The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamas First yesterday revealed it overturned a near-$1m loss for the first nine months of 2021 with a strong finish that left annual profits just 10 percent down on prior year levels.

Patrick Ward, the BISX-listed insurer’s president and chief executive, told Tribune Business that “accelerated growth” across all its main business lines during the three months to end-December helped drive $5.763m in total comprehensive income for that period.

That represented a near-$7.3m year-over-year turnaround from the year before period’s $1.536m loss, and also reversed the $996,173 loss for the first nine months of 2021 into an annual profit of $4.766m. The latter figure is some 10.1 percent below 2020’s $5.306m bottom line.

Boosted by the continued economic revival in both The Bahamas and Cayman Islands, Mr Ward said the number of vehicles insured by Bahamas First had returned to “levels that are getting close to pre-pandemic” after suffering what he termed as a “double digit” decline at COVID-19’s peak.

With Bahamas First also getting to grips with the “escalating” health insurance claims in Cayman that had impacted its performance through the first nine months of 2021, he added that the fourth quarter turnaround was driven by a combination of factors.

“We saw a trend in the growth of our main lines of business- property, motor and even in the health segment to some extent - that accelerated in the fourth quarter, so the additional growth in premium provided some extra bottom line benefits,” Mr Ward told this newspaper.

“Because a significant portion of the growth occurred in the 2021 second half, we will not see the full benefit of that until 2022 because the premiums are earned over the year-long life of the property [insurance] contract.

“We arrested some of the issues with the health account and saw the benefits of that in the last quarter of 2021, and as a consequence of that saw an improvement in the overall loss ratio of the health business. And the performance of the property and casualty segment for The Bahamas and Cayman was very strong because of excellent claims results.”

Mr Ward said Bahamas First also saw some reversal of the “unrealised loss” on the value of its Commonwealth Bank equity stake in the 2021 fourth quarter, the worth of its shareholding rising by $981,589 over those three months. As a result, the total unrealised loss for the 2021 full-year was narrowed to $1.742m compared to $2.881m the year before.

Meanwhile, Bahamas First’s total underwriting expenses soared by almost $8m or 13.3 percent year-over-year, jumping from $57.477m to $65.129m. Mr Ward said the increase reflected “the cost of additional reinsurance we had to acquire because of the increase in property exposure, and the claims experience on the health account probably drove the underwriting expenses”.

He declined to provide details on how Bahamas First had stemmed the bleeding from its Cayman health business, describing them as “significant proprietary information at this point”. However, the health segment with its $964,602 net loss was primarily responsible for dragging down the BISX-listed insurer’s overall results.

For The Bahamas and Cayman property and casualty underwriting businesses produced profits for the 2021 full-year of $4.795m and $1.79m, respectively. And Mr Ward said the benefits from the expansion of its insurance portfolio will be fully felt in 2022.

“We saw some of the motor portfolio return to levels that are getting close to pre-pandemic in terms of number of vehicles insured,” he told Tribune Business. “Second, the rate increases on the property book for both The Bahamas and Cayman continued in 2021, so we saw the benefit of that as well.”

The Bahamas First chief added that the carrier’s motor insurance business had suffered a “double digit reduction” due to the pandemic’s impact, with persons using the Government’s relaxation of vehicle licensing to delay insuring their vehicles. Some, especially those on furlough, may not have opted to renew at all.

“If you look at 2019 compared to 2020 it’s pretty clear there was a big drop-off in the number of vehicles insured,” Mr Ward said. In his message to shareholders, he added that the continued economic re-opening in The Bahamas and Cayman Islands had enabled Bahamas First to expand its business during the final quarter of 2021.

“We achieved growth in almost every line of business in both jurisdictions, and we were particularly pleased to see meaningful growth in our main lines of property, motor and health. This outcome was the result of a combination of rate increases, strong retention and new business acquisition. We will see the full benefit of this robust growth in subsequent quarters during 2022,” Mr Ward said.

“In previous quarterly reports for 2021, we highlighted the fact that the performance of the property and casualty segment of our business was trending ahead of 2020, and this certainly continued into the last quarter of the year. As a consequence of this, we benefited from increased profit commissions in the 2021 fourth quarter.

As a result of targeted action to improve the performance of the health segment, we were able to achieve a meaningful reduction in claims during the 2021 fourth quarter, resulting in a lowering of the full year’s loss ratio for this line of business. We expect to see further improvements in subsequent periods.”

Mr Ward added that Bahamas First was continuing to deal with 147 claims from the Cayman Islands relating to Tropical Storm Grace, but added that the $2m total gross sum involved was lower than initial loss estimates of $2.3m.

With the fourth quarter restoring Bahamas First to 2021 full-year profitability, Mr Ward said the insurer’s Board had approved a final $0.04 per share dividend. This will double the year’s capital return to shareholders to $2.9m or $0.08 per share.

“Our efforts to develop a digital customer service platform for the group continued in the fourth quarter, and we were able to launch the First Online Customer Portal at the beginning of January 2022 in The Bahamas. The launch for the Cayman market took place in February 2022,” the Bahamas First chief added.

“Navigating through the various challenges of 2021 has been both a difficult and rewarding process, as we were able to achieve many important milestones.”