NASSAU, BAHAMAS — A BISX-listed property and casualty insurer says negotiations for its reinsurance contracts for 2023 proved “especially challenging” due to a combination of regional and global factors which will likely persist for the next 12 months if not longer.
Patrick Ward, president, and CEO of The Bahamas First Holdings Group made the observation in a report on the group’s unaudited financial results for the 12 months ended December 31, 2022.
He noted that the insurer had been able to nevertheless successfully place all of its reinsurance contracts for 2021 “at the best terms available” in what has been described as a “once-in-a-generation” reinsurance renewal cycle.
As to the group’s performance, Ward said the economic growth experienced in the first three quarters of 2022 had carried over into the final quarter of the year as expected.
He said: “The economic landscapes in both the Cayman Islands and The Bahamas were very much supportive of business development endeavors but constrained somewhat by a lack of reinsurance capacity for catastrophe property damage covers, in particular. During the fourth quarter of 2022, we booked gross income of $42.7 million, which is 0.9 percent above the premium levels achieved during the same period in 2021.”
Ward added: “Based on the level of GDP improvement in our operating jurisdictions, we believe that the top line performance for the current quarter and, indeed, the full year, would have been better if we were able to access additional capacity from the international reinsurance markets during the year. For reasons previously identified, this was not possible; however, because it was a market-wide problem, we did not find ourselves at a competitive disadvantage.”
Ward also noted that the group’s full-year top line grew to $191.2 million, which exceeds the prior year total of $178.2 million by 7.3 percent. However, overall Net Underwriting Income saw a material dip, compared to the prior year, finishing at $29.4 million, compared to $33 million in 2021. The motor portfolio in The Bahamas experienced a reduction in underwriting profitability due mainly to a return to more normal frequency and severity of damage claims and prior year adverse loss development. Additionally, the Cayman Health business continued to perform below our expectations.
The investment returns, according to Ward, represented “a mixed bag” of results, with the group’s equity holding in Commonwealth Bank showing improvement, while its fixed-income investments posted an unrealized loss.
The group also saw a sharp rise in comprehensive income in the fourth quarter of 2022, amounting to $7.1 million, compared to $5.8 million in the fourth quarter of 2021. The Group’s comprehensive income for 2022 is $6.6 million, compared to $4.8 million in 2021.