The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Bahamian insurer yesterday said premium income from its contractor all-risk business had declined almost 50 per cent over the past four years, as it predicted “another flat year” for 2014 overall.

Timothy Ingraham, Summit Insurance Company’s president, told Tribune Business that the anaemic economy and increased competition from new entrants meant “the pie gets shared a little bit smaller” in the Bahamian general insurance market.

But despite the challenges associated with “finding growth in a market that is not growing”, Summit managed to enjoy a 51.2 per cent year-over-year comprehensive income increase to $2.563 million for 2013.

This compared to $1.696 million the year before, and the property and casualty insurer through which Insurance Management places much of its business also saw underwriting profits increase by 44.6 per cent or just over $1 million.

Much of this improvement, though, and that of the bottom line’s was driven by a more than $2 million, or 32.5 per cent, drop in net claims from $6.976 million in 2012 to $4.711 million last year.

Mr Ingraham told Tribune Business that 2012’s claims experience had been impacted by Hurricane Sandy-related payouts, which exceeded the sums paid to clients hit by the May 2013 floods.

He added that gross flood claims dealt with by Summit totalled just under $2 million, a figure that was exceeded by $2.3 million incurred in a fire-related claim.

Emphasising that the carrier’s 2013 performance was boosted by the absence of any hurricanes, Mr Ingraham said the absence of major construction projects had resulted in “absolute zero growth” in Summit’s contractor all-risk insurance business.

“In the last two years, the contractors’ all-risk business has drastically fallen off,” he told Tribune Business. “Most of our contractor clients have a lot of excess capacity.

“If you go back three to four years ago, we’ve seen close to a 50 per cent reduction in income from this line of business. As some of the larger projects have been completed, there’s not been a whole lot to replace them.”

This assessment was backed up by Bahamian Contractors Association (BCA) president Godfrey Forbes, who told this newspaper: “Right now we need to see some real activity in the industry for local Bahamians.

“We have some activity going on, but it seems to be more for foreign contractors. If we can see something happening for local contractors, that will be a plus.”

On a more positive note at Summit, Mr Ingraham said the underwriter’s 2013 bottom line was “right around what we projected.

“The [premium] revenue was down slightly, and we had expected it to be flat,” he added. “It was down a bit more than in the previous year, but overall we were not far off from where we anticipated being, given the economy and everything else.”

Summit celebrates its 20th year in business in 2014, but does so amid much uncertainty over how the Bahamian economy will perform against the backdrop of much angst over tax/fiscal reform.

And, with increased competition being provided by new Caribbean underwriter entrants, Summit and all its rivals are engaged in a market share battle for a sector that is not expanding.

“The pie gets shared a little smaller in some instances, and we’re trying to find growth in a market that is not growing,” Mr Ingraham told Tribune Business. “There’s not a lot of movement.

“Baha Mar is seen as the big thing on the horizon that will give us a significant economic boost, but it remains to be seen how much and over what timeframe.”

He expressed doubt that all the Baha Mar hotel properties will open on schedule by December 1, 2014, which would also delay the anticipated economic impact from the 5,000-plus jobs that will be created.

“Growth is going to be difficult to come by, so it’s going to be another flat year this year as far as I can tell,” Mr Ingraham said.

He disclosed that Summit had “given some consideration” to expanding into other Caribbean markets, given the limited growth opportunities in the Bahamas, but this was “not something we’re actively pursuing at the moment”.

“When you look at the markets in the Caribbean, they’re similar to us in that they’re saturated with insurance companies and rates are sliding,” Mr Ingraham told Tribune Business.

“In some instances, it’s worse than they are here. As a new player going into another market, you can try to acquire someone, but acquisitions have their own pitfalls. We’ll keep our eyes open for opportunities, but we’re not aggressively seeking any.”

The Summit chief said his carrier was less impacted than some rivals by the downward pressure on auto premium rates, as its market was property insurance.

Margins were also being squeezed by increased vehicle theft, and Mr Ingraham said: “It’s not a space we’re particularly aggressive in. We’re selective in that area.

“We’re not chasing premium growth in that line of business, as it can be a difficult proposition growing that line profitably.”