The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A 149 percent increase in losses incurred by its Cayman health business dropped Bahamas First to $2.293m in comprehensive ‘red ink’ for the 2024 first quarter despite improvements elsewhere.

The BISX-listed property and casualty insurer, unveiling its figures for the three months to end-March 2024, revealed that losses produced by its troubled Cayman health portfolio more than doubled year-over-year from $448,816 to $1.119m.

This more than offset improved performances from the carrier’s core property and casualty businesses in both The Bahamas and the Cayman Islands, as each reduced their losses year-over-year. The Bahamas was not far off halving its first quarter loss, reducing this from $1.344m in 2023 to $739,732, while the Cayman property and casualty business lowered its ‘red ink’ from $356,575 to $265,552.

Alison Treco, Bahamas First’s executive chair, said the company’s core insurance underwriting business produced a loss that matched, or was flat, with the prior year’s first quarter loss at $2.124m. However, a more than $350,000 negative swing on its investment income increased total comprehensive losses for the 2024 first quarter compared to the prior year.

Total comprehensive losses thus rose by 16.7 percent or just over $300,000 year-over-year to $2.293m as opposed to $1.965m the year-before. “For the three months ended March 31, 2024, the group reported a loss of $2.1m, which was comparable to the performance in the 2023 first quarter,” Ms Treco wrote.

“However, due to the change from positive other comprehensive income in the 2023 first quarter to negative in the 2024 first quarter, the overall total comprehensive loss increased by 16.7 percent over the 2023 first quarter. The change in other comprehensive income was due to the decline in market value of our global bond portfolio and the decline in price of an equity security.”

As for the Cayman health business, Ms Treco wrote: “In the 2024 first quarter, Cayman First Insurance Company’s health premiums continued to decline but the rate of decline was less than anticipated. The insurance service result declined from the first quarter 2023 to the first quarter 2024 from a loss of $0.4m to $1.1m.

“While claims declined from prior year at a similar rate as the premiums, the operational costs have seen an increase to support ongoing remediation efforts. The property and casualty segments for Cayman and The Bahamas combined have shown a reduction in the loss over the 2023 first quarter of $0.7m or 40.9 percent.

“This improvement emanated from the insurance service result, specifically within The Bahamas property and casualty segment, which represented $0.6m of the change. The key driver for this was an improvement in insurance service expense which was mostly impacted by the improvement in the motor claims loss ratio. All other components of the property and casualty insurance service result have remained relatively consistent with the prior year.”

Bahamas First also confirmed that it has appointed Michele Fields to its Board of Directors while Judith Whitehead has stepped down as a director after 19 years. Ms Treco, in her report on the insurer’s full-year 2023 results, pledged to make “strategic changes” after profits slumped by 63.1 percent due primarily to the “ongoing issues” with the Cayman health business.

She signalled that there are several issues she is seeking to put right in her shareholder report on the unaudited results for the 12 months to end-December 2023. “As executive chair, I am currently overseeing the group’s operations as we look to make some strategic changes aimed at improving operational efficiency and, ultimately, the overall performance of the group,” Ms Treco wrote.

“The overall performance for the group for 2023 was a comprehensive income of $6m, which was 14.9 percent ($1m) below the prior year. The group’s profit for the year was $1.6m, down 63.1 percent from the prior year’s result of $4.4m.

“The profit for the property and casualty segments for the year ended December 31, 2023, was $6.5m, a 4.5 percent increase from the prior year. Unfortunately, the group’s result was impacted by the ongoing issues with the health segment, which incurred a loss in 2023 of $4.9m compared to a loss in 2022 of $1.8m.”

Bahamas First’s Cayman subsidiary has been plagued with problems stemming from delays in processing claims as a result of introducing a new information technology (IT) system. Ms Treco conceded this had resulted in “a loss of business”, with the improvements and corrections made unlikely to be fully felt until Bahamas First’s 2025 financial year.