The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamas First’s chief executive yesterday said it “definitely has no intention” of entering the local health insurance market, despite a subsidiary obtaining ‘exclusive rights’ to refer Bahamian patients to a Cayman hospital.

Patrick Ward told Tribune Business that the property and casualty insurer wanted to work with Bahamian health insurers and service providers to exploit its subsidiary’s agreement with Health City Cayman Islands (HCCI).

He added that Bahamas First was “very keen to develop” the deal, involving its BFH Services (Cayman) affiliate, given the potential boost to its growing medical portfolio in that Caribbean nation.

While unable to projections on the likely financial benefits to Bahamas First, Mr Ward said the group intended to promote HCCI and the Cayman Islands as “an alternative” destination for Bahamians seeking medical care abroad.

“It’s a developing scenario, and one we are very keen to develop in connection with local business partners, meaning our counterparts in the health insurance market and health services providers in the Bahamas,” Mr Ward told Tribune Business of the HCCI deal.

“Our intention is to work in tandem with health insurers and providers here, rather than enter into competition with them... Our intention is not to get into the health insurance market in the Bahamas as a carrier. That’s definitely not our intention.”

Asked about the financial benefits for Bahamas First’s Cayman business, Mr Ward replied: “It’s a little bit difficult to say precisely, but there is clearly a certain level of demand for medical services outside the Bahamas that’s already extensive.

“Our intention is to provide an alternative outside the Bahamas for persons to look at. We want to make sure these benefits are known, so people look at this alternative as a viable option.”

Bahamas First inherited a health insurance portfolio when it entered the Cayman Islands market via acquisition several years ago, and its 2016 expansion efforts focused largely on expanding this business line.

Bahamas First’s 2016 annual report revealed that Cayman First, its underwriting affiliate on the island, acquired a health insurance portfolio generating $1.2 million in annual premiums last February.

And, following the model established by the group in the Bahamas, its wholly-owned BFH International subsidiary acquired a Cayman-based intermediary, Brac Insurance Associates, last October.

Brac’s $3.8 million in annual premiums will continue to be underwritten by Cayman First, and the annual report said the purchase allows “for the continuation of an important revenue stream, while adding value to our bottom line, both now and in the future”.

The HCCI agreement is detailed in Bahamas First’s just-released 2016 annual report, which revealed: “During 2016, our business development initiatives in Cayman, resulted in the execution of an Agency Agreement with Health City Cayman Islands (HCCI).

“To facilitate this transaction, the group established a separate subsidiary entity, BFH Services (Cayman), which is wholly-owned by BFH International, to carry out the duties and obligations as detailed in the executed contract. Under the terms of the agreement, BFH Services (Cayman) will have the exclusive right to refer patients to HCCI from the Bahamian market.”

HCCI is a prominent hospital facility that has helped to position the Cayman Islands as a medical tourism destination - a market where the Bahamas is also trying to make a name for itself.

The 104-bed facility, which has Joint Commission International (JCI) accreditation, is said to have treated more than 14,000 patients from the Caribbean, Latin America, US and Canada since opening in early 2014.

Despite the increased health insurance focus in the Cayman Islands, Bahamas First has yet to translate this model to the Bahamas.

While potential synergies may exist, the competition posed by more established life and health underwriters is likely deterring such a move. The uncertainty created by the proposed National Health Insurance (NHI) scheme is likely to be another factor.

The Cayman Islands business is also providing important geographical diversification for Bahamas First, which in 2016 worked to minimise Hurricane Matthew’s impact on the group’s financial performance, notwithstanding the devastation in this nation.

Bahamas First’s Cayman medical portfolio generated $736,673 in profits for the group in 2016, based on net underwriting income of $3.838 million, although the bottom line figure represented a 56.5 per cent drop on the prior year’s $1.692 million.

“The gross premiums for the health account exceeded both our budget and the prior year result, finishing at $24.1 million in 2016,” Bahamas First’s annual report said of the health portfolio.

“The loss ratio for the year was 76.9 per cent, which was elevated from the prior year result of 71.5 per cent, but nevertheless sufficient to provide positive returns for yet another year.

“Commencing in the last quarter of 2016, a number of specific underwriting and pricing actions were initiated in order to contain the loss ratio at or below 75 per cent.”

Mr Ward, meanwhile, confirmed that Bahamas First remained on the look-out for agent/broker acquisition opportunities in both this nation and the Cayman Islands, but only if they were “the right fit”.

“We’ll take a very serious look at opportunities to make sure they fit the profile we’re after,” Mr Ward told Tribune Business.

“There are potential opportunities that don’t fit the profile, and we will not take them any further, but if there are some that might fit the bill, we’ll take those further.”