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GHL profit declines in first quarter

Published: 
Monday, June 4, 2018

For the three months ending March 31, Guardian Holdings Limited recorded group profit of $72 million, down from $18 million or a 20 per cent decline compared to the corresponding period last year ($90 million).

Chairman Henry Peter Ganteaume said the disappointing result was due to Net fair value losses of $37 million, as opposed to gains of $63 million in the prior period, an overall swing of $100 million. He explained: “These movements substantially arose from our equity portfolios and reflect intrinsic volatility in equity markets. The group is not distracted by short-term movements in equity prices, as we remain confident that superior long-term returns will be derived from this investment class.”

GHL’s net income from insurance underwriting activities increased by $80 million or 78 per cent to $183 million, as organic growth initiatives continued to be successful with gross and net written premiums increasing year-over-year by $275 million (17 per cent) and $165 million (15 per cent) respectively. Net income from investing activities declined by $90 million, from $279 million to $189 million, owing to the swing in Net fair value gains and losses.

“For the period ended 31 March 2018, the Group recognised an impairment gain of $5 million. We take the opportunity to note that the expected credit loss model will result in the earlier recognition of possible impairment losses, which must be recorded at the time that a financial asset is initially recognized.

“The assessment of an instrument’s credit risk may change period by period, as a result of, inter alia, purely external considerations for example, sovereign ratings, with a consequent impact on the consolidated statement of income,” the chairman said.

He also noted an unusually high tax charge for the quarter which he said, was “the consequence of the rules governing the taxability of unrealised equity gains and losses versus underwriting income in most jurisdictions. We do not expect this to have a material effect on after tax results in future quarters.”

Ganteaume said GHL’s core insurance performance reflects the success of its many initiatives and directors are satisfied that it is “progressing along its strategic path.”

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