Regional insurance giant, Trinidad-based Guardian Holdings Limited (GHL) has suffered a massive loss of just over TT$715.5 million (J$10 billion) on its operations in the third quarter to September this year, due primarily to the write-off of its loss-making British motor insurance operation, Zenith.

The quarterly loss wiped out all gains made by the Trinidad-based insurance group in the previous two periods when it was TT$60 million in the black. The write-offs have produced a nine-month loss of TT$655 million, compared to the TT$521 billion of profit netted in the same period of 2008.

The measures included a 100 per cent or TT$896 million (J$12.6 billion) write-off of Zenith UK's associated goodwill and net asset value.

Non-cash items accounted for TT$765 million (J$10.7 billion) of this amount.

"We have substantially restructured the investment portfolios of group companies in order to reduce exposure to market price volatility,"the company reported in its third quarter financials.

But, a week into the reporting of its results, the news having percolated through the Jamaican market, investors have punished the stock, which traded at its lowest point in a year at J$100 on the Jamaica Stock Exchange (JSE) Wednesday. The stock eventually recovered some of its value to close trading at J$199.50, but this still reflected a 38 per cent loss in one day of more than J$120 from its longstanding price of J$320 per share, on very thin volumes of 4,000 units.

The JSE Cross Listed Index dumped 91 points or 9.28 per cent, to close at 887.93 on Wednesday, as a result. Guardian was also the main drag on the broad JSE Market Index, which lost 2,597 points to close down 3.1 per cent at 81,448 points.

Financial powerhouse

Group chairman Arthur Lok Jack was upbeat at the release of the results, despite the massive hit.

"Guardian is a financial powerhouse that is big enough and financially robust enough to take this hit and still remain one of the strongest financial institutions in the region," Lok Jack said in his statement to shareholders appended to the September 2009 earnings report.

The GHL boss has assured shareholders and policyholders of its Caribbean insurance operations, which include Guardian Life in Jamaica, that the regional core business remained unaffected by the loss.

In fact, he noted, the core business delivered TT$241 million (J$3.3 billion) in net profit during the period.

No spill-over effects

"The write-off of Zenith has absolutely no spill-over effects on our core business which operate independently from Zenith. In fact, the capital base and reserves of Guardian Life of the Caribbean remain significantly above the required minimum levels," Lok Jack said.

On the books, GHL has a net worth of TT$2.7 billion (J$380.3 billion) with asset base of TT$22.8 billion (J$321 billion).

GHL is the parent company for an integrated financial services group whose business focus is in life, health, property and casualty insurance, pensions and asset management.

It operates across the English and Dutch Caribbean, Central and Latin America and has expanded its international presence in Europe through strategic acquisitions in the United Kingdom and Gibraltar.

Core companies in the group are Guardian Life, Guardian General, Guardian Asset Management and Fatum, which is registered in the Dutch-speaking Caribbean of the Netherlands Antilles and Aruba to transact life and non-life insurance business.

The group grew the critical net interest-income by more than TT$140 million to TT$2.25 billion, and reported a profit on operations of TT$254 million - or TT$241 million when only 'continuing operations' is factored.

Lok Jack said the 6.5 per cent increase in net premium income was a "reflection of the confidence clients continue to repose in the group."

sabrina.gordon@gleanerjm.com