled a flat year-over-year net income for the 2012 third quarter and first nine months, with a 57.6 per cent drop in annuity deposits offset by a $4.5 million decline in net poliyholder benefits.

The BISX-listed holding company for Family Guardian, the life and health insurer, saw a slight 1.2 per cent increase in its net income for the nine months to end-September 2012, rising from $3.057 million to $3.0923 million. Earnings per share (EPS) were identical year-over-year at $0.31.

In what was a fairly unremarkable results statement, the major changes were in the annuity deposit and policyholder benefits lines. The former fell by 57.6 per cent, with annuity deposits for the first nine months dropping year-over-year from $11.598 million to $4.917 million.

The decline reflects just how sensitive annuities are to interest rate changes, the fall having been sparked through May 2011’s 75 basis point cut to the Bahamian Prime rate. As a result, FamGuard’s total income dropped by 5.6 per cent for the first nine months, falling from $83.442 million in 2011 to $78.756 million this year.

But this was counterbalanced by the drop in policyholder benefit payouts, amid signs that revised premium pricing to better align with risk in Family Guardian’s BahamaHealth portfolio is continuing to pay dividends.

Gross policyholder benefits fell 8.8 per cent year-over-year, from $47.233 million to $41.561 million, while net policyholder payouts fell 8.1 per cent. They declined from $56.171 million in 2011 to $51.631 million this time around.

In his third quarter message to shareholders, Norbert Boissiere, FamGuard’s chairman, said: “We continue to record a lower level of growth in annuity deposits, reflecting the interest rate sensitivity of our annuitants. Year-to-date annuity deposits are $6.7 million or 57.6 per cent below the level achieved as at September 30, 2011.

“Through the past three quarters we have seen steady improvements in our policyholders’ benefits payments, reflecting the impact of the enhancements made in our BahamaHealth portfolio.

“As at September 30, 2012, we recorded a reduction in net policyholder benefits incurred of $4.5 million or 8.1 per cent over the nine months ended September 2011.”

Describing FamGuard’s net income performance as “stable”, with the bottom line up $35,000 for the first nine months, Mr Boissiere added: “For the nine months ended September 30, 2012, net premium income grew by $2.2 million or 3.5 per cent over third quarter 2011, reflecting gains in all product lines.

“Total assets grew steadily during the year, increasing by $12 million or 5.4 per cent over year-end 2011. Mortgages currently represent 35 per cent of our investment assets, with non-performing loans well below industry levels.”