The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

J S Johnson yesterday revealed that a 170 percent spike in net claims incurred due to Hurricane Dorian has slashed its net income for the first nine months of 2019 by 26 percent.

The BISX-listed broker and agent, also unveiling its third quarter financial results for the period to end-September, said its bottom line had been negatively impacted by the $2.257m net loss suffered by its property and casualty insurance affiliate, Insurance Company of The Bahamas (ICB).

Alister McKellar, J S Johnson’s managing director, told shareholders that Hurricane Dorian had “seriously affected” its results. “Consolidated net income fell 26 percent as a direct result of Hurricane Dorian, despite total income rising some 13 percent,” he confirmed.

“The overwhelming factor being net claims incurred that increased 170 percent from $1.57m to $4.241m and impacted our underwriting segment, turning second quarter profit of $906,495 into third quarter cumulative loss of $2.257m.”

J S Johnson’s results provide the first insight into the impact Dorian-related claims payouts have had on individual Bahamian property and casualty insurers in terms of the net losses they have suffered. Previously, the only data revealed has been collective figures for the industry.

J S Johnson’s net income for the first nine months dropped to $3.11m from $4.197m year-over-year as the hit to ICB more than offset a strong performance from the brokerage and agency business. Its profits for the year to end-September were $5.367m compared to $4.217m in the prior year.

Elsewhere, Patrick Ward, Bahamas First’s president and chief executive, said the property and casualty underwriter was projecting around 2,000 claims from Hurricane Dorian. He added that home and auto insurance premiums were likely to rise “on the low end” by 15 percent, and 20 percent in the storm ravaged areas “at a minimum”.

“We are likely to see payouts in terms of the overall gross amounts at a level that will be higher than we’ve ever had before in the history of the company,” Mr Ward said. “We’re likely to have 2,000 claims or thereabouts at Bahamas First.”

While the claims volume does not represent a record for a carrier that first began writing business in 1983, Mr Ward said the severity of the damage - and sums being claimed - were the highest ever. He declined, though, to place a figure on this.

“One positive element is because the number of claims is not going to be significant relative to what we’ve seen in the past, we will probably be able to deal with the majority of them by year-end,” he added.

Mr Ward, though, warned that individual homeowners and businesses could see greater than 15-20 percent increases in their insurance premium rates because carriers and their reinsurers may introduce “some additional underwriting measures”.

“Companies are reassessing elements like distance from the sea, how much of a factor that plays in rates and deductible terms,” he added. “Persons need to be aware that some additional measures may be taken as to how those properties are treated going forward.”