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Just nine months in, General Accident Insurance Company Jamaica Limited’s earnings have already surged past the full-year results for all of 2024, performance that positioned the insurer for a strong year end close; but that was before Melissa.
Year to date, January to September, the company reported strong growth in revenue and profit of nearly $297 million. That’s up from $216 million in the comparative period last year and from $248 million over the entire fiscal year in 2024.
But CEO of General Accident Group Sharon Donaldson is now apprehensive about potential disruptions to “the continuation of the excellent run rate enjoyed for the past nine months”.
Hurricane Melissa wreaked massage damage on Jamaica as a Category 5 storm that passed through the island on October 28, and Donaldson is expecting claims to spike in its wake, including the motor segment, from which the general insurer earns most of its revenue. Of the $11.8 billion earned in insurance revenue last year, motor accounted for over half, or $6.6 billion.
“Cars covered in the water is catastrophe cover. While General Accident does not have a significant amount of exposed aggregate cover in the Black River area, we have a reasonable amount in the Montego Bay area, where we are expecting some fallout particularly in the motor claims, since almost every modern car has a digital dashboard,” Donaldson said in an interview with the Financial Gleaner.
However, as to where the company will end up at year-end is still up in the air, not only because of Melissa, but also the announcement late Wednesday that Genac has made an acquisition that will push its revenue to $32 billion annually. That deal is yet to be signed off on by regulators [see story on Page 3].
Genac is not the only general insurer in a field of around 11 operators bracing for fallout. However, pre-storm, insurance rating agency A.M. Best said that whereas economic losses are expected to be high, insurance losses for property are likely to be low. That’s because “Jamaica’s insurance penetration is low, less than 5 per cent, as only a small portion of property is insured on the island”, the agency’s Senior Director of Industry Research and Analytics, Sridhar Manyem, said.
Already, there are estimates from foreign sources that insured losses from the storm may be in the region of $680 billion. However, up to Tuesday, local insurers said they were still tallying the cost.
Jamaica’s Prime Minister Dr Andrew Holness reported to Parliament on Tuesday that the country may be facing up to 13 per cent contraction in economic output, or GDP, in the short term, while indicators are pointing to potential losses of US$6 billion to US$7 billion in relation to physical infrastructure, which is equivalent to 28 per cent to 32 per cent of GDP.
For the nine-month period, Genac, which operates in Jamaica, Trinidad & Tobago and Barbados, grew profit by 37 per cent, from $216.5 million to $296.7 million, driven by strong underwriting results and investment income.
In the third quarter alone, Genac posted net profit of $122.48 million, more than doubling the $57.41 million earned in the comparative 2024 period. Insurance revenue for the quarter climbed 13 per cent to $3.28 billion, up from $2.9 billion in the prior year.
The insurance service result for the quarter stood at $211.19 million, a 30 per cent increase year-over-year. This is the segment of the company’s profit and loss sheet that will manifest the hit by Melissa once those numbers begin to roll in.
“The great news that we’re seeing now will be curtailed by the expected Melissa losses,” Donaldson projected.
Damage from the storm was mostly concentrated in St Elizabeth and western Jamaica.
Reinsurance normally covers insurance companies in the event of a payout, but the insurers may have to absorb a portion of the loss, referred to as the deductible.
Chairman Paul Scott and Donaldson, in their report to shareholders, emphasised Genac’s focus on maintaining a strong capital base and prioritising “prudent underwriting”. The company said all capital adequacy and liquidity ratios remain within targeted ranges.
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