The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Colina Holdings (Bahamas) has become the first BISX-listed company to issue a 2020 profits warning due to the COVID-19 pandemic’s impact.

The parent of Colina Insurance Company, the life and health underwriter, told shareholders in footnotes to its 2019 annual financial statements that it faced “a significant decrease in its original projected net income” due to the health and economic fall-out from the virus.

While no figures were disclosed, Colina Holdings (Bahamas) said the main impacts would be felt from reduced premium income as growing numbers of policyholders were likely to be unable to meet payment. It did not mention the government order that prevents terminated workers suffering policy lapses for the duration of the lockdown plus a 60-day period afterwards.

The insurance parent also warned that the value of some investment assets may be impaired and result in losses, but added that it had a sufficiently strong capital base and liquidity to meet all its obligations “even under significant stress”.

“Management has prepared an assessment of the potential impact on the group,” Colina Holdings (Bahamas) said, “and, after adjusting their projections from a very conservative viewpoint, determined that the group could experience a significant decrease in its original projected net income for 2020 as a direct result of the pandemic primarily due to possible decreases in premium income and potential impairment losses on certain assets.

“However, the directors and management believe that the group has a very strong capital base, sufficient liquidity and the ability to meet its obligations even under significant stress..... Management continues to monitor developments relating to the coronavirus pandemic and is co-ordinating its operational response based on existing business continuity plans, and on guidance from global and local health organisations, relevant governments and general pandemic response best practices.”

The profits warning comes after profits earned by Colina Holdings (Bahamas) equity shareholders rose 43 percent last year. The insurer said an improved claims experience saw its bottom line jump to $17.6m compared to $12.3m in 2018. Total assets on its balance sheet grew by 4.4 percent to $793.3m at December 31, 2019, compared to $759.9m in 2018, due to an increase in the value of its various investments.

Invested assets totalled $622.4m at 2019 year-end, comprising 78.5 percent of the total on Colina Holdings (Bahamas) balance sheet. The insurer added that its focus on high-quality assets has resulted in an improvement in net investment income, with returns totalling $38.9m compared to $26.6m in the prior year.

Colina Holdings (Bahamas) said it has extended its service offerings to digital and online capabilities, thereby improving access to its products and services. General and administrative expenses totaled $35.8m, equivalent to 19.6 percent of total revenues, as opposed to $33.4m and 19.8 percent, respectively, in 2018.

Total shareholders’ equity rose to $184.4m, an increase of $9.1m over the prior year. Ordinary shareholder equity grew to $141.9m, compared to $132.8m in 2018.