The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamas First yesterday blamed a decline in the value of its investment holdings and a $4.1m year-over-year reversal on its Cayman health insurance portfolio for a $1.344m first quarter loss.

Patrick Ward, the BISX-listed insurer’s group president and chief executive, told shareholders that the adverse claims experience on its health portfolio stemmed from a “pent-up demand” for healthcare services after that Caribbean territory removed COVID-19 related restrictions.

He branded this and the “unrealised” $1.9m loss on the value of its investment portfolio, driven by a loss of equal amount on its Commonwealth Bank holdings, as “inescapable realities” that Bahamas First had to face during the three months to end-March 2021. Its total comprehensive loss increased by 50.8 percent year-over-year compared to the prior year’s $891,281.

“The first quarter 2021 results of the group are very much in line with our expectations, apart from the notable exception of investment earnings and the underperformance of the health account in Cayman,” Mr Ward told investors.

“The property and casualty claims experience across both territories was very good, showing double-digit positive variances against the prior year. Unfortunately, the adverse claims variance on the health portfolio in Cayman almost entirely erased the benefit of the property and casualty segment for the 2021 first quarter.

“These inescapable realities have impacted the group’s results, as we reported net underwriting income of $6.2m in the first quarter 2021, a decrease of 13.6 percent when compared to $7.2m in the first quarter of 2020,” he added. 

“Similarly, we have reported a comprehensive loss attributable to owners of the group for the three months ended March 31, 2021 of $1.3m, compared to a loss $0.9m for the same period in 2020.”

Bahamas First suffered a $421,994 loss on its Cayman health portfolio in the 2021 first quarter compared to a $3.719m profit in the same period in 2020, and Mr Ward added: “The main factors impacting the health account are related to the increased frequency and severity of claims, brought on by the pent-up demand for services which was unleashed as restrictions on access were removed.

“The issues that led to the underperformance of the health account in Cayman are multi-faceted, but in each case a credible response can be mounted to either contain, mitigate or eliminate the negatives associated with each point. The early signs for the period post-quarter are already encouraging.”

As to Bahamas First’s investment holdings, the group chief executive said: “Cayman’s investment portfolio registered an unrealised loss of $0.1m which, when combined with the unrealised loss of $1.9m in our Commonwealth Bank equity investment, has resulted in an overall disappointing investment result for the quarter.

“Comparatively, there was a loss reported on the same equity investment of $1.4m in the 2020 first quarter. Expenses decreased significantly by 10.4 percent in the 2021 first quarter compared to the first quarter of 2020. Our reported expenses are down across the organisation, with the most material savings relating to bank charges and bad debt expense.”

Looking ahead, Mr Ward said the Cayman Islands were forecast to “outpace” what he described as “the marginal growth” the Bahamian economy is likely to experience in 2021. “The 2021 Atlantic hurricane season is currently projected to have an above-average level of activity – somewhere in the range of 25 percent to 30 percent more than the long run average,” he added.

“The group is preparing to launch a series of digital offerings in the coming months that we are confident will simplify the process of purchasing our products and provide our customers more flexible, diverse options for interacting with us.

“The new NUA Insurance Agents and Brokers branch in Abaco is now fully operational and we have recently launched our new and improved Carmichael Road branch, with more space and easier parking. These investments highlight our commitment to improve the quality of service to our customers.”

Mr Ward said Bahamas First’s share price was $2.90 at the 2021 first quarter close, a figure that was almost double its $1.47 “book value”.