Annual Report 2013
Building on solid foundations
General Accident 2013
Annual Report
For more information, visit www.genac.com
Peace of mind
PEACE OF MIND
CALL YOUR BROKER OR A GENAC REPRESENTATIVE FOR FURTHER DETAILS
876-929-8451
// 876-929-8454
HEAD OFFICE: 58 HALF WAY TREE ROAD, KINGSTON 10, JAMAICA W.I.
WWW.GENAC.COM
PEACE OF MIND
Statement of the Chairman .....................
Notice of Annual General Meeting..........
Directors Report ..........................................
Our Performance
Financial Statistics .......................................
Management Discussion and Analysis ....
Our Team
Board of Directors ......................................
Leadership Team ........................................
Accountability
Corporate Data ..........................................
Disclosure of Shareholding.........................
4
6
7
10
14
18
22
24
26
Our Community
Corperate Social Responsibility ................
29
Appendices
Audited financial statements
Form of Proxy
CALL YOUR BROKER OR A GENAC REPRESENTATIVE FOR FURTHER DETAILS
876-929-8451
// 876-929-8454
For more information, visit www.genac.com
HEAD OFFICE: 58 HALF WAY TREE ROAD, KINGSTON 10, JAMAICA W.I.
WWW.GENAC.COM
Contents
THE YEAR AT A GLANCE
$4.5
Billion in gross written premiums
24%
Return on average equity
Statement of the Chairman
General Accident had another record year in 2013 recording the highest
premiums and profits in our history.
Operating performance
General Accident recorded a net profit of $327.9 million in 2013 or an in-
crease of 13% over 2012. While the operating environment remained challenging,
General Accident produced an underwriting profit for the fifth consecutive year.
Underwriting profitably on a consistent basis over time is difficult and is the result of
the expertise and discipline of our underwriting team.
Our insurance float has grown considerably in the last few years and was
over $2.3 billion at the end of 2013. We invested this float prudently last year, earn-
ing a 13% return.
Capital management
General Accident’s reinsurance partners are some of the largest and
best capitalized in the world. The support of these reinsurers allows us to under-
write some of the largest and most complicated commercial property, engineer-
ing and marine risks in Jamaica. I am pleased to report that we deepened and
strengthenes our relationships with our reinsurers in 2013.
As a result of our solid underwriting and investment results, General Acci-
dent made a return on average equity of 24%. In line with our dividend policy, we
returned over $140 million to our shareholders last year and still managed to grow
our equity base.
Outlook
The outlook for the Jamaican economy remains uncertain. For the fore-
seeable future, the demand for insurance services is likely to remain depressed.
Thankfully, I believe we have an enduring high quality business capable of con-
tinuing a long-term trajectory of profitable growth even in the face of these chal-
lenges. I look forward to working with our team to continue to build our business. I
would like to thank the board, management and the staff for their commitment to
this task throughout 2013.
Sincerely,
P.B. Scott
Chairman
4
General Accident Insurance Company Jamaica Limited. ANNUAL REPORT 2012
Statement of the Chairman
P.B. Scott
Chairman
For more information, visit www.genac.com 5
“In many ways, our financial performance this year was a testimony to the resilience of our business.” Notice Of Annual General Meeting
GENERAL ACCIDENT INSURANCE COMPANY (JAMAICA) LIMITED
NOTICE IS HEREBY GIVEN THAT the annual general meeting of General Acci-
dent Insurance Company (Jamaica) Limited (the “Company”) will be held
at 10am on July 8th, 2014 at 58 Half Way Tree Road for shareholders to consider
and, if thought fit, to pass the following resolutions:
Ordinary Resolutions
1. To receive the report of the Board of Directors and the audited accounts
of the Company for the financial year ended December 31, 2013.
2. To authorise the Board of Directors to re-appoint PWC as the auditors of
the Company, and to fix their remuneration.
3. To re-appoint the following Directors of the Board, who have resigned by
rotation in accordance with the Articles of Incorporation of the
Company and, being eligible, have consented to act on re-appointment:
(a) To re-appoint Jennifer Scott as a Director of the Board of the Company.
(b) To re-appoint Nicholas Scott as a Director of the Board of the Company.
(c) To re-appoint Nigel Clarke as a Director of the Board of the Company.
4. To authorise the Board of Directors to fix the remuneration of the Directors.
5. To approve the aggregate amount of interim dividends declared by the Board
during the financial year ended 31st December 2013, being $140,023,125.43 or
13.578 cent per ordinary share, as the final dividend for that year.
Dated this the 25th day of April 2014 By order of the Board.
P.B. Scott
Chairman
6
General Accident Insurance Company Jamaica Limited. ANNUAL REPORT 2013
Directors Report
The Directors are pleased to present their report for General Accident Insurance
Company Jamaica Limited for the financial year ended December 31, 2013
Financial Results
The Statement of Comprehensive Income for the Company shows pre-tax
profits for the year of $324 million, taxation recoverable of $4.2 million and a net
profit after-tax of $328 million. Details of these results, along with a comparison
with the previous year’s performance and the state of affairs of the Company are
set out in the Management Discussion and Analysis and the Financial Statements
which are included as part of this Annual Report.
Directors
The Directors of the Company as at December 31, 2013 are: P.B. Scott,
Melanie Subratie, Sharon Donaldson, Ralph Thompson, Geoffrey Messado,
Christopher Nakash, Jennifer Scott, Nicholas Scott, Nigel Clarke, Duncan Stewart
and Maxim Rochester.
The Directors to retire by rotation in accordance with the Articles of
Incorporation are: Jennifer Scott, Nichalos Scott and Nigel Clarke but being
eligible, will offer themselves for reelection.
Auditors
The auditors of the Company, PricewaterhouseCoopers of Scotiabank
Centre, Duke Street, Kingston, Jamaica have expressed their willingness to
continue in office. The Directors recommend their reappointment.
Dividend
A dividend of $0.08728 per share paid on October 14, 2013 is proposed to
be the final dividend in respect of the financial year ended December 31, 2013.
On behalf of the Board of Directors,
P.B. Scott
Chairman
For more information, visit www.genac.com 7
Our Performance
General Accident today
Policies in force 16,015
Employees 83
Gross written premiums $4.5b
Investment portfolio
$2.1b
Net worth $1.5b
For more information, visit www.genac.com 9
7-Year Financial Statistics
Employee
2013
83
2012
7
7
2011
74
Policies in force
16,015
15,876
15,247
Gross written premiums
4,479,755
3,788,969
3,626,395
Net written premiums
1,018,398
991,175
866,513
Net earned premiums
Claim
994,193
646,791
932,818
540,775
819,490
693,085
420,142
426,624
Management expenses
381,073
332,903
300,592
241,641
Underwriting profit
Investment income
Profit before tax
Profit after tax
Cash Dividends
58,503
284,788
323,702
327,914
140,025
117,362
186,114
285,269
290,537
100,031
161,589 68,862
1,015,010
1,341,478
1,284,816
90,925
Investment assets
2,104,201
1,780,642
1,602,732
Insurance reserves
2,364,658
2,199,132
2,042,511
Shareholders equity
1,456,944
1,288,850
1,140,743
10
General Accident Insurance Company Jamaica Limited. ANNUAL REPORT 2013
7-Year Financial Statistics
2010
2009
2008
2007
4
69 66 64
61
13,466
11,727
11,187
12,787
3,626,395
2,203,074
1,683,911
1,504,687
1,101,424
866,513
784,562
592,741
434,117
502,721
819,490
693,085
599,663
356,433
477,774
420,142
426,624
391,416
360,568
273,074
300,592
241,641
204,357
169,613
150,519
161,589 68,862
33,818
(124,899)
31,997
1,015,010
204,565
134,106
288,007
89,834
1,341,478
244,775
141,300
142,810
94,685
1,284,816
213,944
105,299
149,018
86,221
95,000
270,000
-
40,000
1,602,732
1,727,588
1,357,765
1,265,838
1,177,126
2,042,511
1,511,904
1,163,257
1,100,096
854,434
1,140,743
1,270,502
1,034,229
1,157,244
1,028,409
For more information, visit www.genac.com 11
7-Year Financial Statistics
2013
2012
Market Share
(2)
Growth in gross written premiums
Loss ratio
Expense ratio
(3)
Underwriting margin4
Investment return%
Return on average equity
(5)
Dividend yield on average equity
Increase in net worth
Total return to shareholders
(6)
15%
18%
65%
9%
1%
13.5%
24%
10%
13%
23%
13%
4%
58%
9%
3%
10%
24%
8%
13%
21%
NOTES:
1. Cash, cash equivalents, fixed income securities, equities and other
investment assets
2. Based on gross written premium data from the Insurance Association of
Jamaica
3. Management expenses divided by gross written premiums
4. Excludes gains from the sale of available for sale securites and
subsidiary in 2011 and dividend from former subsidiary in 2010
5. Excludes gains from the sale of available for sale securites, subsidiary
and property in 2011 and dividend from former subsidiary in 2010
6. Includes dividends and capital distributions paid to shareholders and
increases in shareholders equity
12
General Accident Insurance Company Jamaica Limited. ANNUAL REPORT 2013
7-Year Financial Statistics
2011 2010
2009
2008
13% 10%
7%
7%
65%
31% 12% 37%
51%
62%
65%
101%
8%
11%
12%
11%
3%
2%
2%
-8%
12%
26%
11%
10% 14%
9%
8%
88%
8%
25%
0%
(-11%)
23%
(-11%)
13%
77%
31%
14%
(13%)
For more information, visit www.genac.com 13
Management Discussion and Analysis
Our Business
General Accident is committed to focusing on the specific needs of all
its stakeholders and our 2013 results are the product of a defined strategic road-
map that continues to drive our activities on building long term value for our clients,
shareholders, employees and society as a whole.
We operate in an environment that has become more uncertain and
therefore less predictable and even less calculable resulting in the task of provid-
ing insurance more challenging. Notwithstanding, we accept as insurers that our
core business is to assume risks from our clients in exchange for security. With our risk
knowledge we continue to offer solutions that can relieve our insureds of some of
the uncertainty as we provide insurance cover against peak risks, in particular those
arising from natural catastrophes.
The ever-changing dynamics of our operating environment requires
responsive, informed strategies and the tools at our disposal rest on three major
pillars, namely underwriting, investments and capital management. We mea-
sure our success by the increase in shareholders value over time, which represents
growth in book value per share plus dividend paid. Since our entry into the public
market, the company has increased shareholder’s value at a compound rate of
24% which we believe is a demonstration of our strength and effective
operating strategies. We remain committed to achieving double-digit returns, de-
spite a challenging economic environment. Our main tool in achieving this objec-
tive is the employment of strict underwriting discipline, which is firmly embedded in
all our business operations
The essence of our strategy is to earn a bottom line profit by focusing on
that which we know and we do not risk profitability and the strength of our balance
sheet for market share.
Financial Performance Highlights
• 15th consecutive year of premium growth
• Profit for the year of $327.9 million, an increase of 13.5% (2012: $290.5 million)
• Earnings per share of $0.32 (2012: $0.28)
• Book value of $1.45 billion (2012: $1.28 billion)
• Annualized return on average equity of 24%
14
General Accident Insurance Company Jamaica Limited. ANNUAL REPORT 2013
Underwriting Performance
This year gross written premiums grew to $4.5 billion, an increase of 18%,
with net written premiums, before excess of loss reinsurance costs, increasing to
$1.165 billion over prior year of $1.123 billion. While net premiums earned (after all
reinsurance outflows) increased marginally over prior year [$994.0 million compared
to $991 million], our underwriting profit fell to $58.5 million, well below prior year of
$117.4 million. Our underwriting performance was negatively impacted by signifi-
cant increases in our claims cost that produced ripple effect deterioration in our
loss ratio and combined ratio, which worsened from 94% in 2012 to 96% in 2013. The
combined ratio, a widely used measure of insurance underwriting performance, is
the sum of claims and management expenses divided by net premiums earned.
Although our loss ratio worsened from 58% last year to 65% in 2013 we be-
lieve that our financial strength, combined with our hands on risk management, our
prudent investment policy and our efficient capital management have made us
resilient despite the upstream current of increasing claims cost.
Investment Performance
We underwrite insurance to make a profit, not to generate funds for invest-
ment. Nevertheless, General Accident dedicates significant resources to actively
managing our insurance float. In managing our investment portfolio, we balance
our desire to maximize returns with our needs to limit the risk of loss relative to our
capital and the need to ensure that our liquidity exceeds our claims in even the
most conservative of scenarios.
Our investment portfolio continued to perform well in 2013. We generated
investment income of $286 million. We also recorded a small unrealized gain in the
fair value of our holdings. We made a 12.9% return on our investment portfolio this
year, far exceeding both inflation and the returns on benchmark securities. This
improved performance was the result of increases in our float and the more active
and efficient management of our capital in the face of continued low interest rates.
Profitability
General Accident’s profitability improved significantly this year benefitting
primarily from increased investment income rather than better technical results.
During 2013, General Accident earned $268.5 million in investment income. Invest-
ment returns continue to be an important lever in driving the overall profitability of
the company.
We continue our dividend policy as the company’s consistent performance
has enabled us to raise dividend again by 40% compared to last year
out $140.03 million in cash to our shareholders or $0.08728 per share, a slight increase
over 2012. General Accident ended 2013 with a book value of $1.45 billion and
For more information, visit www.genac.com 15
Management Discussion and Analysis
paying out $140.03 million in cash to our shareholders or $0.08728 per share, a slight
increase over 2012. General Accident ended 2013 with a book value of $1.45 billion
and generated a return on average equity for shareholders of 24%.
Capital Position
Our business operations are in part dependent on our financial strength
and the market’s perception of our financial strength, measured by shareholder’s
equity, stood at $1.45 billion at December 31, 2013.
General Accident remains in compliance with the capital adequacy and
liquidity metrics prescribed by the Financial Services Commission and requires the
company to maintain a minimum of 250% capital to risk weighted assets [MCT]. At
year-end our MCT ratio was 260%.
The company’s liquidity is ensured by means of detailed liquidity planning.
At December 31st, 2013 our liquidity ratio of 116% exceeds the regulatory minimum
of 95%.
In addition, we successfully renewed our reinsurance treaty with our inter-
national reinsurance partners for 2014.
Outlook 2013
As we enter 2014, we have every reason to believe that market volatility will
continue as our industry is highly competitive and subject to pricing cycles that can
be very pronounced. However, given that our underwriting strategies emphasize
flexibility and responsiveness to changing market conditions, we believe that our
broad underwriting expertise and strong capital base will allow us to take advan-
tage of those market opportunities that provide the greatest potential for underwrit-
ing profitability.
The business model pursued by General Accident combines a well-man-
aged direct portfolio with significant broker partner business that require focus on
strengthening of relationships and the enhancement of our value proposition to
each of our customer segments. We are confident that this model produces the
best opportunity for profitable growth. In closing we continue to reiterate that our
strategic focus in the short term will be building our business on the key platforms of
speedy claims settlement, efficiency and excellent customer relationship.
We wish to thank our all of our policyholders, brokers, reinsurers, and em-
ployees for their loyal support and the trust you placed in us. We will continue to
16
General Accident Insurance Company Jamaica Limited. ANNUAL REPORT 2012
make every effort to fulfill justified expectations of all our stakeholders.
On behalf of the Board of Directors.
Sincerely,
Sharon E. Donaldson
Managing Director
Sharon E. Donaldson
Managing Director
Managing Director
For more information, visit www.genac.com 17
Board Of Directors
P.B. Scott
(appointed November 1998)
Chairman
Sharon Donaldson
(appointed March 2008)
Managing Director
P.B. Scott is the Chairman of the Company.
In addition to his role with the Company, Mr. Scott is
the Chairman, Chief Executive Officer and principal
shareholder of the Musson Group, one of the largest
privately held groups in the region with business units
in some 30 Caribbean and Central American coun-
tries including Facey Group Limited, T. Geddes Grant
Limited, and others.
Mr. Scott serves as a Director of several lo-
cal companies and organisations including, Seprod
and its subsidiaries (Chairman), Scotia Life Insurance
Company Limited, the Jamaica Chamber of Com-
merce and the American International School in
Kingston. He currently serves as Honorary Consul Gen-
eral in Jamaica for the Republic of Guatemala.
Sharon Donaldson is the Managing Di-
rector of the Company. She has been responsible
for driving its recent growth and for overseeing its
prudent underwriting and risk management strat-
egy. Ms. Donaldson has been with the Company
for over 20 years, first joining as the Financial Con-
troller in 1989 before becoming Managing Direc-
tor in 2001. In addition to her responsibilities at the
Company, Ms. Donaldson is a Director of Musson
(Jamaica) Limited.
Ms. Donaldson holds an LLB from the Uni-
versity of London, England, an M.B.A from University
of Wales. She is a Chartered Accountant, a fellow
member of the Institute of Chartered Accounts of
Jamaica and an Attorney at Law.
Melanie Subratie
(appointed March 2002)
Deputy Chairman
Dr. Nigel L. Clarke
(appointed August 2011)
Non Executive Director
Melanie Subratie is the Deputy Chairman
of the Company and Chairman of the Investment
and Loan Committee of the Board. Mrs. Subratie is
also Vice Chairman of the Musson Jamaica Limited
and a director of all of its principal subsidiaries and its
affiliates.
Mrs. Subratie holds a B.Sc. (Hons) from the
London School of Economics. She began her career
in the United Kingdom in the Financial Services Divi-
sion of Deloitte & Touche and also worked for startup
political newswire service DeHavilland prior to return-
ing to Jamaica in 2002 and joining the Musson Board.
Dr. Nigel Clarke is a Non Executive Direc-
tor of the Company. Dr. Clarke is also the Musson
Group Deputy Chairman, CFO and previously CEO
oF Facey Group. He also serves as a director of
many of the Musson Group’s subsidiaries and affili-
ated companies.
Prior to his return to Jamaica, Dr. Clarke
worked as an Equity Derivatives Trader at Goldman
Sachs in London, England. Dr. Clarke is the Chair-
man of the National Youth Orchestra of Jamaica.
Dr. Clarke holds a B.Sc. in Mathematics from the
University of the West Indies, as well as a M.Sc. from
Oxford University and a D.Phil. from Oxford Univer-
sity of the United Kingdom, in Numerical Analysis.
18
General Accident Insurance Company Jamaica Limited. ANNUAL REPORT 2013
Board Of Directors
Geoffrey Messado
(appointed May 2001)
Non Executive Director
Jennifer Scott
(appointed December 2009)
Non Executive Director
Geoffrey Messado is a non-executive
director of the Company and is Chairman of the
Audit Committee of the Board.
Mr. Messado is also the Financial Con-
troller of the Musson Group, and he serves as a di-
rector of certain subsidiaries and affiliated compa-
nies. He also serves as Chairman of Mapco Printers
Limited and as a director of Edgechem (Jamaica)
Limited, the KRB Lea Jamaica Rums Limited, Cor-
rpak Jamaica Limited, Clarendon Distillers Limited,
Spirits Pool Association and Caribbean Molasses
Company (Jamaica) Limited.
Mr. Messado is a Chartered Accoun-
tant, FCA, FCAA, ATII. He is also the Past President
of the Jamaica Exporters Association.
Jennifer Scott is a non executive direc-
tor of the Board of the Company. Mrs. Scott holds a
B.Sc.(Hons) in Psychology from Newcastle University,
United Kingdom. She later gained a Graduate Di-
ploma in Legal Studies from Keele University, UK, the
Certificate of Legal Practice from the College of Law,
London and was admitted as a Solicitor of Supreme
Court of England and Wales. She attended Norman
Manley Law School, and was admitted as an Attor-
ney-at-Law of the Supreme Court of Jamaica. She is
a member of the legal practice of Clinton Hart & Co.,
Attorneys-at-Law.
Nicholas A. Scott
(appointed July 2011)
Non Executive Director
Dr. Ralph Thompson, C.D.
(appointed January 1993)
Non Executive Director
Nicholas Scott is a non executive direc-
tor of the Company. Mr. Scott is the Chief Invest-
ment Officer of the Investment and Financial Ser-
vices businesses of the Musson Group and in this
capacity serves as the Managing Director of Ep-
pley Limited. He is also a Director of Seprod Lim-
ited. He returned to Jamaica in 2009 after working
as a private equity investor and investment banker
at the Blackstone Group and Morgan Stanley in
New York and Brazil.
Mr. Scott holds a B.Sc. in Economics
(Magna Cum Laude) from the Wharton School
at the University of Pennsylvania, an M.B.A (beta
Gamma Sigma) from Columbia Business School
and M.P.A. from the Harvard Kennedy School of
Government.
Dr. Ralph Thompson is a non – executive
director of the Company. He is also the Chairman of
the Conduct Review Committee of the Board.
Dr. Thompson was formally the Managing
Director of C.D. Alexander Realty Company Limited
and was formerly the Chief Executive Officer of Se-
prod Limited.He serves as a director of several entities
within the Musson Group including Musson (Jamaica)
Limited and T. Geddes Grant Limited. Dr. Thompson is
also a former member of the New York Bar.
For more information, visit www.genac.com 19
Board Of Directors
Duncan Stewart
(appointed August 2011)
Independent
Non Executive Director
Christopher Nakash
(appointed December 2006)
Independent
Non Executive Director
Duncan Stewart is an independent non
executive director of the Company. Mr. Stewart is
the General Manager of Stewart Motors Limited and
is also involved in related family business operating
under the umbrella of Stewart’s Automotive Group.
Mr. Stewart joined as a third generation member af-
ter graduating from McGill University with a B.Eng.
(Mech).
Mr. Stewart is also a director of the Auto-
mobile Dealers Association and the Richard and Di-
ana Stewart Foundation. He is also a sponsor of the
family charity, Kind Hearts, which is run by his children
and their cousins. Mr. Stewart is a past National Rally
Champion.
Christopher Nakash is an independent
non executive Director of the Board of the Com-
pany. Mr. Nakash brings to the Board his manage-
ment experience, gained as Chief Executive Offi-
cer of Nakash Construction & Equipment Limited.
In the past, Mr. Nakash also served as General
Manager of Netstream Global (2003 to 2008), and
he was also a founding member and Director of
the Riverton Improvement Association and Intelli-
gent Multimedia Limited. Mr. Nakash holds a BBA
from University of New Brunswick, Canada.
Maxim G. Rochester
(appointed July 2012)
Non Executive Director
Mr. Maxim G. Rochester is an independent
non executive director of the Company. Mr. Roch-
ester – B.Sc. (Accounting) Hons. FCA, FCCA. Max is
a member of the Chartered Association of Certified
Accountants (UK) and The Institute of Chartered Ac-
countants of Jamaica. He was also a member of
the Accounting Standards Committee of the Institute
of Chartered Accountants of Jamaica (ICAJ) and
played a significant role in the adoption of Interna-
tional Financial Reporting Standards in Jamaica. He
also presented several papers at seminars hosted by
ICAJ.
Mr. Maxim G. Rochester is a former Territory
Senior Partner of PricewaterhouseCoopers and was
responsible for the quality and delivery of the audit of
the financial statements of several major companies.
As engagement partner, Max was responsible for the
overall planning and execution of audit strategies
and had the ultimate decision making responsibility
on all audit matters.
20
General Accident Insurance Company Jamaica Limited. ANNUAL REPORT 2013
Board Of Directors
Leadership Team
Leadership Team Cheryll Henry Lochinvar Lungren Sharon Donaldson Maureen Hall Angella Reynolds
General Accident Insurance Company Jamaica Limited. ANNUAL REPORT 2013
22
Leadership Team
Cheryll Henry Lochinvar Lungren Sharon Donaldson Maureen Hall Angella Reynolds
Sharon Donaldson
Managing Director
See Board of Directors.
Maureen Hall
General Manager
Lochinvar Lungren
Financial Controller
Ms. Maureen Hall is the General Manag-
er of the Company with direct responsibility for the
Claims and Underwriting Departments. Ms. Hall has
been with the Company for over 20 years. She joined
the Company in 1989 as Credit Controller, was ap-
pointed Marketing and Customer Service Manager in
January 1991 and later Claims Manager in June 1994.
She was promoted to General Manager in 2006.
Ms. Hall has also held executive posts at
Kingston Terminal Operators Limited and Allied Insur-
ance Brokers Limited. She also served as Coach of
Jamaica’s National Netball Team for many years and
remains a member of the sport’s international coach-
ing committee. Ms. Hall holds a B. Ed (Hons) degree
from the University of Sussex, England, as well as a Di-
ploma in Mass Communication from the University of
the West Indies, and a M.B.A from Manchester, Univer-
sity England. Ms. Hall is also an associate member of
the Chartered Insurance Institute (UK).
Angella Reynolds
Deputy General Manager
Mr. Lochinvar Lungren is the Financial
Controller of the Company with responsibility for
leading the finance, accounting and treasury
functions. Mr. Lungren has been with the Company
for over 20 years, joining in 1988 as an Accounting
Clerk.
He advanced to the position of Credit
Officer in 1996 and he was then seconded to the
Company’s founding joint venture partner, togeth-
er with Musson (Jamaica) Limited, General Acci-
dent Fire and Life Assurance Company in Scotland.
Mr. Lungren rejoined the Company in 1998. He left
briefly to work as General Manager of JN’s finance
arm before rejoining General Accident in 2005 as
Financial Controller.
Cheryll Henry
Human Resources & Facilities
Manager
Ms. Angella Reynolds joined the Company
in 2010. She is the Deputy General Manager of the
Company in charge of Underwriting and Marketing.
Ms. Reynolds has over 20 years of experi-
ence in the insurance industry, having previously held
executive posts with the Grace Kennedy Group, Al-
lied Insurance Brokers and Jamaica International In-
surance Company.
Ms. Reynolds is the holder of the Jamaican
Insurance Diploma from the College of Insurance &
Professional Studies. She is an associate member of
the Chartered Insurance Institute (UK) and also holds
a Diploma in Commercial Insurance Contract Word-
ing from that organisation.
Ms. Cheryll Henry is the Human Re-
sources and Facilities Manager of the Company.
Ms. Henry has been with the Company for over
15 years. She joined the Company in 1996 as an
Administrative Supervisor and, notably, within a
10 year period she rotated through every division,
and was also appointed Operations Manager of
Orrett& Musson Investment Company Limited, a
former subsidiary of the Company.
Ms. Henry holds a Bachelors degree in
Management Studies from the University ofthe
West Indies and a Diploma in Human Resource
Management from the Institute ofManagement &
Production.
For more information, visit www.genac.com 23
Corporate Data
Chairman
Deputy Charman
Managing Director
..............................................................
Directors:
P.B. Scott
Melanie Subratie
Sharon Donaldson
Dr. Ralph Thompson
Geoffery Messado
Jennifer Scott
Christopher Nakash
Nicholas Scott
Dr. Nigel Clarke
t
Duncan Strewar
Maxim G. Rochester
.................................................................
Corporate Secretary:
Geoffery Messado
Appointed Actuary:
Josh Worsham, FCAS, MAAA
Auditors:
PricewaterhouseCoopers
Bankers:
First Caribbean International Bank
24
General Accident Insurance Company Jamaica Limited. ANNUAL REPORT 2013
..............................................................
Leadership Team:
Sharon Donaldson
Maureen Hall
Angella Reynolds
Lochinvar Lungren
Cheryll Henry
Managing Director
General Manager
Deputy General Manager
Financial Controller
Human Resources & Facilities Manager
..............................................................
Attorneys:
DunnCox
Patterson Mair Hamilton
Registered Office:
58 Halfway Tree Road
Kingston, Jamaica W.I.
Telephone: (876) 929-2451
Fax: (876) 929-1074
Email: info@genac.com
website: www.genac.com
Registrar:
Jamaica Central Securities Depository
For more information, visit www.genac.com 25
Disclosure Of Shareholdings
Shareholdings of Top 10 Shareholders
Shareholders
Shares
%Owned
1. Musson Jamaica Limited
824, 999,989
2. Mayberry West Indes Limited
31,011.807
3. Apex Pharmacy
11,588,279
4. Mayberry Managed Client Account
12,411,826
5. First Caribbean Int’l Sec. Ltd A/C B.U.T.
4,413,539
80.00
3.00
1.12
1.20
0.43
6. Barita Investment Ltd. - Long A/C(Trading) 3,098,561
0.38
7. Sharon Donaldson
8. Konrad Limited
3,000,000
2,688,854
9. Lannaman & Morris(shipping) Limited
2,599,260
10. Lloyd Baday
4,004,040
0.29
0.26
0.25
0.38
26
General Accident Insurance Company Jamaica Limited. ANNUAL REPORT 2013
Shareholdings of Directors
Director/ Connected persons
Shares
P.B. Scott
NIL
824,999,989)
NIL
824,999,989)
1.
( Musson Jamaica Limited
2. Melanie Subratie
( Musson Jamaica Limited
3. Sharon Donaldson
( Self
3,000,000)
( Junior Levine 177,758)
4. Dr Ralph Thompson NIL
5. Geoffery Messado
1,000,000
6. Jennifer Scott
NIL
7. Christopher Nakash 1,698,020
1,980,198
8. Nicholas Scott
2,475,190
9. Duncan Stewart
( and Deborah Strewart)
( and Diana Strewart)
. Nigel Clarke
10. Dr
2,475,248
11. Maxim Rochester
1,237,624
Shareholdings of the Management team
Manager/ connected persons
1. Sharon Donaldson
( self
( Junior Levin
e
2. Maureen Hall
2,362,000)
(and Anthony Dunbar
38,000)
(and Errol Kellyman
3. Angella Reynolds
500,000
4. Lochinvar Lungren 645,482
1,980,198
5. Cheryll Henry
3,000,000)
177,758)
For more information, visit www.genac.com 27
Our Community
Corperate Social Responsibility
For General Accident, corporate so-
for any nation. We recognize the invaluable
cial responsibility is an important entranched
contribution of sports in the development
mandate. We try to conduct our business in
of the nation’s youth as it not only builds
a manner consistent with excellent corporate
patriotism, encourages friendship but incul-
citizenship and as we seek to ensure that our
cates important life skills and shapes char-
operations create value for our sharehold-
acter. General Accident is committed to Ja-
ers, employees, customers, communities and
maica’s world renowned sports programme
Jamaica. During the financial year under
and our talented athletes. For more than
review, despite the financial challenges, we
20 years, we have provided sponsorship of
continue to play a significant role in nation
international tours and the underwriting of
building through our support in education,
travelling costs for many athletes.
cultural heritage, sports, child welfare and
the environment.
Education and Cultural
Heritage
We support the Jamaica Athletic
Association by providing sponsorship for
Gibson Relays in February of each year, and
for individual events such as the Phil Palmer
Summer Tennis Camp held annually at the
Jamaica Pegasus for over 70 children be-
tween the ages of 5 – 16.
General Accident recognizes that
the fostering of educational opportunities
for young people plays a pivotal role in na-
tional development. The company renewed
Child Welfare
In conjunction with the staff sports
its partnership with Next Move Jamaica, with
club, GA provided much needed support in
the provision of fourteen (14) scholarships for
cash and kind to Sophie’s Place, a home for
students pursuig tertiary education at a Uni-
27 children with disabilities. Each year, GA
versity in Jamaica.
staff members organize a Christmas treat at
We continue to support the Chess
Foundation of Jamaica through our spon-
the home and both staff and children are
sorship of chess competition for high schools
provided with gifts and day of fun and good
to the tune of$300,000. St Jago High School
food and care.
won the 2012 competition.
GA has supported the Jamaica Cul-
tural Development Commission (JCDC) since
2008 and in 2012, was again a sponsor of the
Miss Festival Queen Competition.
Sports
Sports not only touches the lives of
everyone, it undoubtedly, is a uniting force
For more information, visit www.genac.com 29
Our Community
Corperate Social Responsibility
Environment
A healthy natural environment is of
vital importance to the insurance industry.
GA firmly believes all development should
be sustainable and should not result in dam-
age to natural resources. Since 1995, GA has
been a major donor to the Jamaica Environ-
ment Trust (JET), one of Jamaica’s leading
environmental non profit groups.
GA has worked in partnership with JET to
educate young Jamaicans about environ-
mental issues via the Schools’ Environment
Programme, to clean our country’s beach-
es, and has helped JET invest in training and
development for its small staff complement.
In recognition of GA’s long standing support,
JET recently named GA a “Champion for the
Environment.”
Other support
At General Accident we en-
courage our staff to be change lead-
ers and to assit in the nation building
process. In keeping with this mandate
our staff also participated in a number
of other CSR events, such as Sigma run
which raises money for child related
charities.
30
General Accident Insurance Company Jamaica Limited. ANNUAL REPORT 2013
Corperate Social Responsibility
“Our mission is to be “a general insurance
company, which provides an innovative product,
excellent service for our customers, fair
remuneration to our staff and a fair return to our
shareholders.”
Appendices
General Accident Insurance Company Jamaica Limited
Index
31 December 2013
GENERAL ACCIDENT INSURANCE
COMPANY JAMAICA LIMITED
Financial Statements
31 December 2013
Actuary’s Report
Independent Auditors’ Report to the Members
Financial Statements
Statement of comprehensive income
Statement of financial position
Statement of changes in equity
Statement of cash flows
Notes to the financial statements
Page
1
2
3
4-5
6 - 59
General Accident Insurance Company Jamaica Limited
Index
31 December 2013
GENERAL ACCIDENT INSURANCE
COMPANY JAMAICA LIMITED
Financial Statements
31 December 2013
Actuary’s Report
Independent Auditors’ Report to the Members
Financial Statements
Statement of comprehensive income
Statement of financial position
Statement of changes in equity
Statement of cash flows
Notes to the financial statements
Page
1
2
3
4-5
6 - 59
General Accident Insurance Company Jamaica Limited
Statement of Comprehensive Income
Year ended 31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
Page 1
Gross Premiums Written
Reinsurance ceded
Excess of loss reinsurance cost
Net premiums written
Changes in unearned premiums, net
Net Premiums Earned
Commission income
Commission expense
Claims expense
Management expenses
Underwriting Profit
Investment income
Other income
Other operating expenses
Profit before Taxation
Taxation
Net Profit for the Year
Note
2013
$’000
2012
$’000
4,479,755
3,788,969
(3,314,356)
(2,665,753)
(147,001)
(132,041)
1,018,398
(24,205)
994,193
269,094
991,175
(58,357)
932,818
295,485
(176,920)
(237,263)
10
(646,791)
(540,775)
(381,073)
(332,903)
11
12
58,503
141,407
151,091
(27,299)
117,362
136,062
61,711
(29,866)
323,702
285,269
15
4,212
5,268
327,914
290,537
Other Comprehensive Income:
Items that may be subsequently reclassified to profit or loss
Unrealised losses on available-for-sale investments,
15
(15,621)
(30,959)
Gains recycled to profit or loss on disposal and maturity of available-for-
sale investments
Total Other Comprehensive Income
TOTAL COMPREHENSIVE INCOME
(4,174)
(19,795)
(11,440)
(42,399)
308,119
248,138
EARNINGS PER SHARE
16
$0.32
$0.28
General Accident Insurance Company Jamaica Limited
Statement of Comprehensive Income
Year ended 31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
Page 1
Gross Premiums Written
Reinsurance ceded
Excess of loss reinsurance cost
Net premiums written
Changes in unearned premiums, net
Net Premiums Earned
Commission income
Commission expense
Claims expense
Management expenses
Underwriting Profit
Investment income
Other income
Other operating expenses
Profit before Taxation
Taxation
Net Profit for the Year
Note
2013
$’000
2012
$’000
4,479,755
3,788,969
(3,314,356)
(2,665,753)
(147,001)
(132,041)
1,018,398
(24,205)
994,193
269,094
991,175
(58,357)
932,818
295,485
(176,920)
(237,263)
10
(646,791)
(540,775)
(381,073)
(332,903)
11
12
58,503
141,407
151,091
(27,299)
117,362
136,062
61,711
(29,866)
323,702
285,269
15
4,212
5,268
327,914
290,537
Other Comprehensive Income:
Items that may be subsequently reclassified to profit or loss
Unrealised losses on available-for-sale investments,
15
(15,621)
(30,959)
Gains recycled to profit or loss on disposal and maturity of available-for-
sale investments
Total Other Comprehensive Income
TOTAL COMPREHENSIVE INCOME
(4,174)
(19,795)
(11,440)
(42,399)
308,119
248,138
EARNINGS PER SHARE
16
$0.32
$0.28
Page 3
Page 4
General Accident Insurance Company Jamaica Limited
Statement of Changes in Equity
Year ended 31 December 2013
(expressed in Jamaican dollars unless otherwise stated)
Balance at 31 December 2011
470,358
152,030
110,517
407,838
1,140,743
Share
Capital
$’000
Capital
Reserves
$’000
Fair Value
Reserve
$’000
Retained
Earnings
$’000
Note
Total
$’000
Comprehensive income :
Net profit for the year
Other comprehensive income
Total comprehensive income
Transactions with owners
Dividends
17
-
-
-
-
-
-
-
-
-
290,537
290,537
(42,399)
(42,399)
-
(42,399)
290,537
248,138
-
(100,031)
(100,031)
Balance at 31 December 2012
470,358
152,030
68,118
598,344
1,288,850
Comprehensive income :
Net profit for the year
Other comprehensive income
Total comprehensive income
Transactions with owners
Dividends
17
-
-
-
-
-
-
-
-
327,914
327,914
(19,795)
-
(19,795)
(19,795)
327,914
308,119
-
(140,025)
(140,025)
Balance at 31 December 2013
470,358
152,030
48,323
786,233
1,456,944
General Accident Insurance Company Jamaica Limited
Statement of Cash Flows
Year ended 31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
Cash Flows from Operating Activities
Net profit
Adjustments for items not affecting cash:
Depreciation
Amortisation of intangible assets
Gain on sale of investments
Gain on sale of leases
Unrealised gain on Unit Trust Fund
Gain on disposal of property, plant and equipment
Interest income
Dividend income
Deferred taxation
Foreign exchange gains
Increase in deferred policy acquisition cost
Increase in insurance reserves
Changes in operating assets and liabilities:
Due from policyholders, brokers and agents
Other receivables
Loans receivable
Other liabilities
Due from related parties
Due from reinsurers and coinsurers, net
Tax withheld at source
Net cash provided by operating activities
Cash Flows from Investing Activities
Acquisition of investments
Leases receivable, net
Acquisition of property, plant and equipment
Acquisition of intangible asset
Proceeds from disposal of property, plant and equipment
Proceeds from disposal and maturity of investments
24
25
Dividend received
Interest received
Net cash (used in)/provided by investing activities
Note
2013
$’000
2012
$’000
327,914
290,537
24
25
11
12
11
11
15
17,352
9,947
(4,498)
-
-
(1,378)
(129,638)
(7,271)
(4,212)
(146,495)
(7,724)
165,526
219,523
4,775
(13,528)
70,418
12,125
628
(4,075)
289,866
(34,172)
255,694
(667,546)
(33,017)
(26,923)
(537)
1,415
218,787
7,271
123,000
(377,550)
15,057
14,808
(10,361)
(999)
(4,510)
(6,337)
(110,708)
(8,007)
(5,268)
(58,583)
(6,316)
156,621
265,934
(74,893)
(3,202)
(1,037)
(15,268)
406
79,789
251,729
(64,682)
187,047
(232,277)
(21,040)
(33,303)
(10,757)
9,207
210,025
8,007
112,376
42,238
General Accident Insurance Company Jamaica Limited
Statement of Changes in Equity
Year ended 31 December 2013
(expressed in Jamaican dollars unless otherwise stated)
Balance at 31 December 2011
470,358
152,030
110,517
407,838
1,140,743
Share
Capital
Capital
Reserves
$’000
Fair Value
Reserve
$’000
Retained
Earnings
$’000
Note
$’000
Total
$’000
Page 3
Dividends
17
-
(100,031)
(100,031)
Balance at 31 December 2012
470,358
152,030
68,118
598,344
1,288,850
Comprehensive income :
Net profit for the year
Other comprehensive income
Total comprehensive income
Transactions with owners
Comprehensive income :
Net profit for the year
Other comprehensive income
Total comprehensive income
Transactions with owners
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
290,537
290,537
(42,399)
(42,399)
-
(42,399)
290,537
248,138
327,914
327,914
(19,795)
-
(19,795)
(19,795)
327,914
308,119
Dividends
17
-
(140,025)
(140,025)
Balance at 31 December 2013
470,358
152,030
48,323
786,233
1,456,944
General Accident Insurance Company Jamaica Limited
Statement of Cash Flows
Year ended 31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
Page 4
Cash Flows from Operating Activities
Net profit
Adjustments for items not affecting cash:
Depreciation
Amortisation of intangible assets
Gain on sale of investments
Gain on sale of leases
Unrealised gain on Unit Trust Fund
Gain on disposal of property, plant and equipment
Interest income
Dividend income
Deferred taxation
Foreign exchange gains
Increase in deferred policy acquisition cost
Increase in insurance reserves
Changes in operating assets and liabilities:
Due from policyholders, brokers and agents
Other receivables
Loans receivable
Other liabilities
Due from related parties
Due from reinsurers and coinsurers, net
Tax withheld at source
Net cash provided by operating activities
Cash Flows from Investing Activities
Acquisition of investments
Leases receivable, net
Acquisition of property, plant and equipment
Acquisition of intangible asset
Proceeds from disposal of property, plant and equipment
Proceeds from disposal and maturity of investments
Dividend received
Interest received
Net cash (used in)/provided by investing activities
Note
2013
$’000
2012
$’000
327,914
290,537
24
25
11
12
11
11
15
24
25
17,352
9,947
(4,498)
-
-
(1,378)
(129,638)
(7,271)
(4,212)
(146,495)
(7,724)
165,526
219,523
4,775
(13,528)
70,418
12,125
628
(4,075)
289,866
(34,172)
255,694
(667,546)
(33,017)
(26,923)
(537)
1,415
218,787
7,271
123,000
(377,550)
15,057
14,808
(10,361)
(999)
(4,510)
(6,337)
(110,708)
(8,007)
(5,268)
(58,583)
(6,316)
156,621
265,934
(74,893)
(3,202)
(1,037)
(15,268)
406
79,789
251,729
(64,682)
187,047
(232,277)
(21,040)
(33,303)
(10,757)
9,207
210,025
8,007
112,376
42,238
Page 5
Page 6
General Accident Insurance Company Jamaica Limited
Statement of Cash Flows (Continued)
Year ended 31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
Net cash (used in) /provided by investing activities brought forward
Cash Flows from Financing Activities
Dividends paid
Net cash used in by financing activities
(Decrease)/increase in cash and cash equivalents
Effect of exchange rate changes on cash and cash equivalents
Note
2013
$’000
(377,550)
2012
$’000
42,238
17
(140,025)
(140,025)
(261,881)
114,208
(100,031)
(100,031)
129,254
53,671
Cash and cash equivalents at beginning of year
1,317,203
1,134,278
CASH AND CASH EQUIVALENTS AT END OF THE YEAR (NOTE 18)
1,169,530
1,317,203
2. Summary of Significant Accounting Policies
.
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
1.
Identification and Activities
General Accident Insurance Company Jamaica Limited is incorporated and domiciled in Jamaica. The company
is a public listed company with its listing on the Jamaica Junior Stock Exchange. The company is an 80%
subsidiary of Musson (Jamaica) Limited (Musson). The registered office of the company is located at 58 Half-
Way-Tree Road, Kingston 10. The Company’s ultimate parent company, Musson, is incorporated and domiciled
in Jamaica.
The company is licensed to operate as a general insurance company under the Insurance Act, 2001. Its
principal activity is the underwriting of commercial and personal property and casualty insurance.
The principal financial accounting policies adopted in the preparation of these financial statements are set out
below. These policies have been consistently applied to all the years presented, unless otherwise stated.
(a) Basis of preparation
These financial statements have been prepared in conformity with International Financial Reporting Standards
(IFRS) and have been prepared under the historical cost convention as modified by the revaluation of certain
financial instruments carried at fair value.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting
estimates. It also requires management to exercise its judgement in the process of applying the Company’s
accounting policies. Although these estimates are based on managements’ best knowledge of current events
and action, actual results could differ from those estimates. The areas involving a higher degree of judgement
or complexity, or areas where assumptions and estimates are significant to the financial statements are
disclosed in Note 7.
Accounting pronouncements effective in 2013 which are relevant to the Company’s operations
Certain new standards, amendments and interpretations to existing standards have been published that
became effective during the current financial year and are relevant to the Company’s operations. The
adoption of these new pronouncements has impacted the Company as discussed below.
IAS 1 (Amendment), ‘Presentation of financial statements’ (effective 1 July 2012). This
amendment changes the disclosure of items presented in other comprehensive income (OCI) in the
statement of comprehensive income. The amendment requires entities to separate items presented in
OCI into two groups, based on whether or not they may be recycled to profit or loss in the future. The
Company has adopted these amendments from 1 January 2013.
IFRS 11, ‘Joint arrangements,’ (effective 1 January 2013). The standard gives a more realistic
reflection of joint arrangements by focusing on the rights and obligations of the arrangement rather than
its legal form. There are two types of joint arrangement: joint operations and joint ventures. Joint
operations arise where a joint operator has rights to the assets and obligations relating to the
arrangement and hence accounts for its interest in assets, liabilities, revenue and expenses. Joint
ventures arise where the joint operator has rights to the net assets of the arrangement and hence
equity accounts for its interest. Proportional consolidation of joint ventures is no longer allowed. The
Company has assessed the impact of IFRS 11 and has concluded that there is no impact on the
financial statements.
General Accident Insurance Company Jamaica Limited
Statement of Cash Flows (Continued)
Year ended 31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
Net cash (used in) /provided by investing activities brought forward
Cash Flows from Financing Activities
Dividends paid
Net cash used in by financing activities
(Decrease)/increase in cash and cash equivalents
Effect of exchange rate changes on cash and cash equivalents
Note
2013
$’000
(377,550)
2012
$’000
42,238
17
(140,025)
(140,025)
(261,881)
114,208
(100,031)
(100,031)
129,254
53,671
Page 5
Page 6
Page 6
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
1.
Identification and Activities
General Accident Insurance Company Jamaica Limited is incorporated and domiciled in Jamaica. The company
is a public listed company with its listing on the Jamaica Junior Stock Exchange. The company is an 80%
subsidiary of Musson (Jamaica) Limited (Musson). The registered office of the company is located at 58 Half-
Way-Tree Road, Kingston 10. The Company’s ultimate parent company, Musson, is incorporated and domiciled
in Jamaica.
The company is licensed to operate as a general insurance company under the Insurance Act, 2001. Its
principal activity is the underwriting of commercial and personal property and casualty insurance.
Cash and cash equivalents at beginning of year
1,317,203
1,134,278
CASH AND CASH EQUIVALENTS AT END OF THE YEAR (NOTE 18)
1,169,530
1,317,203
2. Summary of Significant Accounting Policies
.
The principal financial accounting policies adopted in the preparation of these financial statements are set out
below. These policies have been consistently applied to all the years presented, unless otherwise stated.
(a) Basis of preparation
These financial statements have been prepared in conformity with International Financial Reporting Standards
(IFRS) and have been prepared under the historical cost convention as modified by the revaluation of certain
financial instruments carried at fair value.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting
estimates. It also requires management to exercise its judgement in the process of applying the Company’s
accounting policies. Although these estimates are based on managements’ best knowledge of current events
and action, actual results could differ from those estimates. The areas involving a higher degree of judgement
or complexity, or areas where assumptions and estimates are significant to the financial statements are
disclosed in Note 7.
Accounting pronouncements effective in 2013 which are relevant to the Company’s operations
Certain new standards, amendments and interpretations to existing standards have been published that
became effective during the current financial year and are relevant to the Company’s operations. The
adoption of these new pronouncements has impacted the Company as discussed below.
IAS 1 (Amendment), ‘Presentation of financial statements’ (effective 1 July 2012). This
amendment changes the disclosure of items presented in other comprehensive income (OCI) in the
statement of comprehensive income. The amendment requires entities to separate items presented in
OCI into two groups, based on whether or not they may be recycled to profit or loss in the future. The
Company has adopted these amendments from 1 January 2013.
IFRS 11, ‘Joint arrangements,’ (effective 1 January 2013). The standard gives a more realistic
reflection of joint arrangements by focusing on the rights and obligations of the arrangement rather than
its legal form. There are two types of joint arrangement: joint operations and joint ventures. Joint
operations arise where a joint operator has rights to the assets and obligations relating to the
arrangement and hence accounts for its interest in assets, liabilities, revenue and expenses. Joint
ventures arise where the joint operator has rights to the net assets of the arrangement and hence
equity accounts for its interest. Proportional consolidation of joint ventures is no longer allowed. The
Company has assessed the impact of IFRS 11 and has concluded that there is no impact on the
financial statements.
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
2. Summary of Significant Accounting Policies (Continued)
(a) Basis of preparation (continued)
Page 7
Page 8
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
2. Summary of Significant Accounting Policies (Continued)
Accounting pronouncements effective in 2013 which are relevant to the Company’s operations
IFRS 12, 'Disclosures of interests in other entities' (effective 1 January 2013). This standard
includes the disclosure requirements for all forms of interests in other entities, including joint
arrangements, associates, special purpose vehicles and other off balance sheet vehicles. Management
has adopted the provisions of this standard and has concluded there will be no impact on the
Company.
IFRS 13, ‘Fair Value Measurement’, (effective 1 January 2013). This standard, aims to improve
consistency and reduce complexity by providing a precise definition of fair value and a single source of
fair value measurement and disclosure requirements for use across IFRSs. The requirements, which
are largely aligned between IFRSs and US GAAP, do not extend the use of fair value accounting but
provide guidance on how it should be applied where its use is already required or permitted by other
standards within IFRSs or US GAAP. The Company adopted the standard from 1 January 2013.
Accounting pronouncements that are not yet effective, and have not been early adopted
At the date of authorisation of these financial statements, certain new standards, interpretations and
amendments to existing standards have been issued which are mandatory for the Company’s accounting
periods beginning on or after 1 January 2013 or later periods, but were not effective at the date of the
statement of financial position, and which the Company has not early adopted. The Company has assessed
the relevance of all such new standards, interpretations and amendments, has determined that the following
may be relevant to its operations, and has concluded as follows:
IAS 32, (Amendment), ‘Financial instruments: Presentation’, (effective 1 January 2014). These
amendments clarify some of the requirements for offsetting financial assets and a financial liability on
the balance sheet. Management is currently assessing the impact this may have on the Company.
IAS 36, (Amendment), ‘Impairment of assets’, (effective 1 January 2014). This amendment
addresses the disclosure of information about the recoverable amount of impaired assets if that amount
is based on fair value less costs of disposal. The Company will adopt the standard from 1 January 2014.
IFRS 9, ‘Financial instruments’ (effective 1 January 2015). The standard introduces new
requirements for the classification and measurement of financial assets and liabilities and is effective
from 1 January 2015 with early adoption permitted. The standard divides all financial assets and
liabilities that are currently in the scope of IAS 39 into two classifications – those measured at amortised
cost and those measured at fair value. This standard is a work in progress and will eventually replace
IAS 39 in its entirety. Management is currently assessing the impact this may have on the Company.
(b) Revenue and income recognition
Revenue comprises the fair value of the consideration received or receivable for the provision of services in
the ordinary course of the Company’s activities. Revenue is shown net of General Consumption Tax and is
recognised as follows:
Insurance services
Gross premiums written are recognised on a pro-rated basis over the life of the policies written. The portion
of premiums written in the current year which relates to coverage in subsequent years is deferred as
unearned premiums (Note 2(p)(i)).
Commissions payable on premium income and commissions receivable on reinsurance of risks are charged
and credited to profit or loss, respectively, over the life of the policies.
Interest income
Interest income is recognised on a time-proportion basis using the effective interest method. When a
receivable is impaired, the Company reduces the carrying amount to its recoverable amount, being the
estimated future cash flow discounted at the original effective interest rate of the instrument, and continues
unwinding the discount as interest income.
Dividend
Dividend income for equities is recognised when the right to receive payment is established.
Rental income
Rental income is recognised on an accrual basis.
(c) Foreign currency translation
(i) Functional and presentation currency
Items included in the financial statements of the Company are measured using the currency of the
primary economic environment in which it operates (the functional currency). The financial statements
are presented in Jamaican dollars which is also the company’s functional currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates
prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at year-end exchange rates of monetary
assets and liabilities denominated in foreign currencies are recognised in profit or loss.
Translation differences resulting from changes in the amortised cost of foreign currency monetary assets
classified as available-for-sale are recognised in profit or loss. Other changes in the fair value of these
assets are recognised in other comprehensive income. Translation differences on non-monetary financial
assets classified as available-for-sale are reported as a component of the fair value gain or loss in other
comprehensive income.
(d) Financial instruments
Financial instruments carried on the statement of financial position include investments, due to and from
related parties, due to and from reinsurers and coinsurers, due from policyholders, brokers and agents, loans
and other receivables, cash and short term investments, other liabilities and claims liabilities. The particular
recognition methods adopted are disclosed in the individual policy statements associated with each item.
The fair values of the company’s financial instruments are discussed in Note 6.
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
2. Summary of Significant Accounting Policies (Continued)
(a) Basis of preparation (continued)
Accounting pronouncements effective in 2013 which are relevant to the Company’s operations
IFRS 12, 'Disclosures of interests in other entities' (effective 1 January 2013). This standard
includes the disclosure requirements for all forms of interests in other entities, including joint
arrangements, associates, special purpose vehicles and other off balance sheet vehicles. Management
has adopted the provisions of this standard and has concluded there will be no impact on the
Company.
IFRS 13, ‘Fair Value Measurement’, (effective 1 January 2013). This standard, aims to improve
consistency and reduce complexity by providing a precise definition of fair value and a single source of
fair value measurement and disclosure requirements for use across IFRSs. The requirements, which
are largely aligned between IFRSs and US GAAP, do not extend the use of fair value accounting but
provide guidance on how it should be applied where its use is already required or permitted by other
standards within IFRSs or US GAAP. The Company adopted the standard from 1 January 2013.
Accounting pronouncements that are not yet effective, and have not been early adopted
At the date of authorisation of these financial statements, certain new standards, interpretations and
amendments to existing standards have been issued which are mandatory for the Company’s accounting
periods beginning on or after 1 January 2013 or later periods, but were not effective at the date of the
statement of financial position, and which the Company has not early adopted. The Company has assessed
the relevance of all such new standards, interpretations and amendments, has determined that the following
may be relevant to its operations, and has concluded as follows:
IAS 32, (Amendment), ‘Financial instruments: Presentation’, (effective 1 January 2014). These
amendments clarify some of the requirements for offsetting financial assets and a financial liability on
the balance sheet. Management is currently assessing the impact this may have on the Company.
IAS 36, (Amendment), ‘Impairment of assets’, (effective 1 January 2014). This amendment
addresses the disclosure of information about the recoverable amount of impaired assets if that amount
is based on fair value less costs of disposal. The Company will adopt the standard from 1 January 2014.
IFRS 9, ‘Financial instruments’ (effective 1 January 2015). The standard introduces new
requirements for the classification and measurement of financial assets and liabilities and is effective
from 1 January 2015 with early adoption permitted. The standard divides all financial assets and
liabilities that are currently in the scope of IAS 39 into two classifications – those measured at amortised
cost and those measured at fair value. This standard is a work in progress and will eventually replace
IAS 39 in its entirety. Management is currently assessing the impact this may have on the Company.
Page 7
Page 8
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
2. Summary of Significant Accounting Policies (Continued)
(b) Revenue and income recognition
Revenue comprises the fair value of the consideration received or receivable for the provision of services in
the ordinary course of the Company’s activities. Revenue is shown net of General Consumption Tax and is
recognised as follows:
Insurance services
Gross premiums written are recognised on a pro-rated basis over the life of the policies written. The portion
of premiums written in the current year which relates to coverage in subsequent years is deferred as
unearned premiums (Note 2(p)(i)).
Commissions payable on premium income and commissions receivable on reinsurance of risks are charged
and credited to profit or loss, respectively, over the life of the policies.
Interest income
Interest income is recognised on a time-proportion basis using the effective interest method. When a
receivable is impaired, the Company reduces the carrying amount to its recoverable amount, being the
estimated future cash flow discounted at the original effective interest rate of the instrument, and continues
unwinding the discount as interest income.
Dividend
Dividend income for equities is recognised when the right to receive payment is established.
Rental income
Rental income is recognised on an accrual basis.
(c) Foreign currency translation
(i) Functional and presentation currency
Items included in the financial statements of the Company are measured using the currency of the
primary economic environment in which it operates (the functional currency). The financial statements
are presented in Jamaican dollars which is also the company’s functional currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates
prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at year-end exchange rates of monetary
assets and liabilities denominated in foreign currencies are recognised in profit or loss.
Translation differences resulting from changes in the amortised cost of foreign currency monetary assets
classified as available-for-sale are recognised in profit or loss. Other changes in the fair value of these
assets are recognised in other comprehensive income. Translation differences on non-monetary financial
assets classified as available-for-sale are reported as a component of the fair value gain or loss in other
comprehensive income.
(d) Financial instruments
Financial instruments carried on the statement of financial position include investments, due to and from
related parties, due to and from reinsurers and coinsurers, due from policyholders, brokers and agents, loans
and other receivables, cash and short term investments, other liabilities and claims liabilities. The particular
recognition methods adopted are disclosed in the individual policy statements associated with each item.
The fair values of the company’s financial instruments are discussed in Note 6.
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
2. Summary of Significant Accounting Policies (Continued)
Page 9
General Accident Insurance Company Jamaica Limited
Page 10
(e) Cash and cash equivalents
Cash and cash equivalents are stated at cost. For purposes of the cash flow statement, cash and cash
equivalents comprise balances with maturity dates of less than 90 days from the dates of acquisition including
cash and bank balances and deposits held on call with banks.
(f) Investments
Investments are classified as held-to-maturity, available-for-sale and fair value through profit or loss.
Management determines the appropriate classification of investments at the time of purchase. Purchases
and sales of investments are recognised on the trade date, which is the date that the Company commits to
purchase or sell the asset.
(i)
Held-to-maturity financial assets
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments
and fixed maturities that the Company’s management has the positive intention and ability to hold to
maturity. Were the Company to sell other than an insignificant amount of held-to-maturity assets, the
entire category would be tainted and reclassified as available-for-sale. Held-to-maturity investments are
initially recorded at fair value and subsequently measured at amortised cost.
(ii) Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held for trading or designated at
fair value through profit or loss at inception. Investments classified as fair value through profit or loss,
are initially recognised at fair value and transaction costs are expensed through profit or loss.
Investments at fair value through profit or loss are subsequently measured at fair value. Gains or losses
arising from changes in the fair value of investments at fair value through profit or loss are presented in
investment income in arriving at profit or loss.
(iii) Available for sale financial assets
Available-for-sale financial assets are non-derivatives that are either designated in this category or not
classified in any of the other categories. Available-for-sale investments are initially recognised at fair
value, which includes transaction costs, and subsequently carried at fair value based on quoted bid
prices or amounts derived from cash flow models. Unrealised gains and losses arising from changes in
fair value of available-for-sale securities are recognised in other comprehensive income.
Equity securities for which fair values cannot be measured reliably are recognised at cost less
impairment. When securities classified as available-for-sale are sold or impaired, the accumulated fair
value adjustments in equity at the date of disposal or impairment are reclassified to profit or loss.
(iv) Reclassification of financial assets
Financial assets are reclassified if; as a result of a change in intention or ability, management has
determined that it is no longer appropriate to classify an investment as held-to-maturity.
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
2. Summary of Significant Accounting Policies (Continued)
(f) Investments (continued)
(v) Impairment of financial assets
A financial asset is considered impaired if its carrying amount exceeds its estimated recoverable
amount. The Company assesses at each year end whether there is objective evidence that a financial
asset or group of financial assets is impaired. The amount of the impairment loss for assets carried at
amortised cost is calculated as the difference between the asset’s carrying amount and the present
value of expected future cash flows discounted at the original effective interest rate. The recoverable
amount of a financial asset carried at fair value is the present value of expected future cash flows
discounted at the current market interest rate for a similar financial asset. In the case of equity
securities classified as available-for-sale, a significant or prolonged decline in the fair value of the
security below its cost is considered as an indicator that the securities are impaired. If any such
evidence exists for available-for-sale financial assets, the cumulative loss - measured as the difference
between the acquisition cost and the current fair value, less any impairment loss on that financial asset
previously recognised in other comprehensive income – is recycled through other comprehensive
income and recognised in profit or loss for the current year. Impairment losses recognised in profit or
loss on equity instruments are not reversed through profit or loss.
(g) Loans and receivables
The Company classifies its financial assets other than investments in the loans and receivables category.
The classification depends on the purpose for which the financial assets were acquired. Management
determines the classification at initial recognition and re-evaluates this designation at every reporting date.
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market.
Financial assets classified as loans and receivables either meet the definition of loans and receivables at
the date of acquisition, or at the date of reclassification from another category (fair value through profit or
loss or available-for-sale). Leases and loans receivable have been classified as loans and receivables.
A provision for bad debts is established if there is objective evidence that a loan is impaired. A loan is
considered impaired when management determines that it is probable that all amounts due will not be
collected according to the original contractual terms. When a loan has been identified as impaired, the
carrying amount of the loan is reduced by recording specific provisions for bad debt to its estimated
recoverable amount, which is the present value of the expected future cash flows including amounts
recoverable from guarantees and collateral, discounted at the original effective interest rate of the loan
General Accident Insurance Company Jamaica Limited
Page 9
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
2. Summary of Significant Accounting Policies (Continued)
(e) Cash and cash equivalents
Cash and cash equivalents are stated at cost. For purposes of the cash flow statement, cash and cash
equivalents comprise balances with maturity dates of less than 90 days from the dates of acquisition including
cash and bank balances and deposits held on call with banks.
(f) Investments
Investments are classified as held-to-maturity, available-for-sale and fair value through profit or loss.
Management determines the appropriate classification of investments at the time of purchase. Purchases
and sales of investments are recognised on the trade date, which is the date that the Company commits to
purchase or sell the asset.
(i)
Held-to-maturity financial assets
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments
and fixed maturities that the Company’s management has the positive intention and ability to hold to
maturity. Were the Company to sell other than an insignificant amount of held-to-maturity assets, the
entire category would be tainted and reclassified as available-for-sale. Held-to-maturity investments are
initially recorded at fair value and subsequently measured at amortised cost.
(ii) Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held for trading or designated at
fair value through profit or loss at inception. Investments classified as fair value through profit or loss,
are initially recognised at fair value and transaction costs are expensed through profit or loss.
Investments at fair value through profit or loss are subsequently measured at fair value. Gains or losses
arising from changes in the fair value of investments at fair value through profit or loss are presented in
investment income in arriving at profit or loss.
(iii) Available for sale financial assets
Available-for-sale financial assets are non-derivatives that are either designated in this category or not
classified in any of the other categories. Available-for-sale investments are initially recognised at fair
value, which includes transaction costs, and subsequently carried at fair value based on quoted bid
prices or amounts derived from cash flow models. Unrealised gains and losses arising from changes in
fair value of available-for-sale securities are recognised in other comprehensive income.
Equity securities for which fair values cannot be measured reliably are recognised at cost less
impairment. When securities classified as available-for-sale are sold or impaired, the accumulated fair
value adjustments in equity at the date of disposal or impairment are reclassified to profit or loss.
(iv) Reclassification of financial assets
Financial assets are reclassified if; as a result of a change in intention or ability, management has
determined that it is no longer appropriate to classify an investment as held-to-maturity.
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
Page 10
2. Summary of Significant Accounting Policies (Continued)
(f) Investments (continued)
(v) Impairment of financial assets
A financial asset is considered impaired if its carrying amount exceeds its estimated recoverable
amount. The Company assesses at each year end whether there is objective evidence that a financial
asset or group of financial assets is impaired. The amount of the impairment loss for assets carried at
amortised cost is calculated as the difference between the asset’s carrying amount and the present
value of expected future cash flows discounted at the original effective interest rate. The recoverable
amount of a financial asset carried at fair value is the present value of expected future cash flows
discounted at the current market interest rate for a similar financial asset. In the case of equity
securities classified as available-for-sale, a significant or prolonged decline in the fair value of the
security below its cost is considered as an indicator that the securities are impaired. If any such
evidence exists for available-for-sale financial assets, the cumulative loss - measured as the difference
between the acquisition cost and the current fair value, less any impairment loss on that financial asset
previously recognised in other comprehensive income – is recycled through other comprehensive
income and recognised in profit or loss for the current year. Impairment losses recognised in profit or
loss on equity instruments are not reversed through profit or loss.
(g) Loans and receivables
The Company classifies its financial assets other than investments in the loans and receivables category.
The classification depends on the purpose for which the financial assets were acquired. Management
determines the classification at initial recognition and re-evaluates this designation at every reporting date.
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market.
Financial assets classified as loans and receivables either meet the definition of loans and receivables at
the date of acquisition, or at the date of reclassification from another category (fair value through profit or
loss or available-for-sale). Leases and loans receivable have been classified as loans and receivables.
A provision for bad debts is established if there is objective evidence that a loan is impaired. A loan is
considered impaired when management determines that it is probable that all amounts due will not be
collected according to the original contractual terms. When a loan has been identified as impaired, the
carrying amount of the loan is reduced by recording specific provisions for bad debt to its estimated
recoverable amount, which is the present value of the expected future cash flows including amounts
recoverable from guarantees and collateral, discounted at the original effective interest rate of the loan
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
2. Summary of Significant Accounting Policies (Continued)
Page 11
Page 12
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
2. Summary of Significant Accounting Policies (Continued)
(h) Leases
Leases of property, plant and equipment where the Company has substantially all the risks and rewards of
ownership are classified as finance leases. Finance leases are capitalised at the inception of the lease at
the lower of the fair value of the leased property or the present value of the minimum lease payments.
Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate
on the finance balance outstanding. The corresponding rental obligations, net of finance charges, are
included in non-current borrowings. The interest element of the finance cost is charged to the statement of
comprehensive income over the lease period so as to produce a constant periodic rate of interest on the
remaining balance of the liability for each period. Property, plant and equipment acquired under finance
leases are depreciated over the shorter of the useful life of the asset or the lease term.
Leases where a significant portion of the risks and rewards of ownership are retained by the lessor are
classified as operating leases. Payments made under operating leases (net of any incentives received from
the lessor) are charged to the statement of comprehensive income on a straight-line basis over the period of
the lease.
When an operating lease is terminated before the lease period has expired, any payment required to be
made to the lessor by way of penalty is recognised in profit or loss in the period in which termination takes
place
(i)
Insurance contracts
Insurance contracts are those contracts that transfer significant insurance risk. The Company’s insurance
contracts are classified as short-term insurance contracts which include casualty and property insurance
contracts.
Casualty insurance contracts protect the Company’s customers against the risk of causing harm to third
parties as a result of their legitimate activities. Damages covered include both contractual and
non-contractual events. The typical protection offered is designed for employers who become legally liable
to pay compensation to injured employees (employer’s liability) and business customers who become liable
to pay compensation to a third party for bodily harm or property damage (public liability).
Property insurance contracts mainly compensate the Company’s customers for damage suffered to their
properties or for the value of property lost. Customers who undertake commercial activities on their
premises could also receive compensation for loss of earnings caused by the inability to use the insured
properties in their business activities (business interruption cover).
Premiums are recognised as revenue (earned premiums) proportionally over the period of coverage. The
portion of premium received on in-force contracts that relates to unexpired risk at the date of the statement
of financial position is reported as unearned premium in Insurance Reserves. Premiums are shown before
deductible commission.
Claims and loss adjustments expenses are charged to profit or loss as incurred based on estimated liability
for compensation owed to contract holders or third parties damaged by the contract holders. They include
direct and indirect claims settlement costs and arise from events that have occurred up to the date of the
statement of financial position even if they have not yet been reported to the Company. The Company does
not discount its liabilities for unpaid claims. Liabilities for unpaid claims are estimated using the input of
assessments for individual cases reported to the Company. Statistical analysis is used to estimate claims
incurred but not reported, as well as the expected ultimate cost of more complex claims that may be
affected by external factors.
(j)
Receivables and payables related to insurance contracts
Receivables and payables related to insurance contracts are recognised when due. These include amounts
due to and from agents, brokers and insurance contract holders.
If there is objective evidence that the insurance receivable is impaired, the Company reduces the carrying
amount of the insurance receivable accordingly and recognises the impairment loss in profit or loss.
(k) Reinsurance ceded
Contracts entered into by the Company with reinsurers under which the Company is compensated for losses
on one or more contracts issued by the Company are classified as reinsurance contracts.
The benefits to which the Company is entitled under its reinsurance contracts held are recognised as
reinsurance assets. These assets consist of short–term balances due from reinsurers as well as longer term
receivables that are dependent on the expected claims and benefits arising under the related reinsurance
contracts. Amounts recoverable from or due to reinsurers are measured consistently with amounts associated
with the reinsured insurance contracts and in accordance with the terms of each reinsurance contract.
Reinsurance liabilities are primarily premiums payable for reinsurance contracts and are recognised as an
expense when due.
Estimated amounts of reinsurance recoverable, which represent the portion of unearned premiums ceded to
the reinsurers, are included in recoverable from reinsurers on the statement of financial position.
The Company relies upon reinsurance agreements to limit the potential for losses and to increase its capacity
to write insurance. Reinsurance arrangements are effected under reinsurance treaties and by negotiation on
individual risks. Reinsurance does not relieve the Company from liability to its policyholders. To the extent that
a reinsurer may be unable to pay losses for which it is liable under the terms of the reinsurance agreement, the
Comapany is exposed to the risk of continued liability for such losses. However, in an effort to reduce the risk
of non-payment, the Company requires all of its reinsurers to have a Standard & Poor or equivalent rating of A-
or better.
The Company assesses its reinsurance assets for impairment. If there is objective evidence that the
reinsurance asset is impaired, the Company reduces the carrying amount of the reinsurance asset to its
recoverable amount and recognises that impairment loss in profit or loss.
(l) Deferred policy acquisition costs
The cost of acquiring and renewing insurance contracts, including commissions, underwriting and policy
issue expenses, which vary with and are directly related to the contracts, are deferred over the unexpired
period of risk carried. Deferred policy acquisition costs are subject to recoverability testing at the time of
policy issue and at the end of each accounting period.
(m) Property, plant and equipment
Land is stated at historical cost. All other property, plant and equipment are stated at historical cost less
accumulated depreciation and impairment. Depreciation is computed on the straight line method at rates
estimated to write off the assets over their expected useful lives as follows:
Buildings
Furniture, fixtures and equipment
Motor vehicles
5% and 2.5%
10%
25%
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
2. Summary of Significant Accounting Policies (Continued)
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
2. Summary of Significant Accounting Policies (Continued)
Page 11
Page 12
Page 12
(h) Leases
Leases of property, plant and equipment where the Company has substantially all the risks and rewards of
ownership are classified as finance leases. Finance leases are capitalised at the inception of the lease at
the lower of the fair value of the leased property or the present value of the minimum lease payments.
Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate
on the finance balance outstanding. The corresponding rental obligations, net of finance charges, are
included in non-current borrowings. The interest element of the finance cost is charged to the statement of
comprehensive income over the lease period so as to produce a constant periodic rate of interest on the
remaining balance of the liability for each period. Property, plant and equipment acquired under finance
leases are depreciated over the shorter of the useful life of the asset or the lease term.
Leases where a significant portion of the risks and rewards of ownership are retained by the lessor are
classified as operating leases. Payments made under operating leases (net of any incentives received from
the lessor) are charged to the statement of comprehensive income on a straight-line basis over the period of
When an operating lease is terminated before the lease period has expired, any payment required to be
made to the lessor by way of penalty is recognised in profit or loss in the period in which termination takes
(i)
Insurance contracts
Insurance contracts are those contracts that transfer significant insurance risk. The Company’s insurance
contracts are classified as short-term insurance contracts which include casualty and property insurance
the lease.
place
contracts.
Casualty insurance contracts protect the Company’s customers against the risk of causing harm to third
parties as a result of their legitimate activities. Damages covered include both contractual and
non-contractual events. The typical protection offered is designed for employers who become legally liable
to pay compensation to injured employees (employer’s liability) and business customers who become liable
to pay compensation to a third party for bodily harm or property damage (public liability).
Property insurance contracts mainly compensate the Company’s customers for damage suffered to their
properties or for the value of property lost. Customers who undertake commercial activities on their
premises could also receive compensation for loss of earnings caused by the inability to use the insured
properties in their business activities (business interruption cover).
Premiums are recognised as revenue (earned premiums) proportionally over the period of coverage. The
portion of premium received on in-force contracts that relates to unexpired risk at the date of the statement
of financial position is reported as unearned premium in Insurance Reserves. Premiums are shown before
deductible commission.
Claims and loss adjustments expenses are charged to profit or loss as incurred based on estimated liability
for compensation owed to contract holders or third parties damaged by the contract holders. They include
direct and indirect claims settlement costs and arise from events that have occurred up to the date of the
statement of financial position even if they have not yet been reported to the Company. The Company does
not discount its liabilities for unpaid claims. Liabilities for unpaid claims are estimated using the input of
assessments for individual cases reported to the Company. Statistical analysis is used to estimate claims
incurred but not reported, as well as the expected ultimate cost of more complex claims that may be
affected by external factors.
(j)
Receivables and payables related to insurance contracts
Receivables and payables related to insurance contracts are recognised when due. These include amounts
due to and from agents, brokers and insurance contract holders.
If there is objective evidence that the insurance receivable is impaired, the Company reduces the carrying
amount of the insurance receivable accordingly and recognises the impairment loss in profit or loss.
(k) Reinsurance ceded
Contracts entered into by the Company with reinsurers under which the Company is compensated for losses
on one or more contracts issued by the Company are classified as reinsurance contracts.
The benefits to which the Company is entitled under its reinsurance contracts held are recognised as
reinsurance assets. These assets consist of short–term balances due from reinsurers as well as longer term
receivables that are dependent on the expected claims and benefits arising under the related reinsurance
contracts. Amounts recoverable from or due to reinsurers are measured consistently with amounts associated
with the reinsured insurance contracts and in accordance with the terms of each reinsurance contract.
Reinsurance liabilities are primarily premiums payable for reinsurance contracts and are recognised as an
expense when due.
Estimated amounts of reinsurance recoverable, which represent the portion of unearned premiums ceded to
the reinsurers, are included in recoverable from reinsurers on the statement of financial position.
The Company relies upon reinsurance agreements to limit the potential for losses and to increase its capacity
to write insurance. Reinsurance arrangements are effected under reinsurance treaties and by negotiation on
individual risks. Reinsurance does not relieve the Company from liability to its policyholders. To the extent that
a reinsurer may be unable to pay losses for which it is liable under the terms of the reinsurance agreement, the
Comapany is exposed to the risk of continued liability for such losses. However, in an effort to reduce the risk
of non-payment, the Company requires all of its reinsurers to have a Standard & Poor or equivalent rating of A-
or better.
The Company assesses its reinsurance assets for impairment. If there is objective evidence that the
reinsurance asset is impaired, the Company reduces the carrying amount of the reinsurance asset to its
recoverable amount and recognises that impairment loss in profit or loss.
(l) Deferred policy acquisition costs
The cost of acquiring and renewing insurance contracts, including commissions, underwriting and policy
issue expenses, which vary with and are directly related to the contracts, are deferred over the unexpired
period of risk carried. Deferred policy acquisition costs are subject to recoverability testing at the time of
policy issue and at the end of each accounting period.
(m) Property, plant and equipment
Land is stated at historical cost. All other property, plant and equipment are stated at historical cost less
accumulated depreciation and impairment. Depreciation is computed on the straight line method at rates
estimated to write off the assets over their expected useful lives as follows:
Buildings
Furniture, fixtures and equipment
Motor vehicles
5% and 2.5%
10%
25%
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
Page 13
Page 14
2. Summary of Significant Accounting Policies (Continued)
2. Summary of Significant Accounting Policies (Continued)
(m) Property, plant and equipment (continued)
Property, plant and equipment are reviewed periodically for impairment. Where the carrying amount of an
asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable
amount. Gains and losses on disposals are determined by comparing proceeds with carrying amount and
are included in operating profit.
(p) Insurance reserves (continued)
(iii) Claims outstanding
Repairs and maintenance expenses are charged to profit or loss during the financial period in which they
are incurred. The cost of major renovations is included in the carrying amount of the asset when it is
probable that future economic benefits in excess of the originally assessed standard of performance of the
existing asset will flow to the Group. Major renovations are depreciated over the remaining useful life of the
related asset.
(n) Intangible assets
Computer software
Acquired software licences are capitalised on the basis of the costs incurred to acquire and bring to use the
specific software. These costs are amortised on the basis of the expected useful life, which is between
three to five years.
(o) Impairment of long-lived assets
Long-lived assets are reviewed for impairment losses whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount
by which the carrying amount of the asset exceeds its recoverable amount, which is the higher of an asset’s
net selling price and value in use. For the purpose of assessing impairment, assets are grouped at the
lowest levels for which there are separately identifiable cash flows.
(p) Insurance reserves
Under the Insurance Regulations, 2001, the Company is required to actuarially value its insurance reserves
annually. Consequently, provision for claims incurred but not reported (IBNR) has been independently
actuarially determined. The remaining components of the reserves are also reviewed by the actuary in
determining the overall adequacy of the provision for the Company’s insurance liabilities.
(i)
Provision for unearned premium
The provision for unearned premium represents that proportion of premiums written in respect of risks to
be borne subsequent to the year end, under contracts entered into on or before the date of the
statement of financial position and is computed by applying the “365th” method to gross written
premiums for the period, except for marine where the unearned premium reserve is calculated as 20%
of the year’s gross written premiums.
(ii) Unearned commission
The unearned commission represents the actual commission income on premium ceded on proportional
reinsurance contracts relating to the unexpired period of risk carried. The income is deferred as unearned
commission reserves, and amortised over the period in which the commissions are expected to be earned.
These reserves are calculated on the 365th method.
A provision is made to cover the estimated cost of settling claims arising out of events which occurred
by the year end, including claims incurred but not reported (IBNR), less amounts already paid in respect
of those claims. This provision is estimated by management (insurance case reserves) and the
appointed actuary (IBNR) on the basis of claims admitted and intimated.
(iv) Claims incurred but not reported
The reserve for IBNR claims has been calculated by an independent actuary using the Paid Loss
Development method, the Incurred Loss Development method, the Bornhuetter-Ferguson Paid Loss
method, the Bornhuetter-Ferguson Incurred Loss method, the Expected Loss Ratio method and the
Frequency-Severity method (Note 28). This calculation is done in accordance with the Insurance Act
2001.
(q) Accounts payable
(r) Taxation
Payables are recognised at fair value and subsequently measured at amortised cost.
Taxation on the profit or loss for the year comprises current and deferred tax. Current and deferred taxes
are recognised as income tax expense or benefit in net profit or loss in the statement of comprehensive
income except where they relate to items recorded in other comprehensive income or equity, in which case
they are also charged or credited to other comprehensive income or equity.
Current tax is the expected taxation payable on the taxable income for the year, using tax rates enacted
at date of the statement of financial position, and any adjustment to tax payable and tax losses in
(i) Current taxation
respect of the previous years.
(ii) Deferred income taxes
Deferred tax liabilities are recognised for temporary differences between the carrying amounts of assets
and liabilities and their amounts as measured for tax purposes, which will result in taxable amounts in
future periods. Deferred tax assets are recognised for temporary differences which will result in
deductible amounts in future periods, but only to the extent it is probable that sufficient taxable profits
will be available against which these differences can be utilised.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period
in which the asset will be realised or the liability will be settled based on enacted rates.
(s) Employee benefits
(i) Pension obligations
The Company participates in the defined contribution pension plan of a related company, T. Geddes Grant
(Distributors) Limited. A defined contribution pension plan is a pension plan under which the Company
pays fixed contributions into a separate entity. The Company has no legal or constructive obligations to
pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits
relating to employee service in the current and prior periods. The contributions paid by the Company are
recorded as an expense in profit or loss.
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
Page 13
Page 14
2. Summary of Significant Accounting Policies (Continued)
2. Summary of Significant Accounting Policies (Continued)
(m) Property, plant and equipment (continued)
Property, plant and equipment are reviewed periodically for impairment. Where the carrying amount of an
asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable
amount. Gains and losses on disposals are determined by comparing proceeds with carrying amount and
are included in operating profit.
Repairs and maintenance expenses are charged to profit or loss during the financial period in which they
are incurred. The cost of major renovations is included in the carrying amount of the asset when it is
probable that future economic benefits in excess of the originally assessed standard of performance of the
existing asset will flow to the Group. Major renovations are depreciated over the remaining useful life of the
related asset.
(n) Intangible assets
Computer software
three to five years.
Acquired software licences are capitalised on the basis of the costs incurred to acquire and bring to use the
specific software. These costs are amortised on the basis of the expected useful life, which is between
(o) Impairment of long-lived assets
Long-lived assets are reviewed for impairment losses whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount
by which the carrying amount of the asset exceeds its recoverable amount, which is the higher of an asset’s
net selling price and value in use. For the purpose of assessing impairment, assets are grouped at the
lowest levels for which there are separately identifiable cash flows.
(p) Insurance reserves
Under the Insurance Regulations, 2001, the Company is required to actuarially value its insurance reserves
annually. Consequently, provision for claims incurred but not reported (IBNR) has been independently
actuarially determined. The remaining components of the reserves are also reviewed by the actuary in
determining the overall adequacy of the provision for the Company’s insurance liabilities.
(i)
Provision for unearned premium
The provision for unearned premium represents that proportion of premiums written in respect of risks to
be borne subsequent to the year end, under contracts entered into on or before the date of the
statement of financial position and is computed by applying the “365th” method to gross written
premiums for the period, except for marine where the unearned premium reserve is calculated as 20%
of the year’s gross written premiums.
(ii) Unearned commission
The unearned commission represents the actual commission income on premium ceded on proportional
reinsurance contracts relating to the unexpired period of risk carried. The income is deferred as unearned
commission reserves, and amortised over the period in which the commissions are expected to be earned.
These reserves are calculated on the 365th method.
(p) Insurance reserves (continued)
(iii) Claims outstanding
A provision is made to cover the estimated cost of settling claims arising out of events which occurred
by the year end, including claims incurred but not reported (IBNR), less amounts already paid in respect
of those claims. This provision is estimated by management (insurance case reserves) and the
appointed actuary (IBNR) on the basis of claims admitted and intimated.
(iv) Claims incurred but not reported
The reserve for IBNR claims has been calculated by an independent actuary using the Paid Loss
Development method, the Incurred Loss Development method, the Bornhuetter-Ferguson Paid Loss
method, the Bornhuetter-Ferguson Incurred Loss method, the Expected Loss Ratio method and the
Frequency-Severity method (Note 28). This calculation is done in accordance with the Insurance Act
2001.
(q) Accounts payable
Payables are recognised at fair value and subsequently measured at amortised cost.
(r) Taxation
Taxation on the profit or loss for the year comprises current and deferred tax. Current and deferred taxes
are recognised as income tax expense or benefit in net profit or loss in the statement of comprehensive
income except where they relate to items recorded in other comprehensive income or equity, in which case
they are also charged or credited to other comprehensive income or equity.
(i) Current taxation
Current tax is the expected taxation payable on the taxable income for the year, using tax rates enacted
at date of the statement of financial position, and any adjustment to tax payable and tax losses in
respect of the previous years.
(ii) Deferred income taxes
Deferred tax liabilities are recognised for temporary differences between the carrying amounts of assets
and liabilities and their amounts as measured for tax purposes, which will result in taxable amounts in
future periods. Deferred tax assets are recognised for temporary differences which will result in
deductible amounts in future periods, but only to the extent it is probable that sufficient taxable profits
will be available against which these differences can be utilised.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period
in which the asset will be realised or the liability will be settled based on enacted rates.
(s) Employee benefits
(i) Pension obligations
The Company participates in the defined contribution pension plan of a related company, T. Geddes Grant
(Distributors) Limited. A defined contribution pension plan is a pension plan under which the Company
pays fixed contributions into a separate entity. The Company has no legal or constructive obligations to
pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits
relating to employee service in the current and prior periods. The contributions paid by the Company are
recorded as an expense in profit or loss.
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
Page 15
Page 16
2. Summary of Significant Accounting Policies (Continued)
3. Responsibilities of the Appointed Actuary and External Auditors
(t) Employee benefits (continued)
(ii) Accrued vacation
Employee entitlements to annual leave are recognised when they accrue to employees. A provision is
made for the estimated liability for annual leave as a result of services rendered by employees up to the
date of the statement of financial position.
(iii) Termination benefits
Termination benefits are payable whenever an employee’s employment is terminated before the normal
retirement date or whenever an employee accepts voluntary redundancy in exchange for these benefits.
The Company recognises termination benefits when it is demonstrably committed to either terminating
the employment of current employees according to a detailed formal plan without possibility of
withdrawal or providing termination benefits as a result of an offer made to encourage voluntary
redundancy.
(iv) Profit-sharing and bonus plan
The Company recognises a liability and an expense for bonuses and profit-sharing, based on a formula
that takes into consideration the profit attributable to the Company’s shareholders after certain
adjustments. The Company recognises a provision where contractually obliged or where there is a past
practice that has created a constructive obligation.
(u) Dividend distribution
Dividend distribution to the Company’s shareholders is recognised as a liability in the Company’s financial
statements in the period in which the dividends are approved by the Company’s shareholders.
(v) Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief
operating decision-maker. The chief operating decision-maker, which is responsible for allocating resources
and assessing performance of the operating segments, has been identified as the Board of Directors that
makes strategic decisions.
The Board of Directors, pursuant to the Insurance Act, appoints the Actuary. His responsibility is to carry out an
annual valuation of the Company’s claims liabilities and insurance reserves in accordance with accepted actuarial
practice and regulatory requirements and report thereon to the shareholders. In performing the valuation, the
Actuary analyses past experience with respect to number of claims, claims payment and changes in estimates of
outstanding liabilities.
The shareholders, pursuant to the Companies Act, appoint the external auditors. Their responsibility is to conduct
an independent and objective audit of the financial statements in accordance with International Standards on
Auditing and report thereon to the shareholders. In carrying out their audit, the auditors also make use of the work
of the appointed Actuary and his report on claims liabilities and insurance reserves.
4.
Insurance and Financial Risk Management
(a) Insurance risk
The Company’s activities expose it to a variety of insurance and financial risks and those activities
necessitate the analysis, evaluation, control and/or acceptance of some degree of risk or combination of
risks. Taking various types of risk is core to the financial services business and operational risks are an
inevitable consequence of being in business. The Company’s aim is therefore to achieve an appropriate
balance between risk and return and minimise potential adverse effects on the Company’s financial
The Board of Directors is ultimately responsible for the establishment and oversight of the risk management
framework. The Board of Directors has established committees and departments for managing and monitoring
performance.
risks, as follows:
(i)
Investment and Loan Committee
strategies for the Company.
(ii) Finance Department
the Company.
(iii) Conduct Review Committee
and statutory requirements.
(iv) Audit Committee
The Investment and Loan Committee is responsible for monitoring and approving investment
The Finance Department is responsible for managing the Company’s assets and liabilities and the
overall financial structure. It is also primarily responsible for managing the funding and liquidity risks of
The Conduct Review Committee is responsible for monitoring the Company’s adherence to regulatory
The Audit Committee oversees how management monitors compliance with the Company’s risk
management policies and procedures and reviews the adequacy of the risk management framework in
relation to the risks faced by the Company.
(v) Remuneration Committee
The remuneration committee is responsible for reviewing and recommending for approval, the
remuneration arrangements of the directors and senior officers.
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
Page 15
Page 16
2. Summary of Significant Accounting Policies (Continued)
3. Responsibilities of the Appointed Actuary and External Auditors
(t) Employee benefits (continued)
(ii) Accrued vacation
Employee entitlements to annual leave are recognised when they accrue to employees. A provision is
made for the estimated liability for annual leave as a result of services rendered by employees up to the
date of the statement of financial position.
(iii) Termination benefits
Termination benefits are payable whenever an employee’s employment is terminated before the normal
retirement date or whenever an employee accepts voluntary redundancy in exchange for these benefits.
The Company recognises termination benefits when it is demonstrably committed to either terminating
the employment of current employees according to a detailed formal plan without possibility of
withdrawal or providing termination benefits as a result of an offer made to encourage voluntary
redundancy.
(iv) Profit-sharing and bonus plan
The Company recognises a liability and an expense for bonuses and profit-sharing, based on a formula
that takes into consideration the profit attributable to the Company’s shareholders after certain
adjustments. The Company recognises a provision where contractually obliged or where there is a past
practice that has created a constructive obligation.
Dividend distribution to the Company’s shareholders is recognised as a liability in the Company’s financial
statements in the period in which the dividends are approved by the Company’s shareholders.
(u) Dividend distribution
(v) Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief
operating decision-maker. The chief operating decision-maker, which is responsible for allocating resources
and assessing performance of the operating segments, has been identified as the Board of Directors that
makes strategic decisions.
The Board of Directors, pursuant to the Insurance Act, appoints the Actuary. His responsibility is to carry out an
annual valuation of the Company’s claims liabilities and insurance reserves in accordance with accepted actuarial
practice and regulatory requirements and report thereon to the shareholders. In performing the valuation, the
Actuary analyses past experience with respect to number of claims, claims payment and changes in estimates of
outstanding liabilities.
The shareholders, pursuant to the Companies Act, appoint the external auditors. Their responsibility is to conduct
an independent and objective audit of the financial statements in accordance with International Standards on
Auditing and report thereon to the shareholders. In carrying out their audit, the auditors also make use of the work
of the appointed Actuary and his report on claims liabilities and insurance reserves.
4.
Insurance and Financial Risk Management
(a) Insurance risk
The Company’s activities expose it to a variety of insurance and financial risks and those activities
necessitate the analysis, evaluation, control and/or acceptance of some degree of risk or combination of
risks. Taking various types of risk is core to the financial services business and operational risks are an
inevitable consequence of being in business. The Company’s aim is therefore to achieve an appropriate
balance between risk and return and minimise potential adverse effects on the Company’s financial
performance.
The Board of Directors is ultimately responsible for the establishment and oversight of the risk management
framework. The Board of Directors has established committees and departments for managing and monitoring
risks, as follows:
(i)
Investment and Loan Committee
The Investment and Loan Committee is responsible for monitoring and approving investment
strategies for the Company.
(ii) Finance Department
The Finance Department is responsible for managing the Company’s assets and liabilities and the
overall financial structure. It is also primarily responsible for managing the funding and liquidity risks of
the Company.
(iii) Conduct Review Committee
The Conduct Review Committee is responsible for monitoring the Company’s adherence to regulatory
and statutory requirements.
(iv) Audit Committee
The Audit Committee oversees how management monitors compliance with the Company’s risk
management policies and procedures and reviews the adequacy of the risk management framework in
relation to the risks faced by the Company.
(v) Remuneration Committee
The remuneration committee is responsible for reviewing and recommending for approval, the
remuneration arrangements of the directors and senior officers.
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
Page 17
Page 18
4. Insurance and Financial Risk Management (Continued)
4.
Insurance and Financial Risk Management (Continued)
(a) Insurance risk (continued)
(a) Insurance risk (continued)
The most important types of risk are insurance risk, reinsurance risk, credit risk, liquidity risk, market risk and
other operational risk. Market risk includes currency risk, interest rate and other price risk.
The Company issues contracts that transfer insurance risk. This section summarises these risks and the
way the Company manages them.
The risk under any one insurance contract is the possibility that the insured event occurs and the uncertainty
of the amount of the resulting claim. By the very nature of an insurance contract, this risk is random and
therefore unpredictable.
The principal risk that the Company faces under its insurance contracts is that the actual claim payments
exceed the carrying amount of the insurance liabilities. This could occur because the frequency or severity of
claims and benefits are greater than estimated. Insurance events are random and the actual number and
amount of claims and benefits will vary from year to year from the level established using statistical
techniques.
Experience shows that the larger the portfolio of similar insurance contracts, the smaller the relative variability
about the expected outcome will be. In addition, a more diversified portfolio is less likely to be affected across
the board by a change in any subset of the portfolio. The Company has developed its insurance underwriting
strategy to diversify the types of insurance risks accepted to achieve a sufficiently large population of risks to
reduce the variability of the expected outcome.
Factors that increase insurance risk include lack of risk diversification in terms of type and amount of risk and
geographical location.
Management maintains an appropriate balance between commercial and personal policies and type of
policies based on guidelines set by the Board of Directors. Insurance risk arising from the Company’s
insurance contracts is, however, concentrated within Jamaica.
The Company has the right to re-price the risk on renewal. It also has the ability to impose deductibles and
reject fraudulent claims. Where applicable, contracts are underwritten by reference to the commercial
replacement value of the properties or other assets and contents insured. Claims payment limits are always
included to cap the amount payable on occurrence of the insured event. The cost of rebuilding properties, of
replacement or indemnity for other assets and contents and time taken to restart operations for business
interruption are the key factors that influence the level of claims under these policies.
Claims on insurance contracts are payable on a claims-occurrence basis. The Company is liable for all
insured events that occurred during the term of the contract, even if the loss is discovered after the end of the
contract term. This is however subject to the policy limit. Liability claims are settled over a long period of time
and a portion of the claims provision relates to incurred but not reported (IBNR) claims. There are several
variables that affect the amount and timing of cash flows from these contracts. These mainly relate to the
inherent risks of the business activities carried out by individual contract holders and the risk management
procedures they adopted. The compensation paid on these contracts is the monetary awards granted for
bodily injury suffered by employees (for employer’s liability covers) or members of the public (for public liability
covers). Such awards are lump-sum payments that are calculated as the present value of the lost earnings
and rehabilitation expenses that the injured party will incur as a result of the accident.
The estimated cost of claims includes direct expenses to be incurred in settling claims, net of the expected
subrogation value and other recoveries. The Company takes all reasonable steps to ensure that it has
appropriate information regarding its claims exposures. However, given the uncertainty in establishing the
claims provisions, it is likely that the final outcome will prove to be different from the original liability
established. The liability for these contracts comprises a provision for IBNR, a provision for reported claims not
yet paid and a provision for unexpired risks at the date of financial position. The amount of casualty claims is
particularly sensitive to the level of court awards and to the development of legal precedent on matters of
contract and tort. Casualty contracts are also subject to the emergence of new types of latent claims, but no
allowance is included for this at the date of the statement of financial position.
In calculating the estimated cost of unpaid claims (both reported and not), the Company uses estimation
techniques that are a combination of loss-ratio-based estimates (where the loss ratio is defined as the ratio
between the ultimate cost of insurance claims and insurance premiums earned in a particular financial year
in relation to such claims) and an estimate based upon actual claims experience using predetermined
formulae where greater weight is given to actual claims experience as time passes.
The initial loss-ratio estimate is an important assumption in the estimation technique and is based on previous
years’ experience, adjusted for factors such as premium rate changes, anticipated market experience and
historical claims inflation. The initial estimate of the loss ratios used for the current year (before reinsurance) is
analysed by type of risk for current and prior year premiums earned.
The estimation of IBNR is generally subject to a greater degree of uncertainty than the estimation of the cost
of settling claims already notified to the Company, where information about the claim event is available.
IBNR claims may not be apparent to the insured until many years after the event that gave rise to the
claims. For casualty contracts, the IBNR proportion of the total liability is high and will typically display
greater variations between initial estimates and final outcomes because of the greater degree of difficulty of
estimating these liabilities.
In estimating the liability for the cost of reported claims not yet paid, the Company considers any information
available from loss adjusters and information on the cost of settling claims with similar characteristics in
previous periods. Large claims are assessed on a case-by-case basis or projected separately in order to
allow for the possible distortive effect of their development and incidence on the rest of the portfolio.
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
Page 17
Page 18
4. Insurance and Financial Risk Management (Continued)
4.
Insurance and Financial Risk Management (Continued)
(a) Insurance risk (continued)
(a) Insurance risk (continued)
The most important types of risk are insurance risk, reinsurance risk, credit risk, liquidity risk, market risk and
other operational risk. Market risk includes currency risk, interest rate and other price risk.
The Company issues contracts that transfer insurance risk. This section summarises these risks and the
way the Company manages them.
The risk under any one insurance contract is the possibility that the insured event occurs and the uncertainty
of the amount of the resulting claim. By the very nature of an insurance contract, this risk is random and
therefore unpredictable.
The principal risk that the Company faces under its insurance contracts is that the actual claim payments
exceed the carrying amount of the insurance liabilities. This could occur because the frequency or severity of
claims and benefits are greater than estimated. Insurance events are random and the actual number and
amount of claims and benefits will vary from year to year from the level established using statistical
techniques.
Experience shows that the larger the portfolio of similar insurance contracts, the smaller the relative variability
about the expected outcome will be. In addition, a more diversified portfolio is less likely to be affected across
the board by a change in any subset of the portfolio. The Company has developed its insurance underwriting
strategy to diversify the types of insurance risks accepted to achieve a sufficiently large population of risks to
reduce the variability of the expected outcome.
Factors that increase insurance risk include lack of risk diversification in terms of type and amount of risk and
geographical location.
Management maintains an appropriate balance between commercial and personal policies and type of
policies based on guidelines set by the Board of Directors. Insurance risk arising from the Company’s
insurance contracts is, however, concentrated within Jamaica.
The Company has the right to re-price the risk on renewal. It also has the ability to impose deductibles and
reject fraudulent claims. Where applicable, contracts are underwritten by reference to the commercial
replacement value of the properties or other assets and contents insured. Claims payment limits are always
included to cap the amount payable on occurrence of the insured event. The cost of rebuilding properties, of
replacement or indemnity for other assets and contents and time taken to restart operations for business
interruption are the key factors that influence the level of claims under these policies.
Claims on insurance contracts are payable on a claims-occurrence basis. The Company is liable for all
insured events that occurred during the term of the contract, even if the loss is discovered after the end of the
contract term. This is however subject to the policy limit. Liability claims are settled over a long period of time
and a portion of the claims provision relates to incurred but not reported (IBNR) claims. There are several
variables that affect the amount and timing of cash flows from these contracts. These mainly relate to the
inherent risks of the business activities carried out by individual contract holders and the risk management
procedures they adopted. The compensation paid on these contracts is the monetary awards granted for
bodily injury suffered by employees (for employer’s liability covers) or members of the public (for public liability
covers). Such awards are lump-sum payments that are calculated as the present value of the lost earnings
and rehabilitation expenses that the injured party will incur as a result of the accident.
The estimated cost of claims includes direct expenses to be incurred in settling claims, net of the expected
subrogation value and other recoveries. The Company takes all reasonable steps to ensure that it has
appropriate information regarding its claims exposures. However, given the uncertainty in establishing the
claims provisions, it is likely that the final outcome will prove to be different from the original liability
established. The liability for these contracts comprises a provision for IBNR, a provision for reported claims not
yet paid and a provision for unexpired risks at the date of financial position. The amount of casualty claims is
particularly sensitive to the level of court awards and to the development of legal precedent on matters of
contract and tort. Casualty contracts are also subject to the emergence of new types of latent claims, but no
allowance is included for this at the date of the statement of financial position.
In calculating the estimated cost of unpaid claims (both reported and not), the Company uses estimation
techniques that are a combination of loss-ratio-based estimates (where the loss ratio is defined as the ratio
between the ultimate cost of insurance claims and insurance premiums earned in a particular financial year
in relation to such claims) and an estimate based upon actual claims experience using predetermined
formulae where greater weight is given to actual claims experience as time passes.
The initial loss-ratio estimate is an important assumption in the estimation technique and is based on previous
years’ experience, adjusted for factors such as premium rate changes, anticipated market experience and
historical claims inflation. The initial estimate of the loss ratios used for the current year (before reinsurance) is
analysed by type of risk for current and prior year premiums earned.
The estimation of IBNR is generally subject to a greater degree of uncertainty than the estimation of the cost
of settling claims already notified to the Company, where information about the claim event is available.
IBNR claims may not be apparent to the insured until many years after the event that gave rise to the
claims. For casualty contracts, the IBNR proportion of the total liability is high and will typically display
greater variations between initial estimates and final outcomes because of the greater degree of difficulty of
estimating these liabilities.
In estimating the liability for the cost of reported claims not yet paid, the Company considers any information
available from loss adjusters and information on the cost of settling claims with similar characteristics in
previous periods. Large claims are assessed on a case-by-case basis or projected separately in order to
allow for the possible distortive effect of their development and incidence on the rest of the portfolio.
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
4.
Insurance and Financial Risk Management (Continued)
(a) Insurance risk (continued)
Management sets policy and retention limits based on guidelines set by the Board of Directors. The policy limit
and maximum net retention of any one risk for each class of insurance for the year are as follows:
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
4.
Insurance and Financial Risk Management (Continued)
(a) Insurance risk (continued)
Sensitivity Analysis of Actuarial Liabilities
Page 19
Page 20
Commercial property –
Fire and consequential loss
Personal property
Engineering
Liability
Marine, aviation and transport
Motor
Miscellaneous Accident –
All Risk
Burglary
Cash/Money
Fidelity
Bonds
Goods in Transit
Personal Accident
2013
2012
Policy
Limit
’000
Maximum
Net
Retention
’000
Policy
Limit
’000
Maximum
Net
Retention
’000
US$6,000
US$6,000
US$3,000
J$40,000
US$750
J$10,000
J$30,000
J$5,000
J$5,000
J$5,000
J$20,000
J$5,000
J$7,500
US$1,200
US$1,200
US$75
J$20,000
US$125
J$5,000
US$5,500
US$5,500
US$3,000
J$40,000
US$750
J$10,000
J$2,000
J$1,000
J$1,000
J$1,000
J$4,000
J$1,000
J$1,500
J$22,500
J$5,000
J$5,000
J$5,000
J$20,000
J$5,000
J$7,500
US$1,100
US$1,100
US$75
J$20,000
US$125
J$5,000
J$1,500
J$1,000
J$1,000
J$1,000
J$4,000
J$1,000
J$1,500
The determination of actuarial liabilities is sensitive to a number of assumptions, and changes in those
assumptions could have a significant effect on the valuation results.
In applying the noted methodologies, the following assumptions were made:
(i) Claims inflation has remained relatively constant and there have been no material legislative changes in
the Jamaican civil justice system that would cause claim inflation to increase dramatically.
(ii) There is no latent environmental or asbestos exposure embedded in the Company’s loss history.
(iii) The Company’s case reserving and claim payments rates have remained, and will remain, relatively
constant.
(iv) The overall development of claims costs gross of reinsurance is not materially different from the
development of claims costs net of reinsurance. This assumption is supported by the following:
The majority of the Company’s reinsurance program consists of proportional reinsurance
agreements; and
The Company’s non-proportional reinsurance agreements consist primarily of high attachment points.
(v) Claims are expressed at their estimated ultimate undiscounted value, in accordance with the requirement
of the Insurance Act, 2001.
Provision for adverse deviation assumptions
The basic assumptions made in establishing insurance reserves are best estimates for a range of possible
outcomes. To recognise the uncertainty in establishing these best estimates, to allow for possible deterioration
in experience and to provide greater comfort that the reserves are adequate to pay future benefits, the
appointed actuary is required to include a margin for adverse deviation in each assumption.
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
4.
Insurance and Financial Risk Management (Continued)
(a) Insurance risk (continued)
Management sets policy and retention limits based on guidelines set by the Board of Directors. The policy limit
and maximum net retention of any one risk for each class of insurance for the year are as follows:
Commercial property –
Fire and consequential loss
Personal property
Engineering
Liability
Marine, aviation and transport
Motor
Miscellaneous Accident –
All Risk
Burglary
Cash/Money
Fidelity
Bonds
Goods in Transit
Personal Accident
2013
2012
Policy
Limit
’000
Maximum
Retention
Net
’000
Policy
Limit
’000
Maximum
Retention
Net
’000
US$6,000
US$6,000
US$3,000
J$40,000
US$750
J$10,000
J$30,000
J$5,000
J$5,000
J$5,000
J$20,000
J$5,000
J$7,500
US$1,200
US$5,500
US$1,200
US$5,500
US$75
US$3,000
J$20,000
J$40,000
US$125
J$5,000
US$750
J$10,000
J$2,000
J$1,000
J$1,000
J$1,000
J$4,000
J$1,000
J$1,500
J$22,500
J$5,000
J$5,000
J$5,000
J$20,000
J$5,000
J$7,500
US$1,100
US$1,100
US$75
J$20,000
US$125
J$5,000
J$1,500
J$1,000
J$1,000
J$1,000
J$4,000
J$1,000
J$1,500
Page 19
Page 20
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
4.
Insurance and Financial Risk Management (Continued)
(a) Insurance risk (continued)
Sensitivity Analysis of Actuarial Liabilities
The determination of actuarial liabilities is sensitive to a number of assumptions, and changes in those
assumptions could have a significant effect on the valuation results.
In applying the noted methodologies, the following assumptions were made:
(i) Claims inflation has remained relatively constant and there have been no material legislative changes in
the Jamaican civil justice system that would cause claim inflation to increase dramatically.
(ii) There is no latent environmental or asbestos exposure embedded in the Company’s loss history.
(iii) The Company’s case reserving and claim payments rates have remained, and will remain, relatively
constant.
(iv) The overall development of claims costs gross of reinsurance is not materially different from the
development of claims costs net of reinsurance. This assumption is supported by the following:
The majority of the Company’s reinsurance program consists of proportional reinsurance
agreements; and
The Company’s non-proportional reinsurance agreements consist primarily of high attachment points.
(v) Claims are expressed at their estimated ultimate undiscounted value, in accordance with the requirement
of the Insurance Act, 2001.
Provision for adverse deviation assumptions
The basic assumptions made in establishing insurance reserves are best estimates for a range of possible
outcomes. To recognise the uncertainty in establishing these best estimates, to allow for possible deterioration
in experience and to provide greater comfort that the reserves are adequate to pay future benefits, the
appointed actuary is required to include a margin for adverse deviation in each assumption.
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
Page 21
Page 22
4.
Insurance and Financial Risk Management (Continued)
4.
Insurance and Financial Risk Management (Continued)
(a) Insurance risk (continued)
Development Claim Liabilities
In addition to sensitivity analysis, the development of insurance liabilities provides a measure of the
Company’s ability to estimate the ultimate value of claims. The table below illustrates how the Company’s
estimate of the ultimate claims liability for accident years 2009 - 2013 has changed at successive year-ends,
up to 2013. Updated unpaid claims and adjustment expenses (UCAE) and IBNR estimates in each
successive year, as well as amounts paid to date are used to derive the revised amounts for the ultimate
claims liability for each accident year, used in the development calculations.
2009
2009
2010
2010
2011
2011
2012
2012
2013
and
prior
$’000
$’000
and
prior
And
Prior
$’000
$’000
$’000
$’000
$’000
and
prior
$’000
$’000
2013
and
prior
$’000
2009
Paid during year
175,935
331,678
UCAE, end of year
200,976
348,730
IBNR, end of year
Ratio: excess
(deficiency)
58,042
73,079
2010 Paid during year
98,674
175,978
171,620
347,598
UCAE, end of year
96,738
189,412
235,477
424,889
IBNR, end of year
Ratio: excess
9,744
14,553
68,193
82,746
(deficiency)
20.79%
9.93%
2011 Paid during year
UCAE, end of year
IBNR, end of year
Ratio: excess
38,747
61,664
6,200
80,363
100,861
181,224
183,148
364,372
119,722
120,936
240,659
232,245
472,903
7,205
15,834
23,039
65,680
88,719
(deficiency)
20.75%
9.14%
21.75%
12.35%
2012 Paid during year
UCAE, end of year
IBNR, end of year
Ratio: excess
16,227
45,535
5,154
33,189
88,599
8,260
43,783
76,972
142,264
219,236
210,963
430,200
60,033
148,633
155,272
303,904
272,082
575,987
8,241
16,501
20,258
36,759
60,864
97,263
(deficiency)
21.11%
8.40%
29.89%
16.61%
(6.67%)
0.31%
2013
Paid during year
UCAE, end of year
IBNR, end of year
Ratio: excess
11,394
35,281
2,993
33,884
23,866
57,750
69,298
127,048
156,978
284,026
239,700
523,726
66.043
43,048
109,091
111,383
220,474
161,264
381,738
291,198
672,936
2,993
5,225
8,218
12,732
20,950
25,397
46,347
70,085
116,433
(deficiency)
21.30%
6.96%
28.61%
14.65%
(12.67%)
(4.64%)
(3.21%)
(5.72%)
-
-
(b) Reinsurance risk
To limit its exposure of potential loss on an insurance policy, the insurer may cede certain levels of risk to a
reinsurer. The Company selects reinsurers which have established capability to meet their contractual
obligations and which generally have high credit ratings. The credit ratings of reinsurers are monitored.
Retention limits represent the level of risk retained by the cedant insurer. Coverage in excess of these limits is
ceded to reinsurers up to the treaty limit or as agreed. The retention programs used by the Company are
summarised below:
(a) Facultative reinsurance treaties are accepted on a per risk basis.
(b) The Company has treaty arrangements as follows:
(i) Property and allied perils 80%:20% Quota Share of premiums i.e. 80% ceded premiums and 20%
retention.
for any one loss or event.
(ii) Excess of loss treaty for motor and third party liability, which covers losses in excess of J$5,000,000
(iii) First surplus and a quota share treaty for engineering business with retention of US$75,000.
(iv) First surplus treaty for miscellaneous accident, losses covered in excess of J$2,000,000.
(v) Catastrophe excess of loss treaty which covers losses in excess of J$80,000,000 for any one
catastrophic event as defined.
(c) The Company reinsures with several reinsurers. Of significance are Munich Reinsurance Company,
Munich, Federal Republic of Germany and Swiss Reinsurance Company, Ontario, Canada. All other
reinsurers carry lines under 10%. The Company’s business model supports the placement of specialty
risk directly in the overseas market on a per risk basis. In keeping with the Company’s risk policy,
placement of these risks are with several reinsures. Of significance are Munich Reinsurance Company,
Swiss Reinsurance Company and Lloyds of London. At 31 December, the A. M. Best ratings for the
major reinsurers are as follows:
Munich Reinsurance Company
Swiss Reinsurance Company
2013
A+
A+
2012
A+
A+
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
Page 21
Page 22
4.
Insurance and Financial Risk Management (Continued)
4.
Insurance and Financial Risk Management (Continued)
(b) Reinsurance risk
To limit its exposure of potential loss on an insurance policy, the insurer may cede certain levels of risk to a
reinsurer. The Company selects reinsurers which have established capability to meet their contractual
obligations and which generally have high credit ratings. The credit ratings of reinsurers are monitored.
Retention limits represent the level of risk retained by the cedant insurer. Coverage in excess of these limits is
ceded to reinsurers up to the treaty limit or as agreed. The retention programs used by the Company are
summarised below:
(a) Facultative reinsurance treaties are accepted on a per risk basis.
(b) The Company has treaty arrangements as follows:
(i) Property and allied perils 80%:20% Quota Share of premiums i.e. 80% ceded premiums and 20%
retention.
(ii) Excess of loss treaty for motor and third party liability, which covers losses in excess of J$5,000,000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
for any one loss or event.
(iii) First surplus and a quota share treaty for engineering business with retention of US$75,000.
(iv) First surplus treaty for miscellaneous accident, losses covered in excess of J$2,000,000.
(v) Catastrophe excess of loss treaty which covers losses in excess of J$80,000,000 for any one
catastrophic event as defined.
(c) The Company reinsures with several reinsurers. Of significance are Munich Reinsurance Company,
Munich, Federal Republic of Germany and Swiss Reinsurance Company, Ontario, Canada. All other
reinsurers carry lines under 10%. The Company’s business model supports the placement of specialty
risk directly in the overseas market on a per risk basis. In keeping with the Company’s risk policy,
placement of these risks are with several reinsures. Of significance are Munich Reinsurance Company,
Swiss Reinsurance Company and Lloyds of London. At 31 December, the A. M. Best ratings for the
major reinsurers are as follows:
Munich Reinsurance Company
Swiss Reinsurance Company
2013
A+
A+
2012
A+
A+
(a) Insurance risk (continued)
Development Claim Liabilities
In addition to sensitivity analysis, the development of insurance liabilities provides a measure of the
Company’s ability to estimate the ultimate value of claims. The table below illustrates how the Company’s
estimate of the ultimate claims liability for accident years 2009 - 2013 has changed at successive year-ends,
up to 2013. Updated unpaid claims and adjustment expenses (UCAE) and IBNR estimates in each
successive year, as well as amounts paid to date are used to derive the revised amounts for the ultimate
claims liability for each accident year, used in the development calculations.
2009
2009
2010
2010
2011
2011
2012
2012
2013
and
prior
$’000
and
prior
And
Prior
and
prior
$’000
2013
and
prior
$’000
2009
Paid during year
175,935
331,678
UCAE, end of year
200,976
348,730
IBNR, end of year
58,042
73,079
Ratio: excess
(deficiency)
2010 Paid during year
98,674
175,978
171,620
347,598
UCAE, end of year
96,738
189,412
235,477
424,889
IBNR, end of year
9,744
14,553
68,193
82,746
Ratio: excess
(deficiency)
20.79%
9.93%
2011 Paid during year
80,363
100,861
181,224
183,148
364,372
119,722
120,936
240,659
232,245
472,903
7,205
15,834
23,039
65,680
88,719
2012 Paid during year
UCAE, end of year
IBNR, end of year
Ratio: excess
(deficiency)
UCAE, end of year
IBNR, end of year
Ratio: excess
(deficiency)
UCAE, end of year
IBNR, end of year
Ratio: excess
(deficiency)
38,747
61,664
6,200
11,394
35,281
2,993
20.75%
9.14%
21.75%
12.35%
16,227
45,535
5,154
33,189
88,599
8,260
43,783
76,972
142,264
219,236
210,963
430,200
60,033
148,633
155,272
303,904
272,082
575,987
8,241
16,501
20,258
36,759
60,864
97,263
21.11%
8.40%
29.89%
16.61%
(6.67%)
0.31%
2013
Paid during year
33,884
23,866
57,750
69,298
127,048
156,978
284,026
239,700
523,726
66.043
43,048
109,091
111,383
220,474
161,264
381,738
291,198
672,936
2,993
5,225
8,218
12,732
20,950
25,397
46,347
70,085
116,433
21.30%
6.96%
28.61%
14.65%
(12.67%)
(4.64%)
(3.21%)
(5.72%)
-
-
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
Page 23
Page 24
4.
Insurance and Financial Risk Management (Continued)
4.
Insurance and Financial Risk Management (Continued)
(b) Reinsurance risk (continued)
(d) The amount of reinsurance recoveries recognised during the period is as follows:
Property
Motor
Marine
Liability
Burglary
Miscellaneous Accidents
2013
$’000
87,973
11,312
5,424
162
558
10,234
115,663
2012
$’000
51,454
9,779
2,736
4,272
2
15,936
84,179
(c) Financial risk
The Company is exposed to financial risk through its financial assets, reinsurance assets and insurance
liabilities. In particular the key financial risk is that the proceeds from its financial assets are not sufficient to
fund the obligations arising from its insurance contracts. The most important components of this financial
risk are interest rate risk, market risk, cash flow risk, currency risk, price risk and credit risk.
These risks arise from open positions in interest rates, currency and equity products, all of which are
exposed to general and specific market movements. The risks that the Company primarily faces due to the
nature of its investments and liabilities are credit risk, interest rate risk and market risk. The Company’s
overall risk management programme focuses on the unpredictability of financial markets and seeks to
minimise potential adverse effects of the Company’s financial performance.
(i) Credit risk
The Company takes on exposure to credit risk, which is the risk that its reinsurers, brokers, customers,
clients or counterparties will cause a financial loss for the Company by failing to discharge their
contractual obligations. Credit risk is an important risk for the Company’s business; management
therefore carefully manages its exposure to credit risk. Credit exposures arise principally from the
amounts due from reinsurers, amounts due from insurance contract holders and insurance brokers and
investment contracts and loans receivable.
The Company structures the levels of credit risk it undertakes by placing limits on the amount of risk
accepted in relation to a single counterparty or groups of related counterparties.
(c) Financial risk (continued)
(i) Credit risk (continued)
Credit review process
(i) Reinsurance
information.
(ii) Premium receivables
The Company’s senior management meets on a monthly basis to discuss the ability of customers and
other counterparties to meet repayment obligations.
Reinsurance is used to manage insurance risk. This does not, however, discharge the Company’s
liability as primary insurer. If a reinsurer fails to pay a claim for any reason, the Company remains
liable for the payment to the policyholder. The creditworthiness of reinsurers is considered on an
annual basis by reviewing their financial strength prior to finalisation of any contract. The
Company’s senior management assesses the creditworthiness of all reinsurers and intermediaries
by reviewing credit grades provided by rating agencies and other publicly available financial
The Company’s senior management examines the payment history for significant contract holders
with whom they conduct regular business. Management information reported to the Company
includes details of provisions for impairment on premium receivables and subsequent write-offs.
Exposures to individual policyholders and groups of policyholders are collected within the ongoing
monitoring of the controls associated with regulatory solvency. Where significant exposure to
individual policyholders or homogenous groups of policyholders exists, a financial analysis is
carried out by senior management and where necessary cancellation of policies is effected for
amounts deemed uncollectible.
(iii) Loans and leases receivable
held as security.
(iv) Investments
The Company’s management of exposure to loans and leases receivable is influenced mainly by
the individual characteristics of each customer. Management has established a credit policy under
which each customer is analysed individually for creditworthiness prior to the Company offering
credit facilities. Customers are required to provide a letter of guarantee and proof of collateral to be
The Company limits its exposure to credit risk by investing mainly in liquid securities, with
counterparties that have high credit quality and Government securities. Accordingly, management
does not expect any counterparty to fail to meet its obligations.
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
Page 23
Page 24
4.
Insurance and Financial Risk Management (Continued)
4.
Insurance and Financial Risk Management (Continued)
(b) Reinsurance risk (continued)
(d) The amount of reinsurance recoveries recognised during the period is as follows:
(c) Financial risk (continued)
(i) Credit risk (continued)
Property
Motor
Marine
Liability
Burglary
Miscellaneous Accidents
2013
$’000
87,973
11,312
5,424
162
558
10,234
115,663
2012
$’000
51,454
9,779
2,736
4,272
2
15,936
84,179
(c) Financial risk
The Company is exposed to financial risk through its financial assets, reinsurance assets and insurance
liabilities. In particular the key financial risk is that the proceeds from its financial assets are not sufficient to
fund the obligations arising from its insurance contracts. The most important components of this financial
risk are interest rate risk, market risk, cash flow risk, currency risk, price risk and credit risk.
These risks arise from open positions in interest rates, currency and equity products, all of which are
exposed to general and specific market movements. The risks that the Company primarily faces due to the
nature of its investments and liabilities are credit risk, interest rate risk and market risk. The Company’s
overall risk management programme focuses on the unpredictability of financial markets and seeks to
minimise potential adverse effects of the Company’s financial performance.
(i) Credit risk
The Company takes on exposure to credit risk, which is the risk that its reinsurers, brokers, customers,
clients or counterparties will cause a financial loss for the Company by failing to discharge their
contractual obligations. Credit risk is an important risk for the Company’s business; management
therefore carefully manages its exposure to credit risk. Credit exposures arise principally from the
amounts due from reinsurers, amounts due from insurance contract holders and insurance brokers and
investment contracts and loans receivable.
The Company structures the levels of credit risk it undertakes by placing limits on the amount of risk
accepted in relation to a single counterparty or groups of related counterparties.
Credit review process
The Company’s senior management meets on a monthly basis to discuss the ability of customers and
other counterparties to meet repayment obligations.
(i) Reinsurance
Reinsurance is used to manage insurance risk. This does not, however, discharge the Company’s
liability as primary insurer. If a reinsurer fails to pay a claim for any reason, the Company remains
liable for the payment to the policyholder. The creditworthiness of reinsurers is considered on an
annual basis by reviewing their financial strength prior to finalisation of any contract. The
Company’s senior management assesses the creditworthiness of all reinsurers and intermediaries
by reviewing credit grades provided by rating agencies and other publicly available financial
information.
(ii) Premium receivables
The Company’s senior management examines the payment history for significant contract holders
with whom they conduct regular business. Management information reported to the Company
includes details of provisions for impairment on premium receivables and subsequent write-offs.
Exposures to individual policyholders and groups of policyholders are collected within the ongoing
monitoring of the controls associated with regulatory solvency. Where significant exposure to
individual policyholders or homogenous groups of policyholders exists, a financial analysis is
carried out by senior management and where necessary cancellation of policies is effected for
amounts deemed uncollectible.
(iii) Loans and leases receivable
The Company’s management of exposure to loans and leases receivable is influenced mainly by
the individual characteristics of each customer. Management has established a credit policy under
which each customer is analysed individually for creditworthiness prior to the Company offering
credit facilities. Customers are required to provide a letter of guarantee and proof of collateral to be
held as security.
(iv) Investments
The Company limits its exposure to credit risk by investing mainly in liquid securities, with
counterparties that have high credit quality and Government securities. Accordingly, management
does not expect any counterparty to fail to meet its obligations.
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
Page 25
Page 26
4.
Insurance and Financial Risk Management (Continued)
(c) Financial risk (continued)
(i) Credit risk (continued)
Maximum exposure to credit risk
The maximum exposure to credit risk, of the company, equal the respective carrying amounts on the
statements of financial position, for all financial assets which are subject to credit risk.
Ageing analysis of premium receivables past due but not impaired:
Premium receivables that are less than forty-five (45) days old are not considered impaired. At year end,
premium receivables of $138,724,000 (2012 - $161,168,000) were past due but not impaired. These
relate to a number of independent customers for whom there is no recent history of default. The ageing
analysis of these receivables is as follows:
46 to 60 days
61 to 90 days
More than 90 days
2013
$’000
41,782
56,538
40,404
2012
$’000
41,863
80,895
38,410
138,724
161,168
(iv) Monitoring statement of
financial position
liquidity ratios against
internal and regulatory
There are no premium receivables balances that are considered impaired.
Premium receivables
The following table summarises the Company’s credit exposure for premium receivables at their
carrying amounts, as categorised by brokers and direct business:
Brokers and Insurance Companies
Direct
2013
$’000
361,360
103,061
464,421
2012
$’000
335,488
133,708
469,196
All premium receivables are receivable from policyholders, brokers and agents in Jamaica.
Debt securities
The following table summarises the Company’s credit exposure for debt securities at their carrying
amounts, as categorised by issuer:
Government of Jamaica
Other Government
Corporate
2013
$’000
634,377
130,370
13,950
778,697
2012
$’000
342,707
-
12,256
354,963
4. Insurance and Financial Risk Management (Continued)
(c) Financial risk (continued)
(ii) Liquidity risk
Liquidity risk is the risk that the Company is unable to meet its payment obligations associated with its
financial liabilities when they fall due and to replace funds when they are withdrawn. The consequence
may be the failure to meet obligations to fulfil claims and other liabilities incurred.
Liquidity risk management process
Board of Directors, includes:
The Company’s liquidity management process, as carried out within the Company and monitored by the
(i) Monitoring future cash flows and liquidity on a daily basis. This incorporates an assessment of
expected cash flows and the availability of high grade collateral which could be used to secure
funding if required;
(ii) Maintaining a portfolio of highly marketable assets that can easily be liquidated as protection
against any unforeseen interruptions to cash flow;
(iii) Optimising cash returns on investments;
requirements; and
(v) Managing the concentration and profile of debt maturities.
Monitoring and reporting take the form of cash flow measurement and projections for the next day, week
and month, as these are key periods for liquidity management. The starting point for those projections is
an analysis of the contractual maturity of the financial liabilities and the expected collection date of the
financial assets.
The matching and controlled mismatching of the maturities and interest rates of assets and liabilities is
fundamental to the management of the Company. It is unusual for companies ever to be completely
matched since business transacted is often of uncertain term and of different types. An unmatched
position potentially enhances profitability, but can also increase the risk of loss.
The maturities of assets and liabilities and the ability to replace, at an acceptable cost, interest-bearing
liabilities as they mature, are important factors in assessing the liquidity of the Company and its
exposure to changes in interest rates and exchange rates.
Page 25
Page 26
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
4. Insurance and Financial Risk Management (Continued)
(c) Financial risk (continued)
(ii) Liquidity risk
Liquidity risk is the risk that the Company is unable to meet its payment obligations associated with its
financial liabilities when they fall due and to replace funds when they are withdrawn. The consequence
may be the failure to meet obligations to fulfil claims and other liabilities incurred.
Liquidity risk management process
The Company’s liquidity management process, as carried out within the Company and monitored by the
Board of Directors, includes:
(i) Monitoring future cash flows and liquidity on a daily basis. This incorporates an assessment of
expected cash flows and the availability of high grade collateral which could be used to secure
funding if required;
(ii) Maintaining a portfolio of highly marketable assets that can easily be liquidated as protection
against any unforeseen interruptions to cash flow;
(iii) Optimising cash returns on investments;
138,724
161,168
(iv) Monitoring statement of
financial position
liquidity ratios against
internal and regulatory
requirements; and
(v) Managing the concentration and profile of debt maturities.
Monitoring and reporting take the form of cash flow measurement and projections for the next day, week
and month, as these are key periods for liquidity management. The starting point for those projections is
an analysis of the contractual maturity of the financial liabilities and the expected collection date of the
financial assets.
The matching and controlled mismatching of the maturities and interest rates of assets and liabilities is
fundamental to the management of the Company. It is unusual for companies ever to be completely
matched since business transacted is often of uncertain term and of different types. An unmatched
position potentially enhances profitability, but can also increase the risk of loss.
The maturities of assets and liabilities and the ability to replace, at an acceptable cost, interest-bearing
liabilities as they mature, are important factors in assessing the liquidity of the Company and its
exposure to changes in interest rates and exchange rates.
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
4.
Insurance and Financial Risk Management (Continued)
(c) Financial risk (continued)
(i) Credit risk (continued)
Maximum exposure to credit risk
The maximum exposure to credit risk, of the company, equal the respective carrying amounts on the
statements of financial position, for all financial assets which are subject to credit risk.
Ageing analysis of premium receivables past due but not impaired:
Premium receivables that are less than forty-five (45) days old are not considered impaired. At year end,
premium receivables of $138,724,000 (2012 - $161,168,000) were past due but not impaired. These
relate to a number of independent customers for whom there is no recent history of default. The ageing
analysis of these receivables is as follows:
46 to 60 days
61 to 90 days
More than 90 days
There are no premium receivables balances that are considered impaired.
Premium receivables
The following table summarises the Company’s credit exposure for premium receivables at their
carrying amounts, as categorised by brokers and direct business:
Brokers and Insurance Companies
Direct
All premium receivables are receivable from policyholders, brokers and agents in Jamaica.
Debt securities
amounts, as categorised by issuer:
The following table summarises the Company’s credit exposure for debt securities at their carrying
2013
$’000
41,782
56,538
40,404
2012
$’000
41,863
80,895
38,410
2013
$’000
361,360
103,061
464,421
2012
$’000
335,488
133,708
469,196
2013
$’000
634,377
130,370
13,950
778,697
2012
$’000
342,707
-
12,256
354,963
Government of Jamaica
Other Government
Corporate
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
Page 27
Page 28
4.
Insurance and Financial Risk Management (Continued)
4.
Insurance and Financial Risk Management (Continued)
(c) Financial risk (continued)
(ii) Liquidity risk (continued)
(c) Financial risk (continued)
(ii) Liquidity risk
Liquidity risk management process (continued)
Financial asset and financial liabilities cash flows (continued)
Financial assets and financial liabilities cash flows
The tables below present the undiscounted cash flows of the company’s financial assets and liabilities
based on contractual repayment obligations:
Within 1
Month
$’000
Within 3
Months
$’000
3 to 12
Months
$’000
1 to 5
Years
$’000
Over
5 Years
$’000
No Specific
Maturity
$’000
Total
$’000
At 31 December 2013:
Cash and short term investments
468,927
703,916
Due from policyholders, brokers
and agents
162,547
301,874
Due from reinsurers and
coinsurers
Other receivables
Due from related parties
Loans receivable
Leases receivable
Investment securities
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
174,883
-
-
1,922
3,844
17,297
92,250
294,047
5,126
10,252
46,134
56,078
-
-
-
-
7,088
122
-
-
1,172,843
464,421
174,883
7,088
122
409,360
117,590
11,325
244,988
181,924
264,237
195,153
156,690
1,054,317
Total financial assets
649,847 1,439,757
245,355
412,565
489,200
163,900
3,400,624
Due to reinsurers and coinsurers
-
361,147
-
Other liabilities
Claims liabilities
12,537
6,040
41,788
191,390
114,834
153,112
306,223
Total financial liabilities
203,927
482,021
194,900
306,223
-
-
-
-
-
-
-
-
-
361,147
60,365
765,559
- 1,187,071
Net Liquidity Gap
Cumulative gap
445,920
957,936
50,455
106,342
489,200
163,900 2,213,553
445,920 1,403,656
1,454,111 1,560,453
2,049,653
2,213,553
-
Within 1
Month
Within 3
Months
3 to 12
Months
1 to 5
Years
Over
No Specific
5 Years
Maturity
$’000
$’000
$’000 $’000
$’000
$’000
-
-
-
-
-
-
-
Total
$’000
1,318,480
469,196
213,418
499,424
77,759
-
-
-
-
-
10,286
10,286
750
750
-
343,361
-
-
51,113
678,438
- 1,216,720
-
-
-
-
-
-
-
-
-
-
At 31 December 2012:
Cash and short term investments
667,289
651,191
Due from policyholders, brokers and
agents
149,496
319,700
Due from reinsurers and coinsurers
213,418
-
-
-
-
-
-
-
-
-
Other receivables
Due from related parties
Loans receivable
Leases receivable
Investment securities
Other liabilities
Claims liabilities
Net Liquidity Gap
Cumulative gap
financial institutions.
(iii) Market risk
1,922
70,846
17,297
92,250
317,109
2,499
4,998
22,488
47,774
7,264
15,892
200,877
74,844
134,564
108,476
541,917
Total financial assets
828,470 1,276,045
240,662
214,868
451,673
119,512
3,131,230
Due to reinsurers and coinsurers
-
343,361
-
Total financial liabilities
180,034
453,451
168,053
271,375
10,424
8,324
32,365
169,610
101,766
135,688
271,375
648,437
822,594
72,609
(56,507)
451,673
119,512 2,058,318
648,437 1,741,031 1,543,640 1,487,133 1,938,806
2,058,318
-
Assets available to meet all of the liabilities and to cover financial liabilities include cash and bank
balances and investment securities. The Company is also able to meet unexpected net cash outflows
by selling securities and accessing additional funding sources from its parent company and other
The Company takes on exposure to market risks, which is the risk that the fair value or future cash flows
of a financial instrument will fluctuate because of changes in market prices. Market risks mainly arise
from changes in foreign currency exchange rates, interest rates and prices of quoted equities. Market
risk is monitored by the finance department which carries out research and monitors the price
movement of financial assets on the local and international markets.
There has been no change to the Company’s exposure to market risks or the manner in which it manages
and measures the risk.
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
Page 27
Page 28
4.
Insurance and Financial Risk Management (Continued)
4.
Insurance and Financial Risk Management (Continued)
(c) Financial risk (continued)
(ii) Liquidity risk (continued)
(c) Financial risk (continued)
(ii) Liquidity risk
Liquidity risk management process (continued)
Financial asset and financial liabilities cash flows (continued)
Within 1
Month
Within 3
Months
3 to 12
Months
1 to 5
Years
Over
5 Years
No Specific
Maturity
$’000
$’000
$’000 $’000
$’000
$’000
Total
$’000
At 31 December 2012:
Cash and short term investments
667,289
651,191
Due from policyholders, brokers and
agents
149,496
319,700
Due from reinsurers and coinsurers
213,418
Other receivables
Due from related parties
Loans receivable
Leases receivable
Investment securities
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,318,480
469,196
213,418
10,286
10,286
750
750
-
-
499,424
77,759
1,922
70,846
17,297
92,250
317,109
2,499
4,998
22,488
47,774
-
7,264
15,892
200,877
74,844
134,564
108,476
541,917
-
-
-
-
Total financial assets
828,470 1,276,045
240,662
214,868
451,673
119,512
3,131,230
Total financial assets
649,847 1,439,757
245,355
412,565
489,200
163,900
3,400,624
11,325
244,988
181,924
264,237
195,153
156,690
1,054,317
Other liabilities
Claims liabilities
10,424
8,324
32,365
169,610
101,766
135,688
271,375
Due to reinsurers and coinsurers
-
343,361
-
-
-
-
-
-
-
-
343,361
-
-
51,113
678,438
- 1,216,720
Total financial liabilities
180,034
453,451
168,053
271,375
Net Liquidity Gap
Cumulative gap
648,437
822,594
72,609
(56,507)
451,673
119,512 2,058,318
648,437 1,741,031 1,543,640 1,487,133 1,938,806
2,058,318
-
Assets available to meet all of the liabilities and to cover financial liabilities include cash and bank
balances and investment securities. The Company is also able to meet unexpected net cash outflows
by selling securities and accessing additional funding sources from its parent company and other
financial institutions.
(iii) Market risk
The Company takes on exposure to market risks, which is the risk that the fair value or future cash flows
of a financial instrument will fluctuate because of changes in market prices. Market risks mainly arise
from changes in foreign currency exchange rates, interest rates and prices of quoted equities. Market
risk is monitored by the finance department which carries out research and monitors the price
movement of financial assets on the local and international markets.
There has been no change to the Company’s exposure to market risks or the manner in which it manages
and measures the risk.
Financial assets and financial liabilities cash flows
The tables below present the undiscounted cash flows of the company’s financial assets and liabilities
based on contractual repayment obligations:
Within 1
Month
$’000
Within 3
Months
$’000
3 to 12
Months
$’000
1 to 5
Years
$’000
Over
No Specific
5 Years
$’000
Maturity
$’000
Total
$’000
At 31 December 2013:
Cash and short term investments
468,927
703,916
Due from policyholders, brokers
and agents
162,547
301,874
Due from reinsurers and
coinsurers
Other receivables
Due from related parties
Loans receivable
Leases receivable
Investment securities
-
-
-
174,883
-
-
1,922
3,844
17,297
92,250
294,047
5,126
10,252
46,134
56,078
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7,088
122
1,172,843
464,421
174,883
7,088
122
409,360
117,590
-
-
-
361,147
60,365
765,559
- 1,187,071
Due to reinsurers and coinsurers
-
361,147
Other liabilities
Claims liabilities
12,537
6,040
41,788
191,390
114,834
153,112
306,223
Total financial liabilities
203,927
482,021
194,900
306,223
Net Liquidity Gap
Cumulative gap
445,920
957,936
50,455
106,342
489,200
163,900 2,213,553
445,920 1,403,656
1,454,111 1,560,453
2,049,653
2,213,553
-
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
Page 29
Page 30
4.
Insurance and Financial Risk Management (Continued)
4.
Insurance and Financial Risk Management (Continued)
(c) Financial risk (continued)
(iii) Market risk (continued)
Currency risk
Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in foreign exchange rates.
The Company manages its foreign exchange risk by ensuring that the net exposure in foreign assets
and liabilities is kept to an acceptable level by monitoring currency positions.
The Company also has transactional currency exposure. Such exposure arises from having financial
assets in currencies other than those in which financial liabilities are expected to settle. The Company
ensures that its net exposure is kept to an acceptable level by buying or selling foreign assets to
address short term imbalances.
Concentrations of currency risk
The tables below summarise the company’s exposure to foreign currency exchange rate risk at 31
December:
At 31 December 2013:
Financial Assets
Cash and short term investments
Due from policyholders, brokers and agents
Due from reinsurers and coinsurers
Other receivables
Due from related parties
Loans receivable
Leases receivable
Investment securities
Total financial assets
Financial Liabilities
Due to reinsurers and coinsurers
Other liabilities
Claims liabilities
Total financial liabilities
Net financial position
Jamaican$
J$’000
US$
J$’000
GBP
J$’000
Total
J$’000
568,931
253,601
114,091
7,088
122
167,515
97,582
599,730
210,820
60,792
-
-
-
-
869
-
1,169,530
464,421
-
-
-
-
-
174,883
7,088
122
167,515
97,582
498,584
436,087
1,707,514 1,307,429
-
869
934,671
3,015,812
121,272
56,655
720,850
898,777
239,875
3,710
44,710
288,295
808,737 1,019,134
-
-
-
-
869
361,147
60,365
765,559
1,187,071
1,828,741
(c) Financial risk (continued)
(iii) Market risk (continued)
Currency risk (continued)
Concentrations of currency risk (continued)
At 31 December 2012:
Financial Assets
Cash and short term investments
Due from policyholders, brokers and agents
Due from reinsurers and coinsurers
Other receivables
Due from related parties
Loans receivable
Leases receivable
Investment securities
Total financial assets
Financial Liabilities
Other liabilities
Claims liabilities
Total financial liabilities
Net financial position
Due to reinsurers and coinsurers
Jamaican$
J$’000
US$
J$’000
GBP
J$’000
Total
J$’000
515,470
323,573
160,737
10,286
750
237,933
64,565
386,224
801,613
145,623
52,681
-
-
-
-
77,215
120 1,317,203
469,196
213,418
10,286
750
237,933
64,565
463,439
1,699,538 1,077,132
120 2,776,790
179,068
164,293
47,888
638,232
865,188
3,225
40,206
207,724
343,361
51,113
678,438
- 1,072,912
834,350
869,408
120 1,703,878
-
-
-
-
-
-
-
-
-
-
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
Page 29
Page 30
4.
Insurance and Financial Risk Management (Continued)
4.
Insurance and Financial Risk Management (Continued)
(c) Financial risk (continued)
(iii) Market risk (continued)
Currency risk
Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in foreign exchange rates.
The Company manages its foreign exchange risk by ensuring that the net exposure in foreign assets
and liabilities is kept to an acceptable level by monitoring currency positions.
The Company also has transactional currency exposure. Such exposure arises from having financial
assets in currencies other than those in which financial liabilities are expected to settle. The Company
ensures that its net exposure is kept to an acceptable level by buying or selling foreign assets to
The tables below summarise the company’s exposure to foreign currency exchange rate risk at 31
address short term imbalances.
Concentrations of currency risk
December:
At 31 December 2013:
Financial Assets
Cash and short term investments
Due from policyholders, brokers and agents
Due from reinsurers and coinsurers
Other receivables
Due from related parties
Loans receivable
Leases receivable
Investment securities
Total financial assets
Financial Liabilities
Other liabilities
Claims liabilities
Total financial liabilities
Net financial position
Due to reinsurers and coinsurers
Jamaican$
J$’000
US$
J$’000
GBP
J$’000
Total
J$’000
568,931
253,601
114,091
7,088
122
167,515
97,582
599,730
210,820
60,792
-
-
-
-
498,584
436,087
121,272
239,875
56,655
720,850
898,777
3,710
44,710
288,295
869
1,169,530
-
-
-
-
-
-
-
-
-
-
-
464,421
174,883
7,088
122
167,515
97,582
934,671
361,147
60,365
765,559
1,187,071
1,707,514 1,307,429
869
3,015,812
808,737 1,019,134
869
1,828,741
(c) Financial risk (continued)
(iii) Market risk (continued)
Currency risk (continued)
Concentrations of currency risk (continued)
At 31 December 2012:
Financial Assets
Cash and short term investments
Due from policyholders, brokers and agents
Due from reinsurers and coinsurers
Other receivables
Due from related parties
Loans receivable
Leases receivable
Investment securities
Total financial assets
Financial Liabilities
Due to reinsurers and coinsurers
Other liabilities
Claims liabilities
Total financial liabilities
Net financial position
Jamaican$
J$’000
US$
J$’000
GBP
J$’000
Total
J$’000
515,470
323,573
160,737
10,286
750
237,933
64,565
801,613
145,623
52,681
-
-
-
-
386,224
77,215
1,699,538 1,077,132
179,068
47,888
638,232
865,188
164,293
3,225
40,206
207,724
834,350
869,408
120 1,317,203
469,196
213,418
10,286
750
237,933
64,565
-
-
-
-
-
-
-
463,439
120 2,776,790
343,361
-
51,113
-
678,438
-
- 1,072,912
120 1,703,878
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
4.
Insurance and Financial Risk Management (Continued)
(c) Financial risk (continued)
(iii) Market risk (continued)
Currency risk (continued)
Page 31
Page 32
General Accident Insurance Company Jamaica Limited
Foreign currency sensitivity
The following tables indicate the currencies to which the company had significant exposure on its
monetary assets and liabilities and its forecast cash flows. The change in currency rates below
represents management’s assessment of the possible change in foreign exchange rates. The
sensitivity analysis shows the impact of translating outstanding foreign currency denominated monetary
items, assuming changes in currency rates shown in the table below. The sensitivity analysis includes
cash and short term deposits, investment securities, premium and other receivables and claims
liabilities. The percentage change in the currency rate will impact each financial asset/liability included
in the sensitivity analysis differently. Consequently, individual sensitivity analyses were performed. The
effect on pre-tax profit below is the total of the individual sensitivities done for each of the
assets/liabilities. There was no impact on the other components of equity.
% Change in
Currency Rate
2013
1%
15%
Effect on
Pre-tax
Profit
2013
$’000
(10,191)
152,870
% Change in
Currency Rate
2012
1%
10%
Effect on
Pre-tax
Profit
2012
$’000
(8,694)
86,941
USD – J$Revaluation
USD – J$Devaluation
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
4.
Insurance and Financial Risk Management (Continued)
(c) Financial risk (continued)
(iii) Market risk (continued)
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in market interest rates.
Floating rate instruments expose the Company to cash flow interest risk, whereas fixed interest rate
instruments expose the Company to fair value interest risk.
The Company’s interest rate risk policy requires it to manage interest rate risk by maintaining an
appropriate mix of fixed and variable rate instruments. The policy also requires it to manage the
maturities of interest bearing financial assets and interest bearing financial liabilities.
The following tables summarise the Company’s exposure to interest rate risk. It includes the Company’s
financial instruments at carrying amounts, categorised by the earlier of contractual repricing or maturity
dates.
Cash and short term investments
468,860
700,667
At 31 December 2013:
Due from policyholders, brokers
and agents
Due from reinsurers and coinsurers
Other receivables
Due from related parties
Loans receivable
Leases receivable
Investment securities
Total financial assets
Due to reinsurers and coinsurers
Other liabilities
Claims liabilities
Total financial liabilities
Within 1
Month
Within 3
Months
3 to 12
Months
1 to 5
Years
Over
5 Years
$’000
$’000
$’000
$’000
$’000
$’000
Non-
Interest
Bearing
Total
$’000
167,515
97,582
-
-
167,515
97,582
117,867
293,196
196,952
169,966
156,690
934,671
468,860
818,534
293,196
294,534
337,481
803,207
3,015,812
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3 1,169,530
464,421
464,421
174,883
174,883
7,088
7,088
122
122
361,147
361,147
60,365
60,365
765,559
765,559
- 1,187,071 1,187,071
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total interest repricing gap
468,860
818,534
293,196
294,534
337,481
(383,864) 1,828,741
Cumulative gap
468,860 1,287,394 1,580,590 1,875,124 2,212,605 1,828,741
-
General Accident Insurance Company Jamaica Limited
Page 31
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
4.
Insurance and Financial Risk Management (Continued)
(c) Financial risk (continued)
(iii) Market risk (continued)
Currency risk (continued)
Foreign currency sensitivity
The following tables indicate the currencies to which the company had significant exposure on its
monetary assets and liabilities and its forecast cash flows. The change in currency rates below
represents management’s assessment of the possible change in foreign exchange rates. The
sensitivity analysis shows the impact of translating outstanding foreign currency denominated monetary
items, assuming changes in currency rates shown in the table below. The sensitivity analysis includes
cash and short term deposits, investment securities, premium and other receivables and claims
liabilities. The percentage change in the currency rate will impact each financial asset/liability included
in the sensitivity analysis differently. Consequently, individual sensitivity analyses were performed. The
effect on pre-tax profit below is the total of the individual sensitivities done for each of the
assets/liabilities. There was no impact on the other components of equity.
USD – J$Revaluation
USD – J$Devaluation
2013
1%
15%
% Change in
Currency Rate
% Change in
Currency Rate
Effect on
Pre-tax
Profit
2013
$’000
(10,191)
152,870
Effect on
Pre-tax
Profit
2012
$’000
(8,694)
86,941
2012
1%
10%
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
Page 32
Page 32
4.
Insurance and Financial Risk Management (Continued)
(c) Financial risk (continued)
(iii) Market risk (continued)
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in market interest rates.
Floating rate instruments expose the Company to cash flow interest risk, whereas fixed interest rate
instruments expose the Company to fair value interest risk.
The Company’s interest rate risk policy requires it to manage interest rate risk by maintaining an
appropriate mix of fixed and variable rate instruments. The policy also requires it to manage the
maturities of interest bearing financial assets and interest bearing financial liabilities.
The following tables summarise the Company’s exposure to interest rate risk. It includes the Company’s
financial instruments at carrying amounts, categorised by the earlier of contractual repricing or maturity
dates.
At 31 December 2013:
Cash and short term investments
468,860
700,667
Due from policyholders, brokers
and agents
Due from reinsurers and coinsurers
Other receivables
Due from related parties
Loans receivable
Leases receivable
Investment securities
Total financial assets
Within 1
Month
$’000
Within 3
Months
$’000
3 to 12
Months
$’000
1 to 5
Years
$’000
Over
5 Years
$’000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
167,515
97,582
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Non-
Interest
Bearing
$’000
Total
$’000
3 1,169,530
464,421
464,421
174,883
174,883
7,088
7,088
122
122
-
-
167,515
97,582
117,867
293,196
196,952
169,966
156,690
934,671
468,860
818,534
293,196
294,534
337,481
803,207
3,015,812
Due to reinsurers and coinsurers
Other liabilities
Claims liabilities
Total financial liabilities
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
361,147
361,147
60,365
60,365
765,559
765,559
- 1,187,071 1,187,071
Total interest repricing gap
468,860
818,534
293,196
294,534
337,481
(383,864) 1,828,741
Cumulative gap
468,860 1,287,394 1,580,590 1,875,124 2,212,605 1,828,741
-
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
4.
Insurance and Financial Risk Management (Continued)
Page 33
Page 34
General Accident Insurance Company Jamaica Limited
(c) Financial risk (continued)
(iii) Market risk (continued)
Interest rate risk (continued)
At 31 December 2012:
Cash and short term investments
Due from policyholders, brokers
and agents
Due from reinsurers and coinsurers
Other receivables
Due from related parties
Loans receivable
Leases receivable
Investment securities
Within 1
Month
Within 3
Months
3 to 12
Months
1 to 5
Years
Over
5 Years
Non-Interest
Bearing
$’000
$’000
$’000 $’000
$’000
$’000
Total
$’000
668,420
648,780
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3
1,317,203
469,196
469,196
213,418
213,418
10,286
10,286
750
750
-
-
-
-
66,134
171,799
-
-
64,565
-
-
-
237,933
64,565
139,518
111,273
9,314
94,858
108,476
463,439
-
-
-
-
-
-
668,420
854,432
111,273
73,879
266,657
802,129
2,776,790
Due to reinsurers and coinsurers
Other liabilities
Claims liabilities
Total financial liabilities
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
343,361
343,361
51,113
51,113
678,438
678,438
1,072,912
1,072,912
Total interest repricing gap
668,420
854,432
111,273
73,879 266,657
(270,783) 1,703,878
Cumulative gap
668,420 1,522,852 1,634,125 1,708,004 1,974,661
1,703,878
-
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
4.
Insurance and Financial Risk Management (Continued)
(c) Financial risk (continued)
(iii) Market risk (continued)
Interest rate risk (continued)
Interest rate sensitivity
The following table indicates the sensitivity to a reasonably possible change in interest rates, with all
other variables held constant, on the Company’s profit or loss and shareholders’ equity.
The sensitivity of the profit or loss is the effect of the assumed changes in interest rates on income
based on the floating rate non-trading financial assets and financial liabilities. The sensitivity of other
components of equity is calculated by revaluing fixed rate financial assets and liabilities for the effects
of the assumed changes in interest rates. The change in the interest rates will impact the financial
assets and liabilities differently. Consequently, individual analyses were performed. The effect on pre-
tax profit and other components of equity below is the total of the individual sensitivities done for each
of the assets and liabilities. It should be noted that the changes in the pre-tax profit and other
components of equity as shown in the analysis are non-linear.
Change in
Basis
points:
2013
JMD/USD
-100/-50
+250/+200
Effect on
Profit before
Taxation
Effect on Other
Components of
Effect on
Profit before
Taxation
Effect on Other
Components of
2013
$’000
(1,973)
4,932
Equity
2013
$’000
3,438
(11,965)
Change in
Basis
points:
2012
JMD/USD
-100/-50
+400/-250
2012
$’000
(729)
2,915
Equity
2012
$’000
474
(10,689)
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
4.
Insurance and Financial Risk Management (Continued)
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
4.
Insurance and Financial Risk Management (Continued)
Page 33
Page 34
Page 34
(c) Financial risk (continued)
(iii) Market risk (continued)
Interest rate risk (continued)
(c) Financial risk (continued)
(iii) Market risk (continued)
Interest rate risk (continued)
Cash and short term investments
668,420
648,780
At 31 December 2012:
Due from policyholders, brokers
and agents
Due from reinsurers and coinsurers
Other receivables
Due from related parties
Loans receivable
Leases receivable
Investment securities
Due to reinsurers and coinsurers
Other liabilities
Claims liabilities
Total financial liabilities
Within 1
Month
Within 3
Months
3 to 12
Months
1 to 5
Years
Over
Non-Interest
5 Years
Bearing
$’000
$’000
$’000 $’000
$’000
$’000
Total
$’000
66,134
171,799
-
64,565
139,518
111,273
9,314
94,858
108,476
463,439
668,420
854,432
111,273
73,879
266,657
802,129
2,776,790
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3
1,317,203
469,196
469,196
213,418
213,418
10,286
10,286
750
750
-
-
237,933
64,565
343,361
343,361
51,113
51,113
678,438
678,438
1,072,912
1,072,912
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total interest repricing gap
668,420
854,432
111,273
73,879 266,657
(270,783) 1,703,878
Cumulative gap
668,420 1,522,852 1,634,125 1,708,004 1,974,661
1,703,878
-
Interest rate sensitivity
The following table indicates the sensitivity to a reasonably possible change in interest rates, with all
other variables held constant, on the Company’s profit or loss and shareholders’ equity.
The sensitivity of the profit or loss is the effect of the assumed changes in interest rates on income
based on the floating rate non-trading financial assets and financial liabilities. The sensitivity of other
components of equity is calculated by revaluing fixed rate financial assets and liabilities for the effects
of the assumed changes in interest rates. The change in the interest rates will impact the financial
assets and liabilities differently. Consequently, individual analyses were performed. The effect on pre-
tax profit and other components of equity below is the total of the individual sensitivities done for each
of the assets and liabilities. It should be noted that the changes in the pre-tax profit and other
components of equity as shown in the analysis are non-linear.
Change in
Basis
points:
2013
JMD/USD
-100/-50
+250/+200
Effect on
Profit before
Taxation
Effect on Other
Components of
Equity
2013
$’000
(1,973)
4,932
2013
$’000
3,438
(11,965)
Change in
Basis
points:
2012
JMD/USD
-100/-50
+400/-250
Effect on
Profit before
Taxation
Effect on Other
Components of
Equity
2012
$’000
(729)
2,915
2012
$’000
474
(10,689)
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
Page 35
Page 36
4.
Insurance and Financial Risk Management (Continued)
5. Capital Management
(c) Financial risk (continued)
(iii) Market risk (continued)
Price risk
The Company is exposed to equity securities price risk because of investments held by the Company.
These investments are classified on the statement of financial position as available-for-sale and fair
value through profit or loss.
The table below summarises the impact of increases/decreases on the Company’s pre-tax profit for the
year and on equity. The analysis is based on the assumption that the equity prices had
increased/decreased by 10% (2012 - 10%) with all other variables held constant.
Change in index:
-10% (2012 -10%)
+10% (2012 + 10%)
Effect on Other
Components of
Equity
Effect on Other
Components of
Equity
2013
$’000
(15,597)
15,597
2012
$’000
(10,847)
10,847
MCT
6. Fair Value Estimation
The Company’s objectives when managing capital, which is a broader concept than the ‘equity’ on the face of
statement of financial position, are:
Company operates;
(a) To comply with the capital requirements set by the regulators of the insurance markets where the
(b) To safeguard the Company’s ability to continue as a going concern so that it can continue to provide
returns for stockholders and benefits for other stakeholders; and
(c) To maintain a strong capital base to support the development of its business.
To assist in evaluating the current business and strategies, a risk-based capital approach is used in the form of
the Minimum Capital Test (MCT) as stipulated by the regulators. The MCT is calculated by management. This
information is required to be filed with the Financial Services Commission on a monthly, quarterly and annual
basis. The required MCT ratio was initially set at 200% and will be gradually increased to 250%. The MCT for
the company for the year ended 31 December 2013 is as follows:
Actual
Required
Actual
2013
308%
2013
250%
2012
251%
Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable,
willing parties in an arm’s length transaction.
In accordance with IFRS 7, the Company discloses fair value measurements for items carried on the statement
of financial position at fair value, by level of the following fair value measurement hierarchy:
(a) Quoted prices (unadjusted) in active markets for identical assets or liabilities are disclosed as Level 1.
(b) Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly (that is, as prices) or indirectly (that is, derived from prices) are disclosed as Level 2.
(c) Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) are
disclosed as Level 3.
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
Page 35
Page 36
4.
Insurance and Financial Risk Management (Continued)
5. Capital Management
The Company is exposed to equity securities price risk because of investments held by the Company.
These investments are classified on the statement of financial position as available-for-sale and fair
(b) To safeguard the Company’s ability to continue as a going concern so that it can continue to provide
returns for stockholders and benefits for other stakeholders; and
The Company’s objectives when managing capital, which is a broader concept than the ‘equity’ on the face of
statement of financial position, are:
(a) To comply with the capital requirements set by the regulators of the insurance markets where the
Company operates;
(c) To maintain a strong capital base to support the development of its business.
To assist in evaluating the current business and strategies, a risk-based capital approach is used in the form of
the Minimum Capital Test (MCT) as stipulated by the regulators. The MCT is calculated by management. This
information is required to be filed with the Financial Services Commission on a monthly, quarterly and annual
basis. The required MCT ratio was initially set at 200% and will be gradually increased to 250%. The MCT for
the company for the year ended 31 December 2013 is as follows:
MCT
6. Fair Value Estimation
Actual
Required
Actual
2013
308%
2013
250%
2012
251%
Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable,
willing parties in an arm’s length transaction.
In accordance with IFRS 7, the Company discloses fair value measurements for items carried on the statement
of financial position at fair value, by level of the following fair value measurement hierarchy:
(a) Quoted prices (unadjusted) in active markets for identical assets or liabilities are disclosed as Level 1.
(b) Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly (that is, as prices) or indirectly (that is, derived from prices) are disclosed as Level 2.
(c) Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) are
disclosed as Level 3.
(c) Financial risk (continued)
(iii) Market risk (continued)
Price risk
value through profit or loss.
The table below summarises the impact of increases/decreases on the Company’s pre-tax profit for the
year and on equity. The analysis is based on the assumption that the equity prices had
increased/decreased by 10% (2012 - 10%) with all other variables held constant.
Change in index:
-10% (2012 -10%)
+10% (2012 + 10%)
Effect on Other
Components of
Effect on Other
Components of
Equity
2013
$’000
(15,597)
15,597
Equity
2012
$’000
(10,847)
10,847
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
Page 37
Page 38
6. Fair Value Estimation (Continued)
6. Fair Value Estimation (Continued)
The following table presents the Company’s assets that are measured at fair value. There are no liabilities that
are measured at fair value at the year end, and the Company had no instruments classified in Level 3 during
the year.
At 31 December 2013
Assets
Available-for-sale financial assets –
Equity securities
Debt securities
Total assets measured at fair value
At 31 December 2012
Assets
Available-for-sale financial assets –
Equity securities
Debt securities
Total assets measured at fair value
Level 1
Level 2
$’000
$’000
Total
balance
$’000
155,974
-
155,974
-
541,557
541,557
155,974
541,557
697,531
Level 1
Level 2
$’000
$’000
Total
balance
$’000
108,476
-
108,476
-
296,415
296,415
108,476
296,415
404,891
There were no transfers between levels 1 and level 2 during the year.
Market price is used to determine fair value where an active market (such as a recognised stock exchange) exists
as it is the best evidence of the fair value of a financial instrument. The quoted market price used for financial
assets held by the Company is the current bid price. These instruments are included in Level 1.
However, market prices are not available for all financial assets held by the Company. Therefore, for financial
instruments where no market price is available, the fair values presented have been estimated using present
value or other estimation and valuation techniques. These valuation techniques maximise the use of
observable market data where it is available and rely as little as possible on entity specific estimates. If all
significant inputs required to fair value an instrument are observable, the instrument is included in Level 2. If one
or more of the significant inputs is not based on observable market data, the instrument is included in Level 3.
The following methods have been used to value financial instruments:
(a) Investment securities classified as available-for-sale and fair value through profit or loss are measured at fair
value by reference to quoted market prices when available. If quoted market prices are not available, then fair
values are estimated on the basis of pricing models or other recognised valuation techniques;
(b) The fair value of short-term assets and liabilities maturing within one year is assumed to approximate their
carrying amount. This assumption is applied to liquid assets and the short-term elements of all other financial
assets and financial liabilities;
(c) The fair value of variable rate financial instruments is assumed to approximate their carrying amounts, as
these instruments are expected to reprice at the prevailing market rates;
(d) Loans and leases are carried at amortised cost which is assumed to approximate fair value as loans are
issued at terms and conditions available in the market for similar transactions.
7. Critical Accounting Estimates and Judgements in Applying Accounting Policies
The Company makes estimates and assumptions that affect the reported amounts of assets and liabilities in
the future. Estimates and judgements are continually evaluated and are based on historical experience and
other factors, including expectations of future events that are believed to be reasonable under the
circumstances. The resulting accounting estimates will, by definition, seldom equal the related actual results.
The estimates and assumptions that will have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year are as follows:
(a) Liabilities arising from claims made under insurance contracts
The determination of the liabilities under insurance contracts represents the liability for future claims
payable by the Company based on contracts for the insurance business in force at the date of the
statement of financial position using several methods, including the Paid Loss Development method, the
Incurred Loss Development method, the Bornhuetter-Ferguson Paid Loss method, the Bornhuetter-
Ferguson Incurred Loss method and the Frequency-Severity method. These liabilities represent the
amounts that will, in the opinion of the actuary, be sufficient to pay future claims relating to contracts of
insurance in force, as well as meet the other expenses incurred in connection with such contracts. A
margin for risk or uncertainty (adverse deviations) in these assumptions is added to the liability. The
assumptions are examined each year in order to determine their validity in light of current best estimates or
to reflect emerging trends in the Company’s experience.
Claims are analysed separately between those arising from damage to insured property and consequential
losses. Claims arising from damage to insured property can be estimated with greater reliability, and the
Company’s estimation processes reflect all the factors that influence the amount and timing of cash flows
from these contracts. The shorter settlement period for these claims, allows the Company to achieve a
higher degree of certainty about the estimated cost of claims, and relatively little IBNR is held at year-end.
However, the longer time needed to assess the emergence of claims arising from consequential losses
makes the estimation process more uncertain for these claims.
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
Page 37
Page 38
6. Fair Value Estimation (Continued)
6. Fair Value Estimation (Continued)
The following table presents the Company’s assets that are measured at fair value. There are no liabilities that
are measured at fair value at the year end, and the Company had no instruments classified in Level 3 during
the year.
At 31 December 2013
Assets
Available-for-sale financial assets –
Equity securities
Debt securities
Total assets measured at fair value
At 31 December 2012
Assets
Available-for-sale financial assets –
Equity securities
Debt securities
Total assets measured at fair value
Level 1
Level 2
$’000
$’000
Total
balance
$’000
155,974
-
155,974
-
541,557
541,557
155,974
541,557
697,531
Level 1
Level 2
$’000
$’000
Total
balance
$’000
108,476
-
108,476
-
296,415
296,415
108,476
296,415
404,891
There were no transfers between levels 1 and level 2 during the year.
Market price is used to determine fair value where an active market (such as a recognised stock exchange) exists
as it is the best evidence of the fair value of a financial instrument. The quoted market price used for financial
assets held by the Company is the current bid price. These instruments are included in Level 1.
However, market prices are not available for all financial assets held by the Company. Therefore, for financial
instruments where no market price is available, the fair values presented have been estimated using present
value or other estimation and valuation techniques. These valuation techniques maximise the use of
observable market data where it is available and rely as little as possible on entity specific estimates. If all
significant inputs required to fair value an instrument are observable, the instrument is included in Level 2. If one
or more of the significant inputs is not based on observable market data, the instrument is included in Level 3.
The following methods have been used to value financial instruments:
(a) Investment securities classified as available-for-sale and fair value through profit or loss are measured at fair
value by reference to quoted market prices when available. If quoted market prices are not available, then fair
values are estimated on the basis of pricing models or other recognised valuation techniques;
(b) The fair value of short-term assets and liabilities maturing within one year is assumed to approximate their
carrying amount. This assumption is applied to liquid assets and the short-term elements of all other financial
assets and financial liabilities;
(c) The fair value of variable rate financial instruments is assumed to approximate their carrying amounts, as
these instruments are expected to reprice at the prevailing market rates;
(d) Loans and leases are carried at amortised cost which is assumed to approximate fair value as loans are
issued at terms and conditions available in the market for similar transactions.
7. Critical Accounting Estimates and Judgements in Applying Accounting Policies
The Company makes estimates and assumptions that affect the reported amounts of assets and liabilities in
the future. Estimates and judgements are continually evaluated and are based on historical experience and
other factors, including expectations of future events that are believed to be reasonable under the
circumstances. The resulting accounting estimates will, by definition, seldom equal the related actual results.
The estimates and assumptions that will have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year are as follows:
(a) Liabilities arising from claims made under insurance contracts
The determination of the liabilities under insurance contracts represents the liability for future claims
payable by the Company based on contracts for the insurance business in force at the date of the
statement of financial position using several methods, including the Paid Loss Development method, the
Incurred Loss Development method, the Bornhuetter-Ferguson Paid Loss method, the Bornhuetter-
Ferguson Incurred Loss method and the Frequency-Severity method. These liabilities represent the
amounts that will, in the opinion of the actuary, be sufficient to pay future claims relating to contracts of
insurance in force, as well as meet the other expenses incurred in connection with such contracts. A
margin for risk or uncertainty (adverse deviations) in these assumptions is added to the liability. The
assumptions are examined each year in order to determine their validity in light of current best estimates or
to reflect emerging trends in the Company’s experience.
Claims are analysed separately between those arising from damage to insured property and consequential
losses. Claims arising from damage to insured property can be estimated with greater reliability, and the
Company’s estimation processes reflect all the factors that influence the amount and timing of cash flows
from these contracts. The shorter settlement period for these claims, allows the Company to achieve a
higher degree of certainty about the estimated cost of claims, and relatively little IBNR is held at year-end.
However, the longer time needed to assess the emergence of claims arising from consequential losses
makes the estimation process more uncertain for these claims.
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
Page 39
Page 40
7. Critical Accounting Estimates and Judgements in Applying Accounting Policies (Continued)
8. Segment Information (Continued)
(e) Burglary - Loss of or damage to the insured’s property involving forcible and/or violent entry into or exit
from the building including damage to the premises.
(f) Miscellanous Accidents - This operating segment covers the following policies:
Fidelity Guarantee - Loss of money or goods owned by the insured (or for which the insured is
responsible) as a result of fraud or dishonesty by an employee.
Goods in Transit - Loss, destruction or damage to insured goods by fire and allied perils, including
loss or damage from accidental collision or overturning and whilst in, on or being loaded or unloaded
from any road vehicle or whilst temporarily housed overnight during the ordinary course of transit.
Engineering and machinery breakdown - Loss or damage by fire and allied perils including burglary,
theft and accidental damage to specified equipment, including loss or damage resulting from electrical
and mechanical breakdown subject to maintenance.
Loss of money - Loss, damage or destruction of money including hold-up on premises during and out
of business hours and in transit.
Plate glass - Accident breakage to plate glass windows and doors of buildings.
Personal accident - Compensation for bodily injury caused by violent, visible, external and accidental
means, which injury shall solely and independently of any other cause result in death or
dismemberment within 12 months of such injury. Subject to the limits specified on the policy schedule.
(b) Income taxes
There are many transactions and calculations for which the ultimate tax determination is uncertain during the
ordinary course of business. The Company recognises liabilities for anticipated tax audit issues based on
estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different
from the amounts that were initially recorded, such differences will impact the income tax and deferred tax
provisions in the period in which such determination is made.
(c) Fair value of financial assets determined using valuation techniques
As described in Note 6, where the fair values of financial assets recorded on the statement of financial
position cannot be derived from active markets, they are determined using a variety of valuation techniques
that include the use of discounted cash flows model and/or mathematical models. The inputs to these
models are derived from observable market data where possible, but where observable market data are
not available, judgment is required to establish fair values.
For discounted cash flow analysis, estimated future cash flows and discount rates are based on current
market information and rates applicable to financial instruments with similar yields, credit quality and
maturity characteristics. Estimated future cash flows are influenced by factors such as economic
conditions, types of instruments or currencies, market liquidity and financial conditions of counterparties.
Discount rates are influenced by risk free interest rates and credit risk.
Changes in assumptions about these factors could affect the reported fair value of financial instruments.
8. Segment Information
Management has determined the operating segments based on the reports reviewed by the board of directors
that are used to make strategic decisions. All operating segments used by management meet the definition of a
reportable segment under IFRS 8.
The Company is organised into seven operating segments. These segments represent the different types of
risks that are written by the entity through various forms of brokers, agents and direct marketing programmes,
which are all located in Jamaica. Management identifies its reportable operating segments by product line
consistent with the reports used by the board of directors. These segments and their respective operations are
as follows:
(a) Fire and allied perils - Loss, damage or destruction to insured property as specified on the policy schedule.
(b) Homeowners - Loss, damage or destruction to insured property used for residential purposes as specified
on the policy schedule, resulting from fire and allied perils, burglary, theft, or accidental damage. This
includes liability to third parties and domestic employees.
(c) Marine - Loss or damage to goods from the perils of the seas and other perils whilst in transit from
destination to destination by sea, air or land and from warehouse to warehouse.
(d) Liability - Legal liability of the insured to third parties for accidental bodily injury, death and/or loss of or
damage to property occurring in connection with the insured’s business, subject to a limit of indemnity. In
the case of an employee liability this is legal liability of the insured to pay compensation to its employees in
respect of death, injury or disease sustained during and in the course of their employment, subject to a limit
of indemnity.
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
Page 39
Page 40
7. Critical Accounting Estimates and Judgements in Applying Accounting Policies (Continued)
8. Segment Information (Continued)
(e) Burglary - Loss of or damage to the insured’s property involving forcible and/or violent entry into or exit
from the building including damage to the premises.
(f) Miscellanous Accidents - This operating segment covers the following policies:
Fidelity Guarantee - Loss of money or goods owned by the insured (or for which the insured is
responsible) as a result of fraud or dishonesty by an employee.
Goods in Transit - Loss, destruction or damage to insured goods by fire and allied perils, including
loss or damage from accidental collision or overturning and whilst in, on or being loaded or unloaded
from any road vehicle or whilst temporarily housed overnight during the ordinary course of transit.
Engineering and machinery breakdown - Loss or damage by fire and allied perils including burglary,
theft and accidental damage to specified equipment, including loss or damage resulting from electrical
and mechanical breakdown subject to maintenance.
Loss of money - Loss, damage or destruction of money including hold-up on premises during and out
of business hours and in transit.
Plate glass - Accident breakage to plate glass windows and doors of buildings.
Personal accident - Compensation for bodily injury caused by violent, visible, external and accidental
means, which injury shall solely and independently of any other cause result in death or
dismemberment within 12 months of such injury. Subject to the limits specified on the policy schedule.
(b) Income taxes
There are many transactions and calculations for which the ultimate tax determination is uncertain during the
ordinary course of business. The Company recognises liabilities for anticipated tax audit issues based on
estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different
from the amounts that were initially recorded, such differences will impact the income tax and deferred tax
provisions in the period in which such determination is made.
(c) Fair value of financial assets determined using valuation techniques
As described in Note 6, where the fair values of financial assets recorded on the statement of financial
position cannot be derived from active markets, they are determined using a variety of valuation techniques
that include the use of discounted cash flows model and/or mathematical models. The inputs to these
models are derived from observable market data where possible, but where observable market data are
not available, judgment is required to establish fair values.
For discounted cash flow analysis, estimated future cash flows and discount rates are based on current
market information and rates applicable to financial instruments with similar yields, credit quality and
maturity characteristics. Estimated future cash flows are influenced by factors such as economic
conditions, types of instruments or currencies, market liquidity and financial conditions of counterparties.
Discount rates are influenced by risk free interest rates and credit risk.
Changes in assumptions about these factors could affect the reported fair value of financial instruments.
8. Segment Information
Management has determined the operating segments based on the reports reviewed by the board of directors
that are used to make strategic decisions. All operating segments used by management meet the definition of a
reportable segment under IFRS 8.
The Company is organised into seven operating segments. These segments represent the different types of
risks that are written by the entity through various forms of brokers, agents and direct marketing programmes,
which are all located in Jamaica. Management identifies its reportable operating segments by product line
consistent with the reports used by the board of directors. These segments and their respective operations are
as follows:
(a) Fire and allied perils - Loss, damage or destruction to insured property as specified on the policy schedule.
(b) Homeowners - Loss, damage or destruction to insured property used for residential purposes as specified
on the policy schedule, resulting from fire and allied perils, burglary, theft, or accidental damage. This
includes liability to third parties and domestic employees.
(c) Marine - Loss or damage to goods from the perils of the seas and other perils whilst in transit from
destination to destination by sea, air or land and from warehouse to warehouse.
(d) Liability - Legal liability of the insured to third parties for accidental bodily injury, death and/or loss of or
damage to property occurring in connection with the insured’s business, subject to a limit of indemnity. In
the case of an employee liability this is legal liability of the insured to pay compensation to its employees in
respect of death, injury or disease sustained during and in the course of their employment, subject to a limit
of indemnity.
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
Page 41
Page 42
8. Segment Information (Continued)
8. Segment Information (Continued)
The segment information provided to the board of directors for the reportable segments for the year ended 31
December 2013 is as follows:
2013
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Fire Homeowners
Motor
Marine
Liability Burglary
Misellaneous
Accident
Total
$’000
Gross Premiums Written
2,788,787
112,344
850,344
128,746
302,810
7,822
288,902 4,479,755
Reinsurance ceded
(2,682,216)
(89,965)
(20,308)
(103,411)
(185,108)
(5,247)
(228,101) (3,314,356)
Excess of loss reinsurance cost
(86,233)
(25,635)
(29,564)
-
(5,569)
-
-
(147,001)
Net premiums written
20,338
(3,256)
800,472
25,335
112,133
2,575
60,801 1,018,398
Changes in unearned premiums,
net
Net Premiums Earned
(2,128)
18,210
140
(19,186)
821
(1,229)
92
(2,715)
(24,205)
Commission income
187,129
21,641
2,962
18,478
14,600
1,271
49,404
295,485
(3,116)
781,286
26,156
110,904
2,667
58,086
994,193
Commission expense
(111,067)
(13,575)
(74,790)
(2,853)
(6,359)
(357)
(28,262)
(237,263)
Commission income
183,368
18,966
3,330
18,162
8,946
1,248
35,074
269,094
Claims expense
(31,561)
1,767
(472,948)
(679)
(28,900)
(2)
(8,452)
(540,775)
Commission expense
(62,118)
(12,414)
(72,402)
(1,309)
(4,157)
(256)
(24,264)
(176,920)
Management expenses
(29,501)
(6,679) (238,028)
(5,622)
(35,816)
(804)
(16,453)
(332,903)
Claims expense
(7,860)
(2,127)
(541,913)
(5,516)
(85,750)
(1,770)
(1,855)
(646,791)
Management expenses
(34,962)
(7,342)
(272,303)
(8,312)
(38,613)
(845)
(18,696)
(381,073)
33,962
4,025
(51,137)
28,830
48,461
3,273
49,948
117,362
Segment results
Unallocated income
Unallocated expenses
Profit before tax
Taxation
Net profit
96,638
(6,033)
(102,002)
29,181
(8,670)
1,044
48,345
58,503
292,498
(27,299)
323,702
4,212
327,914
Profit from the reportable segments is reconciled to the Company’s profit before taxation as follows:
2012
Fire Homeowners
Motor
Marine
Liability Burglary
Accident
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Total
$’000
Misellaneous
Gross Premiums Written
2,198,086
113,076
827,683
104,680
295,378
7,880
242,186 3,788,969
Reinsurance ceded
(2,096,574)
(90,584)
(26,125)
(85,749)
(174,767)
(5,173)
(186,781) (2,665,753)
Excess of loss reinsurance cost
(79,664)
(21,109)
(22,050)
-
(9,218)
-
-
(132,041)
Net premiums written
Changes in unearned premiums,
net
Net Premiums Earned
21,848
(2,886)
18,962
1,383
779,508
18,931
111,393
2,707
55,405
991,175
(512)
(47,841)
575
(6,457)
458
(1,694)
(58,357)
871
731,667
19,506
104,936
3,165
53,711
932,818
Segment results
Unallocated income
Unallocated expenses
Profit before tax
Taxation
Net profit
Profit from reportable segments
Unallocated income
Investment income
Other income
Unallocated expenses
Depreciation and amortisation
197,773
(29,866)
285,269
5,268
290,537
2013
$’000
58,503
141,407
151,091
292,498
2012
$’000
117,362
136,062
61,711
197,773
(27,299)
323,702
(29,866)
285,269
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
8. Segment Information (Continued)
Page 42
2012
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Fire Homeowners
Motor
Marine
Liability Burglary
Misellaneous
Accident
Total
$’000
Gross Premiums Written
2,198,086
113,076
827,683
104,680
295,378
7,880
242,186 3,788,969
Reinsurance ceded
(2,096,574)
(90,584)
(26,125)
(85,749)
(174,767)
(5,173)
(186,781) (2,665,753)
Excess of loss reinsurance cost
(79,664)
(21,109)
(22,050)
-
(9,218)
-
-
(132,041)
Net premiums written
Changes in unearned premiums,
net
Net Premiums Earned
21,848
(2,886)
18,962
1,383
779,508
18,931
111,393
2,707
55,405
991,175
(512)
(47,841)
575
(6,457)
458
(1,694)
(58,357)
871
731,667
19,506
104,936
3,165
53,711
932,818
Commission income
187,129
21,641
2,962
18,478
14,600
1,271
49,404
295,485
Commission expense
(111,067)
(13,575)
(74,790)
(2,853)
(6,359)
(357)
(28,262)
(237,263)
Claims expense
(31,561)
1,767
(472,948)
(679)
(28,900)
(2)
(8,452)
(540,775)
Management expenses
(29,501)
(6,679) (238,028)
(5,622)
(35,816)
(804)
(16,453)
(332,903)
Segment results
Unallocated income
Unallocated expenses
Profit before tax
Taxation
Net profit
33,962
4,025
(51,137)
28,830
48,461
3,273
49,948
117,362
197,773
(29,866)
285,269
5,268
290,537
Profit from the reportable segments is reconciled to the Company’s profit before taxation as follows:
Profit from reportable segments
Unallocated income
Investment income
Other income
Unallocated expenses
Depreciation and amortisation
2013
$’000
58,503
141,407
151,091
292,498
2012
$’000
117,362
136,062
61,711
197,773
(27,299)
323,702
(29,866)
285,269
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
Page 43
Page 44
8. Segment Information (Continued)
Total capital expenditure was as follows:
Property, plant and equipment
Intangible assets
2013
$’000
26,923
537
27,460
2012
$’000
33,303
10,757
44,060
Assets, liabilities and capital expenditure are not reported by segment to the board of directors.
9. Related Party Transactions and Balances
(a) Related party transactions are as follows:
Interest income -
2013
$’000
2012
$’000
Fellow subsidiary (Note 11)
21,522
25,497
Rental and maintenance income -
Fellow subsidiary
Rental expense
Fellow subsidiary
Premium income -
Key management
Parent company
Fellow subsidiaries
Affiliates
868
1,022
14,132
12,509
3,644
35,079
124,800
127,223
290,746
2,696
37,371
119,557
63,776
223,400
9. Related Party Transactions and Balances (Continued)
(a) Related party transactions (continued)
Claims expense -
Key management
Parent company
Fellow subsidiaries
Affiliates
Dividends declared -
Key management
Parent company
Key management compensation -
Salaries and other short term benefits
Directors emoluments
Directors’ fees (included above)
Due from related parties -
Receivables -
Fellow subsidiary
2013
$’000
2012
$’000
94
1,264
18,867
4,484
24,709
100
-
-
7,760
7,860
2,657
112,018
114,675
1,927
80,025
81,952
54,512
49,222
2,040
1,720
2013
$’000
2012
$’000
122
750
(b) The statement of financial position includes the following balances with group companies:
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
Page 43
Page 44
8. Segment Information (Continued)
Total capital expenditure was as follows:
Property, plant and equipment
Intangible assets
Assets, liabilities and capital expenditure are not reported by segment to the board of directors.
9. Related Party Transactions and Balances
(a) Related party transactions are as follows:
Fellow subsidiary (Note 11)
21,522
25,497
2013
$’000
26,923
537
27,460
2012
$’000
33,303
10,757
44,060
2013
$’000
2012
$’000
868
1,022
14,132
12,509
3,644
35,079
2,696
37,371
124,800
119,557
127,223
63,776
290,746
223,400
Interest income -
Rental and maintenance income -
Fellow subsidiary
Rental expense
Fellow subsidiary
Premium income -
Key management
Parent company
Fellow subsidiaries
Affiliates
9. Related Party Transactions and Balances (Continued)
(a) Related party transactions (continued)
Claims expense -
Key management
Parent company
Fellow subsidiaries
Affiliates
Dividends declared -
Key management
Parent company
Key management compensation -
Salaries and other short term benefits
Directors emoluments
Directors’ fees (included above)
2013
$’000
2012
$’000
94
1,264
18,867
4,484
24,709
-
100
-
7,760
7,860
2,657
112,018
114,675
1,927
80,025
81,952
54,512
49,222
2,040
1,720
(b) The statement of financial position includes the following balances with group companies:
Due from related parties -
Receivables -
Fellow subsidiary
2013
$’000
2012
$’000
122
750
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
Page 45
Page 46
9. Related Party Transactions and Balances (Continued)
10. Claims Expense
(b) Balances with group companies (continued)
Due from policyholders, brokers and agents -
Fellow subsidiary
Parent company
Loans receivable -
Fellow subsidiary (Note 21)
Investment securities -
Shares in affiliated entity (Note 23)
Claims liabilities
Parent company
Affiliated company
Fellow subsidiary
2013
$’000
2012
$’000
81,369
-
81,369
39,273
40,472
79,745
167,515
237,933
Gross claims expense
Reinsurers share of claims expense (Note 4(b) (d))
Net claims expense
11.
Investment Income
Interest income -
Leases receivable
Loan due from fellow subsidiary (Note 9(a))
Cash and deposits and investment securities
79,867
67,331
Bond premium amortisation
7,556
14,152
26,840
2,452
5,436
8,306
Gain on sale of investments
Dividend income
Realised gain on Unit Trust Fund
Included in the investments of the company are shares in related parties. At 31 December 2013, these shares
represented 1.87% of the total assets (2012 – 1.73%).
12. Other Income
Foreign exchange gains
Rental income
Miscellaneous income
Gain on disposal of property, plant and equipment
2013
2012
$’000
$’000
762,454
624,954
(115,663)
(84,179)
646,791
540,775
2013
2012
$’000
$’000
18,018
21,522
7,661
25,497
91,312
77,550
(1,214)
-
129,638
110,708
4,498
7,271
-
12,837
8,007
4,510
141,407
136,062
2013
2012
$’000
143,381
2,082
1,378
4,250
$’000
50,052
2,126
6,337
3,196
151,091
61,711
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
Page 45
Page 46
9. Related Party Transactions and Balances (Continued)
10. Claims Expense
(b) Balances with group companies (continued)
Due from policyholders, brokers and agents -
Fellow subsidiary
Parent company
Loans receivable -
Fellow subsidiary (Note 21)
Investment securities -
Shares in affiliated entity (Note 23)
Claims liabilities
Parent company
Affiliated company
Fellow subsidiary
Gross claims expense
Reinsurers share of claims expense (Note 4(b) (d))
Net claims expense
11.
Investment Income
Interest income -
Leases receivable
Loan due from fellow subsidiary (Note 9(a))
Cash and deposits and investment securities
79,867
67,331
Bond premium amortisation
Gain on sale of investments
Dividend income
Realised gain on Unit Trust Fund
2013
2012
$’000
$’000
81,369
-
81,369
39,273
40,472
79,745
167,515
237,933
7,556
14,152
26,840
2,452
5,436
8,306
Included in the investments of the company are shares in related parties. At 31 December 2013, these shares
represented 1.87% of the total assets (2012 – 1.73%).
12. Other Income
Foreign exchange gains
Rental income
Gain on disposal of property, plant and equipment
Miscellaneous income
2013
$’000
2012
$’000
762,454
624,954
(115,663)
(84,179)
646,791
540,775
2013
$’000
2012
$’000
18,018
21,522
7,661
25,497
91,312
77,550
(1,214)
-
129,638
110,708
4,498
7,271
-
12,837
8,007
4,510
141,407
136,062
2013
$’000
2012
$’000
143,381
50,052
2,082
1,378
4,250
2,126
6,337
3,196
151,091
61,711
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
Page 47
Page 48
13. Expenses by Nature
15. Taxation
Management and other expenses by nature are as follows:
Advertising costs
Audit fees
Computer expenses
Directors fees
Depreciation and amortisation
Insurance
Professional fees
Printing and stationery
Registration fees
Rent
Repairs and maintenance
Staff costs (Note 14)
Transportation expenses
Utilities
Other operating expenses
14. Staff Costs
Wages and salaries
Statutory contributions
Pension costs
Other
2013
$’000
13,810
4,982
16,859
2,040
27,299
1,779
14,830
4,493
12,505
14,132
15,148
2012
$’000
24,861
4,412
8,467
1,720
29,866
715
9,733
4,413
11,782
12,509
13,915
231,662
201,108
4,541
15,431
28,861
6,969
14,093
18,206
408,372
362,769
2013
$’000
2012
$’000
174,915
150,091
15,722
3,500
37,525
12,841
2,889
35,287
231,662
201,108
(a) The company’s shares were listed on the Junior Market of the Jamaica Stock Exchange, effective
21 September 2011. Consequently, the company is entitled to a remission of tax for ten (10) years in the
proportions set out below, provided the shares remain listed for at least 15 years:
Years 1 to 5 100%
Years 6 to 10 50%
The financial statements have been prepared on the basis that the company will have the full benefit of
the tax remissions. Subject to agreement with the Minister of Finance and Planning, the income tax
payable for which remission has been granted is $115,024,000 (2012 - $85,593,000).
(b) Taxation is based on the profit for the year adjusted for taxation purposes and represents income tax at 33
1/3%:
Deferred income taxes (Note 27)
(c)
The tax charge on the company’s profit differs from the theoretical amount that would arise using the
statutory tax rate as follows:
Profit before tax
Tax calculated at a rate of 33 1/3%
Adjusted for the effects of:
Income relieved
Income not subject to tax
Expenses not deductible for tax
Net effect of other charges and allowances
2013
$’000
(4,212)
(4,212)
2012
$’000
(5,268)
(5,268)
2013
$'000
2012
$'000
323,702
285,268
107,901
95,089
(115,024)
(118,987)
(14,543)
(15,935)
19,993
(2,539)
(4,212)
33,438
1,127
(5,268)
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
Page 47
Page 48
13. Expenses by Nature
15. Taxation
Management and other expenses by nature are as follows:
Advertising costs
Audit fees
Computer expenses
Directors fees
Depreciation and amortisation
Insurance
Professional fees
Printing and stationery
Registration fees
Rent
Repairs and maintenance
Staff costs (Note 14)
Transportation expenses
Utilities
Other operating expenses
14. Staff Costs
Wages and salaries
Statutory contributions
Pension costs
Other
2013
$’000
13,810
4,982
16,859
2,040
27,299
1,779
14,830
4,493
12,505
14,132
15,148
4,541
15,431
28,861
2012
$’000
24,861
4,412
8,467
1,720
29,866
715
9,733
4,413
11,782
12,509
13,915
6,969
14,093
18,206
231,662
201,108
2013
$’000
2012
$’000
174,915
150,091
15,722
3,500
37,525
12,841
2,889
35,287
231,662
201,108
(a) The company’s shares were listed on the Junior Market of the Jamaica Stock Exchange, effective
21 September 2011. Consequently, the company is entitled to a remission of tax for ten (10) years in the
proportions set out below, provided the shares remain listed for at least 15 years:
Years 1 to 5 100%
Years 6 to 10 50%
The financial statements have been prepared on the basis that the company will have the full benefit of
the tax remissions. Subject to agreement with the Minister of Finance and Planning, the income tax
payable for which remission has been granted is $115,024,000 (2012 - $85,593,000).
(b) Taxation is based on the profit for the year adjusted for taxation purposes and represents income tax at 33
1/3%:
Deferred income taxes (Note 27)
2013
$’000
(4,212)
(4,212)
2012
$’000
(5,268)
(5,268)
(c)
The tax charge on the company’s profit differs from the theoretical amount that would arise using the
statutory tax rate as follows:
408,372
362,769
Profit before tax
Tax calculated at a rate of 33 1/3%
Adjusted for the effects of:
Income relieved
Income not subject to tax
Expenses not deductible for tax
Net effect of other charges and allowances
2013
$'000
2012
$'000
323,702
285,268
107,901
95,089
(115,024)
(118,987)
(14,543)
(15,935)
19,993
(2,539)
(4,212)
33,438
1,127
(5,268)
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
Page 49
Page 50
15. Taxation (Continued)
18. Cash and Cash Equivalents
(d) The tax charge/credit relating to components of other comprehensive income is as follows:
Fair value reserve -
Available-for-sale investments -
2013
$'000
2012
$'000
Cash and bank balances
Short term deposits
Short term investments
Unrealised losses on available-for-sale investments, before tax
(16,776)
(33,377)
Unrealised gains on available-for-sale investments, tax credit (Note 27)
1,155
2,418
Unrealised losses on available-for-sale investments, after tax
(15,621)
(30,959)
Gains recycled to profit or loss on disposal and maturity of available-for-
sale investments
(4,174)
(19,795)
(11,440)
(42,399)
16. Earnings Per Share
The calculation of earnings per share is based on the net profit for the year and 1,031,250,000 (2012 -
1,031,250,000) ordinary shares in issue.
Net profit from continuing operations ($’000)
Weighted average number of ordinary shares in issue (‘000)
Earnings per share ($)
2013
327,914
1,031,250
0.32
2012
290,537
1,031,250
0.28
Short term deposits comprise term deposits and repurchase agreements with an average maturity of 67 days
(2012 – 61 days), and include interest receivable of $4,648,000 (2012 – $1,955,000).
The weighted average effective interest rate on short term investments and deposits were as follows:
The weighted average effective interest rates on cash balances for the year were as follows:
J$
US$
US$
J$
GBP
19. Due from Reinsurers and Coinsurers
17. Dividends per Share
The dividends paid in 2013 and 2012 were as follows:
Interim dividends:-
4.85 cents per stock unit – June 2012
4.85 cents per stock unit – September 2012
4.85 cents per stock unit – March 2013
8.72 cents per stock unit – October 2013
2013
$’000
-
-
50,017
90,008
140,025
2012
$’000
50,016
50,015
-
-
100,031
Reinsurers’ portion of unearned premium (Note 28)
Reinsurers’ portion of claims liabilities (Note 28)
Other amounts recoverable from reinsurers and coinsurers
20. Other Receivables
Prepayments
Other receivables
2013
$’000
2012
$’000
96,007
103,822
1,026,917
1,077,926
46,606
135,455
1,169,530
1,317,203
2013
%
7.6
3.2
2012
%
6.3
3.0
2013
%
1.0
0.1
0.1
2012
%
1.1
0.2
0.1
2013
2012
$’000
$’000
880,411
101,468
73,415
820,016
148,637
64,781
1,055,294
1,033,434
2013
2012
$’000
19,946
7,088
27,034
$’000
3,220
10,286
13,506
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
Page 49
Page 50
15. Taxation (Continued)
18. Cash and Cash Equivalents
(d) The tax charge/credit relating to components of other comprehensive income is as follows:
2013
$'000
2012
$'000
Cash and bank balances
Short term deposits
Short term investments
2013
$’000
96,007
1,026,917
46,606
1,169,530
2012
$’000
103,822
1,077,926
135,455
1,317,203
The calculation of earnings per share is based on the net profit for the year and 1,031,250,000 (2012 -
The weighted average effective interest rates on cash balances for the year were as follows:
Short term deposits comprise term deposits and repurchase agreements with an average maturity of 67 days
(2012 – 61 days), and include interest receivable of $4,648,000 (2012 – $1,955,000).
The weighted average effective interest rate on short term investments and deposits were as follows:
J$
US$
2013
%
7.6
3.2
2012
%
6.3
3.0
J$
US$
GBP
19. Due from Reinsurers and Coinsurers
Reinsurers’ portion of unearned premium (Note 28)
Reinsurers’ portion of claims liabilities (Note 28)
Other amounts recoverable from reinsurers and coinsurers
20. Other Receivables
Prepayments
Other receivables
2013
%
1.0
0.1
0.1
2012
%
1.1
0.2
0.1
2013
2012
$’000
880,411
101,468
73,415
$’000
820,016
148,637
64,781
1,055,294
1,033,434
2013
$’000
19,946
7,088
27,034
2012
$’000
3,220
10,286
13,506
Fair value reserve -
Available-for-sale investments -
Unrealised losses on available-for-sale investments, before tax
(16,776)
(33,377)
Unrealised gains on available-for-sale investments, tax credit (Note 27)
1,155
2,418
Unrealised losses on available-for-sale investments, after tax
(15,621)
(30,959)
Gains recycled to profit or loss on disposal and maturity of available-for-
sale investments
(4,174)
(19,795)
(11,440)
(42,399)
16. Earnings Per Share
1,031,250,000) ordinary shares in issue.
Net profit from continuing operations ($’000)
Weighted average number of ordinary shares in issue (‘000)
Earnings per share ($)
2013
327,914
1,031,250
0.32
2012
290,537
1,031,250
0.28
17. Dividends per Share
The dividends paid in 2013 and 2012 were as follows:
Interim dividends:-
4.85 cents per stock unit – June 2012
4.85 cents per stock unit – September 2012
4.85 cents per stock unit – March 2013
8.72 cents per stock unit – October 2013
2013
$’000
-
-
50,017
90,008
140,025
2012
$’000
50,016
50,015
-
-
100,031
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
Page 51
Page 52
21. Loans Receivable
23. Investment Securities
Mortgage receivable from fellow subsidiary (Note 9)
Loans receivable from fellow subsidiary (Note 9)
2013
$’000
2012
$’000
167,515 171,799
66,134
-
167,515 237,933
Mortgage receivable represents a loan extended by the company to a fellow subsidiary for land and building sold
to that fellow subsidiary. The loan attracts an interest of 12% per annum and has tenure of 30 years.
In the prior year, loans receivable from fellow subsidiary attracted interest at a rate of 5.25% and was repaid in
March 2013.
.
22. Lease Receivables
Gross investment in finance leases –
Not later than one year
Later than one year and not later than five years
Less: Unearned income
Net investment in finance leases may be classified as follows:
Not later than one year
Later than one year and not later than five years
2013
$’000
71,384
42,887
114,271
(16,689)
97,582
60,187
37,395
97,582
2012
$’000
29,985
47,774
77,759
(13,194)
64,565
21,808
42,757
64,565
Debt securities -
Available for sale – at fair value
Government of Jamaica Securities
Benchmark Investment Notes
United States Dollar Benchmark Notes
United States Dollar Bonds
Treasury Bills
Certificate of Deposits
United States Dollar Indexed Notes
United States Dollar Corporate Bond
Other Government Securities
Interest receivable
Equity securities -
Available for sale, at fair value –
Quoted shares
Available for sale, at cost –
Unquoted shares
Less: Provision for diminution in value
Weighted average effective interest rate:
Government of Jamaica Securities –
Benchmark Investment Notes
United States Dollars Benchmark Notes
United States Dollar Corporate Bonds
Other Government Securities
2013
$’000
2012
$’000
216,741
7,127
-
-
224,815
176,575
625,258
12,613
128,502
12,324
778,697
219,199
6,220
59,997
12,862
40,000
338,278
10,999
-
-
5,686
354,963
155,974
108,476
105
(105)
-
105
(105)
-
155,974
934,671
108,476
463,439
2013
%
7.96
6.13
11.00
6.34
2012
%
7.93
6.88
9.47
-
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
Page 51
Page 52
21. Loans Receivable
23. Investment Securities
Mortgage receivable from fellow subsidiary (Note 9)
Loans receivable from fellow subsidiary (Note 9)
Mortgage receivable represents a loan extended by the company to a fellow subsidiary for land and building sold
to that fellow subsidiary. The loan attracts an interest of 12% per annum and has tenure of 30 years.
In the prior year, loans receivable from fellow subsidiary attracted interest at a rate of 5.25% and was repaid in
March 2013.
.
22. Lease Receivables
Gross investment in finance leases –
Not later than one year
Later than one year and not later than five years
Less: Unearned income
Net investment in finance leases may be classified as follows:
Not later than one year
Later than one year and not later than five years
2013
2012
$’000
$’000
167,515 171,799
-
66,134
167,515 237,933
2013
$’000
71,384
42,887
114,271
(16,689)
97,582
60,187
37,395
97,582
2012
$’000
29,985
47,774
77,759
(13,194)
64,565
21,808
42,757
64,565
Debt securities -
Available for sale – at fair value
Government of Jamaica Securities
Benchmark Investment Notes
United States Dollar Benchmark Notes
United States Dollar Bonds
Treasury Bills
Certificate of Deposits
United States Dollar Indexed Notes
United States Dollar Corporate Bond
Other Government Securities
Interest receivable
Equity securities -
Available for sale, at fair value –
Quoted shares
Available for sale, at cost –
Unquoted shares
Less: Provision for diminution in value
Weighted average effective interest rate:
Government of Jamaica Securities –
Benchmark Investment Notes
United States Dollars Benchmark Notes
United States Dollar Corporate Bonds
Other Government Securities
2013
$’000
2012
$’000
216,741
7,127
-
-
224,815
176,575
625,258
12,613
128,502
12,324
778,697
219,199
6,220
59,997
12,862
40,000
-
338,278
10,999
-
5,686
354,963
155,974
108,476
105
105
(105)
-
155,974
934,671
(105)
-
108,476
463,439
2013
%
7.96
6.13
11.00
6.34
2012
%
7.93
6.88
9.47
-
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
Page 53
Page 54
23. Investment Securities (Continued)
24. Property, Plant and Equipment
Investment securities -
Available-for-sale -
Debt securities
Equity securities
2013
2012
Carrying
Amount
$'000
Fair
Value
$'000
Carrying
Amount
$'000
Fair
Value
$'000
766,373
155,974
922,347
766,373
155,974
922,347
349,277
108,476
457,753
349,277
108,476
457,753
Included in investments, are Government of Jamaica Benchmark Investment Notes valued at $45,000,000
(2012-$45,000,000) which have been pledged with the FSC, pursuant to Section 8(1)(b) of the Insurance
Regulations, 2001.
Included in investments are shares in Seprod Limited, a related party, with a fair value of approximately
$52,127,000 (2012 - $67,331,000). The company is the beneficial owner of these shares, which are held in
trust by the company’s parent, Musson Jamaica Limited, which is the registered owner.
In February 2013, the Company participated in the National Debt Exchange (NDX) transaction under which it
exchanged its holdings of domestic debt instruments issued by the Government of Jamaica for new, longer-
dated debt instruments with lower coupon interest rates. The fair value of the instruments exchanged totalled
$221,408,000 and the loss arising on initial recognition of the new notes was $2,070,000.
At 31 December 2013
25,310
76,530
51,772
153,612
At Cost -
At 1 January 2012
At 31 December 2012
Additions
Disposals
Additions
Disposals
Depreciation -
At 1 January 2012
Charge for the year
On disposals
At 31 December 2012
Charge for the year
On disposals
At 31 December 2013
Net Book Value -
31 December 2013
31 December 2012
16,430
5,965
22,395
2,915
-
-
6,065
1,051
7,116
1,265
-
-
Furniture,
Fixtures &
Motor
Buildings
Equipment
Vehicles
$’000
$’000
$’000
Total
$’000
57,089
5,853
39,254
21,485
112,773
33,303
(1,404)
(15,833)
(17,237)
61,538
15,142
44,906
128,839
8,866
(150)
(2,000)
26,923
(2,150)
30,506
6,275
34,492
7,731
71,063
15,057
(728)
(13,639)
(14,367)
36,053
8,395
28,584
7,692
(113)
(2,000)
71,753
17,352
(2,113)
86,992
8,381
44,335
34,276
16,929
15,279
32,195
25,485
17,496
16,322
66,620
57,086
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
Page 53
Page 54
Page 54
23. Investment Securities (Continued)
24. Property, Plant and Equipment
At Cost -
At 1 January 2012
Additions
Disposals
At 31 December 2012
Additions
Disposals
Furniture,
Fixtures &
Equipment
Buildings
$’000
$’000
Motor
Vehicles
$’000
Total
$’000
16,430
5,965
57,089
5,853
39,254
21,485
112,773
33,303
-
(1,404)
(15,833)
(17,237)
22,395
2,915
61,538
15,142
44,906
128,839
8,866
26,923
(2,150)
-
(150)
(2,000)
At 31 December 2013
25,310
76,530
51,772
153,612
Investment securities -
Available-for-sale -
Debt securities
Equity securities
2013
2012
Carrying
Amount
$'000
Fair
Value
$'000
Carrying
Amount
$'000
Fair
Value
$'000
766,373
155,974
922,347
766,373
155,974
922,347
349,277
108,476
457,753
349,277
108,476
457,753
Included in investments, are Government of Jamaica Benchmark Investment Notes valued at $45,000,000
(2012-$45,000,000) which have been pledged with the FSC, pursuant to Section 8(1)(b) of the Insurance
Regulations, 2001.
Included in investments are shares in Seprod Limited, a related party, with a fair value of approximately
$52,127,000 (2012 - $67,331,000). The company is the beneficial owner of these shares, which are held in
trust by the company’s parent, Musson Jamaica Limited, which is the registered owner.
In February 2013, the Company participated in the National Debt Exchange (NDX) transaction under which it
exchanged its holdings of domestic debt instruments issued by the Government of Jamaica for new, longer-
dated debt instruments with lower coupon interest rates. The fair value of the instruments exchanged totalled
$221,408,000 and the loss arising on initial recognition of the new notes was $2,070,000.
30,506
6,275
34,492
7,731
71,063
15,057
(728)
(13,639)
(14,367)
6,065
1,051
-
7,116
1,265
-
36,053
8,395
28,584
7,692
(113)
(2,000)
71,753
17,352
(2,113)
86,992
8,381
44,335
34,276
Depreciation -
At 1 January 2012
Charge for the year
On disposals
At 31 December 2012
Charge for the year
On disposals
At 31 December 2013
Net Book Value -
31 December 2013
31 December 2012
16,929
15,279
32,195
25,485
17,496
16,322
66,620
57,086
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
Page 55
25. Intangible Assets
At Cost -
At 1 January 2012
Additions
At 31 December 2012
Additions
At 31 December 2013
Amortisation -
At 1 January 2012
Charge for the year
At 31 December 2012
Charge for the year
At 31 December 2013
Net Book Value -
31 December 2013
31 December 2012
26. Other Liabilities
Statutory contributions payable
Accrued expenses
General consumption tax
Other payables
Computer
Software
$’000
65,397
10,757
76,154
537
76,691
38,773
14,808
53,581
9,947
63,528
13,163
22,573
2012
$’000
4,083
43,989
8,265
9,991
66,328
2013
$’000
4,293
51,780
11,755
10,625
78,453
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
Page 56
25. Intangible Assets
27. Deferred Income Taxes
Computer
Software
Deferred income taxes are calculated in full on temporary differences under the liability method using a
principal tax rate of 16.57⅓%.
Deferred income tax assets
Deferred income tax liabilities
Net assets/(liabilities)
The net movement on the deferred income tax account is as follows:
Balance as at 1 January
Credited to profit or loss (Note 15)
Credited to other
comprehensive income (Note 15)
Balance as at 31 December
Deferred income tax assets and liabilities are attributable to the following items:
Deferred income tax assets
Unrealised fair value losses
Deferred income tax liabilities
Accelerated tax depreciation
2013
$’000
1,155
(815)
340
2012
$’000
-
(5,027)
(5,027)
2013
$’000
2012
$’000
(5,027)
(12,713)
4,212
5,268
1,155
340
2,418
(5,027)
2013
$’000
1,155
2012
$’000
-
-
(815)
(5,027)
At Cost -
Amortisation -
At 1 January 2012
Additions
At 31 December 2012
Additions
At 31 December 2013
At 1 January 2012
Charge for the year
At 31 December 2012
Charge for the year
At 31 December 2013
Net Book Value -
31 December 2013
31 December 2012
26. Other Liabilities
Statutory contributions payable
Accrued expenses
General consumption tax
Other payables
Page 55
$’000
65,397
10,757
76,154
537
76,691
38,773
14,808
53,581
9,947
63,528
13,163
22,573
2012
$’000
4,083
43,989
8,265
9,991
66,328
2013
$’000
4,293
51,780
11,755
10,625
78,453
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
28. Insurance Reserves
(a) These reserves are as follows:
Gross -
Unearned premiums
Claims liabilities
Unearned commission
Recoverable from reinsurers -
Reinsurers’ portion of unearned premiums (Note 19)
Reinsurers’ portion of claims liabilities (Note 19)
Net -
Unearned premiums
Claims liabilities
Unearned commission
(b) Claims liabilities comprise:
Gross -
Outstanding claims
IBNR
Unallocated loss adjustment expense
Recoverable from reinsurers -
Outstanding claims
IBNR
Net -
Outstanding claims
IBNR
Unallocated loss adjustment expense
Page 57
Page 58
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
28. Insurance Reserves (Continued)
(c) The gross unearned premium reserve by class of business is as follows:
2013
$’000
2012
$’000
1,377,948
900,384
86,326
2,364,658
1,293,349
822,246
83,537
2,199,132
(880,411)
(101,468)
(981,879)
497,537
798,916
86,326
1,382,779
(820,016)
(148,637)
(968,653)
473,333
673,609
83,537
1,230,479
2013
$’000
765,559
125,278
9,547
900,384
92,623
8,845
101,468
672,936
116,433
9,547
798,916
2012
$’000
678,438
134,990
8,818
822,246
111,269
37,368
148,637
567,169
97,622
8,818
673,609
2013
$’000
854,900
390,118
8,507
124,423
2012
$’000
814,511
376,297
11,141
91,400
1,377,948
1,293,349
2013
$’000
2012
$’000
Fire, consequential loss and liability
Motor
Marine
Accident
29. Share Capital
Authorised -
Issued and fully paid -
.
30. Capital Reserves
31. Fair Value Reserve
end.
1,100,000,000 (2012 – 1,100,000,000) Ordinary shares of no par
1,031,250,000 (2012 – 1,031,250,000) Ordinary shares of no par
470,358
470,358
At beginning of and end of year
The capital reserves at year end represent realised surpluses.
2013
$’000
2012
$’000
152,030
152,030
This represents the unrealised surplus, net of tax, on the revaluation of available-for-sale investments at the year
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
28. Insurance Reserves
(a) These reserves are as follows:
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
28. Insurance Reserves (Continued)
(c) The gross unearned premium reserve by class of business is as follows:
Page 57
Page 58
Fire, consequential loss and liability
Motor
Marine
Accident
29. Share Capital
Authorised -
1,100,000,000 (2012 – 1,100,000,000) Ordinary shares of no par
2013
$’000
854,900
390,118
8,507
124,423
2012
$’000
814,511
376,297
11,141
91,400
1,377,948
1,293,349
2013
$’000
2012
$’000
(b) Claims liabilities comprise:
Issued and fully paid -
1,031,250,000 (2012 – 1,031,250,000) Ordinary shares of no par
470,358
470,358
.
30. Capital Reserves
At beginning of and end of year
The capital reserves at year end represent realised surpluses.
31. Fair Value Reserve
2013
$’000
2012
$’000
152,030
152,030
This represents the unrealised surplus, net of tax, on the revaluation of available-for-sale investments at the year
end.
Gross -
Unearned premiums
Claims liabilities
Unearned commission
Net -
Unearned premiums
Claims liabilities
Unearned commission
Recoverable from reinsurers -
Reinsurers’ portion of unearned premiums (Note 19)
Reinsurers’ portion of claims liabilities (Note 19)
Gross -
Outstanding claims
IBNR
Unallocated loss adjustment expense
Recoverable from reinsurers -
Outstanding claims
IBNR
Net -
Outstanding claims
IBNR
Unallocated loss adjustment expense
2013
$’000
2012
$’000
1,377,948
1,293,349
900,384
86,326
822,246
83,537
2,364,658
2,199,132
(880,411)
(101,468)
(981,879)
497,537
798,916
86,326
(820,016)
(148,637)
(968,653)
473,333
673,609
83,537
1,382,779
1,230,479
2013
$’000
765,559
125,278
9,547
900,384
92,623
8,845
101,468
672,936
116,433
9,547
798,916
2012
$’000
678,438
134,990
8,818
822,246
111,269
37,368
148,637
567,169
97,622
8,818
673,609
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
Page 59
32. Pension Scheme
Employees participate in a defined contribution pension scheme operated by a related company, T. Geddes
Grant (Distributors) Limited. The scheme is open to all permanent employees, as well as the employees of certain
related companies. The scheme is funded by employees’ compulsory contribution of 5% of earnings and
voluntary contributions up to a further 5%, as well as employer’s contribution of 5% of employees’ earnings. The
scheme is valued triennially by independent actuaries. The results of the most recent actuarial valuation, as at
31 December 2009, indicated that the scheme was adequately funded at that date.
Pension contributions for the period totalled $3,500,000 (2012 – $2,889,000), and are included in staff costs
(Note 14).
33. Contingency
The Company is involved in certain legal proceedings incidental to the normal conduct of business. Management
believes that none of these legal proceedings, individually or in the aggregate, will have a material effect on the
Company.
34. Commitments
Operating lease commitments
The company leases its office situated at 58 Half Way Tree Road from fellow subsidiary Unity Capital
Incorporated under non-cancellable operating lease agreement.
The lease is for a term of five (5) years, and is renewable at the end of the lease period at market rate.
The future aggregate minimum lease payments under non-cancellable operating leases are as follows
No later than 1 year
Later than 1 year and no later than
2013
US$’000
2012
US$’000
142
246
388
142
388
530
Notes
32. Pension Scheme
(Note 14).
33. Contingency
Company.
34. Commitments
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2013
(expressed in Jamaican dollars unless otherwise indicated)
Page 59
Employees participate in a defined contribution pension scheme operated by a related company, T. Geddes
Grant (Distributors) Limited. The scheme is open to all permanent employees, as well as the employees of certain
related companies. The scheme is funded by employees’ compulsory contribution of 5% of earnings and
voluntary contributions up to a further 5%, as well as employer’s contribution of 5% of employees’ earnings. The
scheme is valued triennially by independent actuaries. The results of the most recent actuarial valuation, as at
31 December 2009, indicated that the scheme was adequately funded at that date.
Pension contributions for the period totalled $3,500,000 (2012 – $2,889,000), and are included in staff costs
The Company is involved in certain legal proceedings incidental to the normal conduct of business. Management
believes that none of these legal proceedings, individually or in the aggregate, will have a material effect on the
Operating lease commitments
The company leases its office situated at 58 Half Way Tree Road from fellow subsidiary Unity Capital
Incorporated under non-cancellable operating lease agreement.
The lease is for a term of five (5) years, and is renewable at the end of the lease period at market rate.
The future aggregate minimum lease payments under non-cancellable operating leases are as follows
No later than 1 year
Later than 1 year and no later than
2013
US$’000
2012
US$’000
142
246
388
142
388
530
For more information, visit www.genac.com
Notes
No.
Resolution details
Vote for or against
(tick as appropriate)
ORDINARY RESOLUTIONS
1. To receive the report of the Board of Directors and the audited accounts
of the Company for the year ended December 31, 2013.
2. To authorise the Board of Directors to re-appoint PWC as the Auditors
of the Company and to fix their remuneration.
To re-appoint the following Directors of the Board, who have resigned by rotation in accordance with
the Articles of Incorporation of the Company and, being eligible, have consented to act on re-appointment.
3.(a) To re-appoint Jennifer Scott as a Director of the Board of the Company..
3.(b) To re-appoint Nichalas Scott as a Director of the Board of the Company.
3.(c) To re-appoint Nigel Clarke as a Director of the Board of the Company.
4(a) To authorise the Board of Directors to fix the remuneration of the Directors.
5. To approve the aggregate amount of interim dividends declared by the
Board during the financial year ended 31st December 2013, being
$140,023,125.43 or 13.578 cent per ordinary share, as the final dividend for that year.
Signed this day of 2014:
Signed: _____________________________________ (signature of primary shareholder)
Signed: _____________________________________ (signature of joint shareholder, if any)
For more information, visit www.genac.com
Name: _____________________________________ (print name of primary shareholder)
Name: _____________________________________ (print name of joint shareholder, if any)
Form Of Proxy
“ I/We _____________________________________________________________(insert name)
of _________________________________________________________________(address)
being a shareholder(s) of the above-named Company, hereby appoi
nt:________________________________________________________________(proxy name)
of _____________________________________________________________________(address)
or failing him, ___________________________________________________(alternate proxy)
of _____________________________________________________________________(address)
as my/our proxy to vote for me/us on my/our behalf at the Annual General Meet-
ing of the Company to be held at 10am on the 8th day of July, 2014 at 58 Half-
way Tree Road and at any adjournment thereof . I desire this form to be used for/
against the resolutions as follows (unless directed the proxy will vote as he sees fit):
No.
Resolution details
Vote for or against
(tick as appropriate)
ORDINARY RESOLUTIONS
1. To receive the report of the Board of Directors and the audited accounts
of the Company for the year ended December 31, 2013.
2. To authorise the Board of Directors to re-appoint PWC as the Auditors
of the Company and to fix their remuneration.
For Against
For Against
To re-appoint the following Directors of the Board, who have resigned by rotation in accordance with
the Articles of Incorporation of the Company and, being eligible, have consented to act on re-appointment.
3.(a) To re-appoint Jennifer Scott as a Director of the Board of the Company..
For Against
3.(b) To re-appoint Nichalas Scott as a Director of the Board of the Company.
For Against
3.(c) To re-appoint Nigel Clarke as a Director of the Board of the Company.
4(a) To authorise the Board of Directors to fix the remuneration of the Directors.
For Against
For Against
5. To approve the aggregate amount of interim dividends declared by the
Board during the financial year ended 31st December 2013, being
$140,023,125.43 or 13.578 cent per ordinary share, as the final dividend for that year.
For Against
Signed this day of 2014:
Signed: _____________________________________ (signature of primary shareholder)
Signed: _____________________________________ (signature of joint shareholder, if any)
Name: _____________________________________ (print name of primary shareholder)
Name: _____________________________________ (print name of joint shareholder, if any)
General Accident Insurance
Company Jamaica Ltd.
58 Half Way Tree Road,
Kingston 10, Jamaica.