By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamas First’s chairman is urging the Government and Central Bank to give property and casualty insurers a “special exemption” to invest overseas and help improve their financial resilience to natural disasters.

Alison Treco, writing in the BISX-listed insurer’s annual report, lamented that “unrealised” losses on its investments holdings continues to act as a drag on its financial performance. She argued that this highlighted the need for the industry to be able to diversify its portfolio outside The Bahamas in a bid to enjoy better returns and liquidity, given the limited options and lack of depth in the local capital markets.

“Unfortunately, an unrealised loss on investment continues to depress our results and emphasises the need for insurance companies to be able to diversify their investments outside of The Bahamas. Not only is there a limited pool of available investments in The Bahamas, but in the event of a major catastrophe, all local investments would be subject to the same economic hardships following the disaster,” she argued.

“We, therefore, appeal to our Government and the Central Bank to consider a special exemption for all property and casualty companies to externalise a portion of their investment portfolios so that the population of The Bahamas is even better financially protected in the event of a disaster.”

It is unclear whether the Government and Central Bank would consider giving one industry or sector, however important, a special carve-out or waiver when it comes to exchange control approvals and permission to invest outside this nation. Other sectors will likely demand similar special treatment if the insurance industry gains such an exemption, even though the Central Bank has been moving towards gradual liberalisation.

Meanwhile, Ms Treco, analysing Bahamas First’s 2021 full-year performance, wrote: “While our financial year started with some challenges in the performance of our health claims, significant improvement in this area was achieved by the end of the year. Our last quarter, which was significantly better than prior quarters, primarily due to the recognition of profit commissions and improvement in health claims, resulted in a profit for the year of $5.6m.

“Of particular note, our gross premiums written achieved a new all-time high of $178m, increasing by more than 11 percent over the prior year.” Bahamas First added that property insurance premium income rose from $73m in 2020 to $82m last year.

“The overall catastrophe exposure and non-catastrophe aggregates that were booked in 2021 exceeded the prior year totals, notwithstanding the rate increases in both Cayman and The Bahamas. Both new business and upward revisions in sums insured by clients drove the increases,” the BISX-listed insurer added. “The profitability margin for The Bahamas was particularly good

“During 2021, we saw a reversal of the decline in top-line revenue from the motor class of business in The Bahamas. In Cayman, we experienced a continuation of the growth achieved in the prior year, but at an accelerated pace. At the close of 2020, we recorded gross premiums of $37m for our motor class, but this improved to $40m in 2021 – more in line with the result achieved in the pre-pandemic 2019 year.

“For both territories, the 2021 loss ratio for motor showed an improvement over the prior year, which itself was exceptionally good. The revamping of our private and commercial motor rating structure has been completed and fully released in both Cayman and The Bahamas, and we believe that this will augur well for our future results given the absence of any major loss activity.”