Annual Report 2014
Building on solid foundation
2014 General Accident 2014
Annual Report
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Peace of mind
PEACE OF MIND
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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
Corporate Social Responsibility ................
29
Appendices
Audited financial statements
Form of Proxy
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Contents
THE YEAR AT A GLANCE
16
$5.1
Consecutive years of
premium growth
Billion in gross written premiums
$320
21%
Million in net profit
Return on average equity
2
General Accident Insurance Company Jamaica Limited. ANNUAL REPORT 2014
THE YEAR AT A GLANCE
$5.1
Billion in gross written premiums
21%
Return on average equity
Statement of the Chairman
General Accident navigated a difficult operating environment last year and
made a profit of $320 million or slightly less than in 2013.
Insurance and investment operations
Commercial property insurance rates, the price of our highest selling
product, declined sharply. In spite of this drop, General Accident grew its revenues
and wrote over $5 billion of premiums for the first time in its history. Reflecting our
disciplined approach to underwriting, we grew our premiums while underwriting
profitably. In fact, General Accident has now generated an underwriting profit for
six years in a row.
Unfortunately, we were only able to generate a 9.5% return on our $2.5 bil-
lion float this year or considerably less than our investment returns in recent years.
Capital management
General Accident is now the largest underwriter of commercial property
risks in Jamaica. Our ability to write these risks depends largely on the support of
our reinsurance partners. These partners, some of most the prominent reinsurers
in the world, trust us with their capital and reputation. I am pleased to report that
we’ve strengthened our relationships with our reinsurers in 2014.
General Accident made a return on average equity of 21% last year. In
line with our dividend policy, we returned over $203 million to shareholders while
continuing to strengthen our equity base.
Outlook
With the Jamaican economy officially back in recession, the demand for
insurance is unlikely to grow in the immediate future. Insurance rates are likely to
remain compressed. At the same time, low interest rates will make it harder to
increase investment returns. As a result, we expect General Accident to face an
ever tougher environment in 2015.
The Board and management team is committed to tackling these challenges
head on. General Accident’s culture, brand and relationships with policyholders,
brokers and reinsurers are all strong. I look forward to working with our team to
continue to build our business next year and beyond.
Sincerely,
P.B. Scott
Chairman
4
General Accident Insurance Company Jamaica Limited. ANNUAL REPORT 2014
Statement of the Chairman
P.B. Scott
Chairman
For more information, visit www.genac.com 5
“In many ways, our financial perfor-mance 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 Ac-
cident Insurance Company Jamaica Limited (the “Company”) will be held
at 10 am on June 8, 2015, 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, 2014.
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 Geoffrey Messado as a Director of the Board of the Company.
(b) To re-appoint Ralph Thompson as a Director of the Board of the Company.
(c) To re-appoint Duncan Stewart 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 December2014, being $203,878,125 or 19.77
cent per ordinary share, as the final dividend for that year.
Dated this the 14th day of April 2015 By order of the Board.
P.B. Scott
Chairman
6
General Accident Insurance Company Jamaica Limited. ANNUAL REPORT 2014
Directors Report
The Directors are pleased to present their report for General Accident Insurance
Company Jamaica Limited for the financial year ended December 31, 2014.
Financial Results
The Statement of Comprehensive Income for the Company shows pre-tax
profits for the year of $319.9 million, taxation recoverable of $.11 million and a net
profit after tax of $320 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, 2014 are: P.B. Scott,
Melanie Subratie, SharonDonaldson, Ralph Thompson, Geoffrey Messado, Chris-
topher Nakash, Jennifer Scott, Nicholas Scott, Nigel Clarke and Duncan Stewart.
The Directors to retire by rotation in accordance with the Articles of Incorporation
are: GeoffreyMessado, Ralph Thompson and Duncan Stewart but being eligible,
will offer themselves for re-election.
Auditors
The auditors of the Company, PricewaterhouseCoopers of Scotiabank
Centre, Duke Street, Kingston, Jamaica have expressed their willingness to con-
tinue in office. The Directors recommend their re-appointment.
Dividend
A dividend of $0.1213 per share paid on December 31, 2014 is proposed to
be the final dividendin respect of the financial year ended December 31, 2014.
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 16,087
Employees 78
Gross written premiums $5.1b
Investment portfolio
$2.5b
Net worth $1.6b
For more information, visit www.genac.com 9
8-Year Financial Statistics
Employee
2014
78
2013
83
2012
77
2011
74
Policies in force
16,087
16,015
15,876
15,247
Gross written premiums
5,072,375
4,479,755
3,788,969
3,626,395
Net written premiums
1,066,538
1,018,398
991,175
Net earned premiums
1,069,098
994,193
Claim
678,558
646,791
932,818
540,775
Management expenses
441,628
381,073
332,903
Underwriting profit
101,941
58,503
Investment income
(1)
240,374
Profit before tax
Profit after tax
Cash Dividends
319,965
320,078
203,878
284,788
323,702
327,914
140,025
117,362
186,114
285,269
290,537
100,031
866,513
819,490
420,142
300,592
161,589
1,015,010
1,341,478
1,284,816
90,925
Investment assets
(2)
2,540,368
2,104,201
1,780,642
1,602,732
Insurance reserves
1,988,573
2,364,658
2,199,132
2,042,511
Shareholders equity
1,579, 382
1,456,944
1,288,850
1,140,743
10
General Accident Insurance Company Jamaica Limited. ANNUAL REPORT 2014
8-Year Financial Statistics
2011
74
2010
2009
2008
69 66 64
2007
61
15,247
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
819,490
693,085
599,663
356,433
420,142
426,624
391,416
360,568
300,592
241,641
204,357
169,613
161,589 68,862
33,818
(124,899)
1,015,010
204,565
134,106
288,007
1,341,478
244,775
141,300
142,810
1,284,816
213,944
105,299
149,018
90,925
95,000
270,000
-
502,721
477,774
273,074
150,519
31,997
89,834
94,685
86,221
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
8-Year Financial Statistics
Market Share
(3)
Growth in gross written premiums
Loss ratio
Expense ratio
(4)
Underwriting margin
(5)
Investment return
Return on average equity
(6)
Dividend yield on average equity
Increase in net worth
Total return to shareholders
(7)
NOTES:
2014
15%
13%
63%
9%
2%
9.8%
21%
13%
8%
21%
2013
2012
15%
18%
65%
9%
1%
13.5%
24%
10%
13%
23%
13%
4%
58%
9%
3%
10%
24%
8%
13%
21%
1. Includes Foreign exchange gains.
2. Cash, cash equivalents, fixed income securities, equities and other
investment assets
3. Based on gross written premium data from the Insurance Association of
Jamaica
4. Management expenses divided by gross written premiums
5. Excludes gains from the sale of available for sale securites and
subsidiary in 2011 and dividend from former subsidiary in 2010
6. Excludes gains from the sale of available for sale securites, subsidiary
and property in 2011 and dividend from former subsidiary in 2010
7. Includes dividends and capital distributions paid to shareholders and
12
General Accident Insurance Company Jamaica Limited. ANNUAL REPORT 2014
8-Year Financial Statistics
2012
2011 2010
2009
2008 2007
13%
4%
58%
9%
3%
10%
24%
8%
13%
13% 10%
7%
7%
65%
31% 12% 37%
51%
62%
65%
101%
8%
11%
12%
11%
4%
3%
2%
-8%
9%
8%
2%
12%
26%
11%
10% 14%
88%
8%
25%
0%
(-11%)
23%
(-11%)
13%
21%
77%
31%
14%
(13%)
For more information, visit www.genac.com 13
Management Discussion and Analysis
Operating Performance
We are happy to report that 2014 is yet another success-
ful year in the General Accident journey especially as this
year’s results were generated in a more challenging envi-
ronment. We continue to focus on customers, disciplined
underwriting and on being better prepared to serve our
customers and business partners. Despite the challenging
economic environment we believe that we have the cor-
porate ingredients to continue the growth story. The 2014
performance was buoyed by increased revenue and a
reduced loss experience that produced a most reward-
ing outcome of improved underwriting profit.
Sharon Donaldson
Managing Director
•
•
•
•
•
Financial Performance Highlights
16th consecutive year of premium growth
Profit for the year of $320.1 million
Earnings per share of $0.31
Book value of $1.6 billion (2013: $1.46 billion)
Annualized return on average equity of 21%
Underwriting Performance
Premium income growth was reasonably satisfactory resulting in Gross
Written Premiums of $5.07 billion, an increase of 13%, with net written premiums,
before excess of loss reinsurance costs, increasing to $1.194 billion over prior
year of $1.165 billion. While net premiums earned (premiums after all reinsurance
outflows) increased marginally over prior year [$1.069 billion compared to $994
million], our underwriting profit increased to $101.9 million, well above prior year of
$58.5 million due primarily to significant increases in our commission income. An-
14
General Accident Insurance Company Jamaica Limited. ANNUAL REPORT 2014
other positive metric is the fact that our incurred losses of $678.6 million remained
relatively flat compared to prior year of $646.8 million. Our loss ratio improved
marginally, 63.5% compared to 65.0% in 2013.
Investment Performance
The economic environment over the last 12 months remained relatively
weak. Despite this we continue to reap the rewards of leveraging our institutional
strength. General Accident dedicates significant resources to actively manage our
insurance float as we seek to balance our desire to maximize returns with our need
to limit the risk of loss relative to our capital and to ensure that our liquidity exceeds
our claims obligations. Based on a balanced and prudent investment strategy our
investment portfolio performed fairly well in 2014 with our investment assets gener-
ating income of $160.4 million.
Profitability
During 2014, the company maintained the financial strength that provided
the platform for us to faithfully keep our promises to our stakeholders. Investment
returns continue to be an important lever in driving the overall profitability of the
company. For this year we were able to deliver a solid performance driven by a
high performance culture, operational efficiency, revenue growth and deepening
of our business relationships.
Strong capital management is an integral component of our corporate
governance policy and we will continue to give our shareholders an appropriate
share in the company’s success. We continue our dividend policy as the compa-
ny’s consistent performance has enabled us to increase the dividend payout ratio
with a distribution of $203.8 million in cash to our shareholders or $0.1977 per share,
compared to $0.13578 cents in 2013. General Accident ended 2014 with a return
on average equity for shareholders of 21%.
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 $1.6 billion at December 31, 2014.
For more information, visit www.genac.com 15
Management Discussion and Analysis
General Accident remains in compliance with the main capital adequacy
and liquidity metrics prescribed by the Financial Services Commission that require
the company to maintain a minimum of 250% capital to risk weighted assets [MCT]
and a liquidity ratio of 95%. At year-end our MCT ratio was 270%.
The company’s liquidity is ensured by means of detailed liquidity planning.
At December 31st, 2014 our liquidity ratio of108% exceeds the regulatory minimum
of 95%.
We strive to maintain excess liquidly and capital positions as we believe this
provide us with an inherent advantage that will allow us to respond aggressively to
market changes.
In addition, we successfully renewed our treaty agreements with our inter-
national reinsurance partners for 2015.
Marketing
The company writes business for many different customers with varied lines
of business thereby obtaining a portfolio of risk that is broadly spread. Our extensive
range of insurance products is specifically designed to protect our insureds at every
step, while they focus on pursuing their strategic objectives. Our business is written
through two major distribution channels, the broker/agents channel and the direct
market. Direct written premiums grew by 3.8%, from $489.1 million to $ 507.7 million
in 2014, reflecting growth across all lines of business. The commercial line of business
continues to lead the premium growth with strong sales in both commercial prop-
erty and engineering products. In 2014, broker generated business accounted for
90% of our gross written premiums with the remaining 10% written directly.
Business Strategy and Outlook 2015
The renewal of 2015 supplier agreements took place in a very competi-
tive market and the year ahead is expected to be equally challenging. Demand
for insurance is expected to remain fairly stable but with some pressure on pricing.
Against this backdrop, we expect to see even more pronounced market volatility
as our industry is likely to become fiercely competitive driven by a further softening
16
General Accident Insurance Company Jamaica Limited. ANNUAL REPORT 2014
of the suppliers market that generally produces a trending down of prices. How-
ever we are confident about our strategic direction and will maintain our core busi-
ness principles that have serve us well over the years.
Disciplined financial management and an investment policy geared to-
wards stable and reliable returns support our business model. Our selection of in-
vestments takes into account maturity dates, currency risk and inflation. Because
of our active capital management we are able to maintain our capitalization well
above regulatory requirement. Although the country faces significant economic
challenges, we believe we are well positioned to meet the challenges of the up-
coming year.
We will continue to look for growth opportunities while maintaining effective fiscal
control and management of our liquidity. Our priorities for 2015 include, inter alia:
•
•
•
meeting our financial target
maintaining underwriting discipline and improving
productivity
doing things differently to generate value for our
shareholders, customers, employees and business partners.
We wish to thank all our policyholders, brokers and reinsurance partners
for their loyal support and the trust placed in us, and our management and staff,
whose commitment and dedication has resulted in the continued success of your
company. We will continue to make every effort to fulfill justified expectations of all
our stakeholders.
Sharon E. Donaldson
Managing Director
Managing Director
For more information, visit www.genac.com 17
Board Of Directors
P.B. Scott
Chairman
Sharon Donaldson
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
Deputy Chairman
Dr. Nigel L. Clarke
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 2014
Board Of Directors
Geoffrey Messado
Director
Jennifer Scott
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
Director
Dr. Ralph Thompson, C.D.
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
Director
Christopher Nakash
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.
20
General Accident Insurance Company Jamaica Limited. ANNUAL REPORT 2014
Board Of Directors
Leadership Team
Maureen Hall
General Manager
Cheryll Henry
Human Resources & Facilities Manager
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).
Ms. Cheryll Henry is the Human Resources
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 ap-
pointed Operations Manager of Orrett& Musson In-
vestment 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 Manage-
ment from the Institute ofManagement & Produc-
tion.
Angella Reynolds
Deputy General 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.
Janette Cole Smith
Compliance & Operations Manager
Janette Cole Smith is the Compliance
and Operations Officer of the Company. She re-
joined the Company in January 2014. She has over
20 years of experience as a senior manager in the
finance and insurance industry. Her last post was as
the AVP of Operations at Proven Wealth Ltd.
Mrs. Cole Smith is a Chartered Accoun-
tant and a fellow member of the Institute of Char-
tered Accountants of Jamaica.
Leadership Team
22
General Accident Insurance Company Jamaica Limited. ANNUAL REPORT 2014
Leadership Team
Gregory St Hugh Foster
Chief Financial Officer
Douglas Hayden
Information Technology Manager
Mr. Gregory Foster is the Chief Financial
Offer with responsibility for leading the finance, ac-
counting and treasury function. Mr. Foster joined the
Company in August 2014 after 8 years at Pricewa-
terhouseCoopers where he held the position of an
Assistant Manager in their Audit and Assurance De-
partment. He has accumulated over seven years of
experience in providing audit services to a wide spec-
trum of clients, including government/public sector, fi-
nancial services, and manufacturing and distribution.
Mr. Foster is also part-time lecturer at Rich-
mond Academy (an ACCA gold approved learning
center.
Mr. Foster obtained his ACCA professional
qualification in 2006 and is also a member of Institute
of Chartered Accountants of Jamaica (ICAJ)
Mr. Douglas Hayden join the com-
pany in December 2014. He came to us
with over twenty years of experience in the
Information Technology discipline, twelve of
those years being at the management level.
He holds a Bachelor’s degree in Computer
Science from Florida International University,
a diploma in Information Technology from
the University of Technology and several pro-
fessional certifications including Information
Technology Infrastructure Library (ITIL v3).
Andrea Muir Gibbs
Asst. Broker Services Manager
Mrs. Andrea Muir-Gibbs joined the
company in 2013. She is the Assistant Manager
for Broker Services of the Company.
Mrs. Muir-Gibbs has over 15 years of experi-
ence in the insurance industry.
She is the holder of the Jamaican
Insurance Diploma from the College of Insur-
ance Professional Studies and a member of
the Chartered Insurance Institute (UK) where
she holds the Dip CII Designation.
For more information, visit www.genac.com 23
Corporate Data
..............................................................
Directors:
P.B. Scott
Melanie Subratie
Sharon Donaldson
Dr. Ralph Thompson
Geoffery Messado
Jennifer Scott
Christopher Nakash
Nicholas Scott
Dr. Nigel Clarke
Duncan Strewart
Chairman
Deputy Charman
Managing Director
.................................................................
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 2014
..............................................................
Leadership Team:
Sharon Donaldson Managing Director
Maureen Hall General Manager
Angella Reynolds Deputy General Manager
Gregory Foster Chief Financial Officer
Cheryll Henry Human Resources & Facilities Manager
Andrea Muir Gibbs Asst. Broker Services Manager
Douglas Hayden Information Technology Manager
Janette Cole Smith Compliance & Operations 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
34, 414, 840
3. Mayberry Managed Client Account
12,183, 978
4. Apex Pharmacy
11,588,279
5. First Caribbean Int’l Sec. Ltd A/C B.U.T.
4,519, 240
6. P.A.M Ltd - Pooled Pension Equity Fund
4, 128, 000
80.00
3.14
1.28
1.12
0.44
0.38
7. Lloyd Baday
4,000,040
0.38
8. Barita Investment Ltd. - Long A/C(Trading)
3, 998, 561
0.36
9. Lannaman & Morris(shipping) Limited
3, 399, 260
10. Sharon Donaldson
3,200,198
0.32
0.31
26
General Accident Insurance Company Jamaica Limited. ANNUAL REPORT 2014
Shareholdings of Directors
Director/ Connected persons
Shares
P. B. Scott
(Musson Jamaica Ltd.
Melanie Subratie
(Musson Jamaica Ltd.
Sharon Donaldson
Self
And Junior Levine
Junior Levine
Nigel Clarke
Duncan Stewart
And Deborah Stewart
And Diana Stewart
Nicholas Scott
Christopher Nakash
Geoffrey Messado
Ralph Thompson
Jennifer Scott
NIL
824,999,989)
NIL
824,999,989)
3,000,000
200,198
177,758
2,475,248
2,475,190
1,980,198
1,698,020
1,000,000
NIL
NIL
Shareholdings of the Management team
Manager/ connected person
1. Maureen Hall
And Anthony Dunbar
And Errol Kellyman
2. Cheryll Henry
3. Angela Reynolds
4. Gregory Foster
5. Douglas Hayden
6. Andrea Muir-Gibbs
7. Janette Cole Smith
2,362,000
38,000
1,980,198
500,000
NIL
NIL
NIL
NIL
For more information, visit www.genac.com 27
Our Community
Corporate Social Responsibility
For General Accident, corporate
social responsibility
is an
important en-
grained decree. We try to conduct our busi-
ness in a manner consistent with excellent
corporate citizenship and we seek to en-
sure that our operations create value for our
shareholders, employees, customers, com-
munities and Jamaica. During the financial
year under review, despite the financial
challenges, we continue to play a significant
role in nation building through our support
in education, cultural heritage, sports, child
welfare and the environment.
Sports
Sports not only touches the lives of
everyone, it undoubtedly, is a uniting force
for any nation. We reocognise the invaluable
contribution of sports in the development of
the nation’s youth as it not only builds patrio-
tism, encourages friendships but inculcates
important life skills and shapes character.
General Accident continues to be an event
sponsor for the Gibson Relays in February.
One of our newest involvement was with the
UTECH Tennis Championships.
Child Welfare
In conjunction with the staff sports club,
General Accident provided much needed
support in cash and kind to Sophie’s Places,
a home for 27 children with disabilities.
Environment
A healthy natural environment is of
vital importance to the insurance industry.
General Accident believes all development
should be sustainable and should not result
in damage to natural resources. For the past
20 years, General Accident has contributed
both resources and funding to the Jamaica
Environment Trust (JET), one of Jamaica’s
leading environmental non-profit groups.
General Accident has worked in partner-
ship with JET o educate young Jamaicans
about environmental issues via the Schools’
Environment Programme, to clean our coun-
For more information, visit www.genac.com 29
Our Community
Corporate Social Responsibility
try’s beaches, and has helped JET invest in
training and development for its small staff
complement.
Other support
At General Accident we encourage
our staff to be innovative and to be a part of
the nation building movement. Participation
in the Sigma Run is an annual event that our
staff members willingly take part in.
30
General Accident Insurance Company Jamaica Limited. ANNUAL REPORT 2014
Corporate 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
Financial Statements
31 December 2014
General Accident Insurance Company Jamaica Limited
Index
31 December 2014
Actuary’s Report
Independent Auditor’s 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 - 54
GENERAL ACCIDENT INSURANCE
COMPANY JAMAICA LIMITED
Financial Statements
31 December 2014
General Accident Insurance Company Jamaica Limited
Statement of Changes in Equity
Year ended 31 December 2014
(expressed in Jamaican dollars unless otherwise stated)
Page 3
Note
Share
Capital
$’000
470,358
Capital
Reserves
$’000
Fair Value
Reserve
$’000
Retained
Earnings
$’000
Total
$’000
152,030
68,118
598,344
1,288,850
Balance at 31 December 2012
Comprehensive income :
Net profit for the year
Other comprehensive income
Total comprehensive income
Transactions with owners
-
-
-
-
-
-
-
-
-
327,914
327,914
(19,795)
(19,795)
-
(19,795)
327,914
308,119
-
(140,025)
(140,025)
Dividends
17
Balance at 31 December 2013
470,358
152,030
48,323
786,233
1,456,944
Comprehensive income :
Net profit for the year
Other comprehensive income
Total comprehensive income
Transactions with owners
Dividends
17
-
-
-
-
-
-
-
-
-
320,078
320,078
6,238
54,561
-
6,238
320,078
326,316
-
(203,878)
(203,878)
Balance at 31 December 2014
470,358
152,030
54,561
902,433
1,579,382
General Accident Insurance Company Jamaica Limited
Statement of Cash Flows
Year ended 31 December 2014
(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
Amortisation of investment premium
Gain on sale of investments
Gain on disposal of property, plant and equipment
Interest income
Dividend income
Deferred taxation
Foreign exchange gains
Increase in deferred policy acquisition cost
(Decrease)/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 deducted at source
Net cash provided by operating activities
Cash Flows from Investing Activities
Acquisition of investments
Acquisition of pooled real estate investment
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 provided by /(used in) investing activities
Cash Flows from Financing Activities
Dividends paid
Net cash used in by financing activities
Increase/(decrease) in cash and cash equivalents
Effect of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at beginning of year
CASH AND CASH EQUIVALENTS AT END OF THE YEAR (NOTE 18)
Note
2014
$’000
2013
$’000
320,078
327,914
25
26
11
12
11
11
15
25
26
17
24,066
6,430
2,790
-
-
(147,653)
(7,789)
(113)
(79,354)
(39,273)
(376,085)
(296,903)
128,790
1,577
(2,076)
(3,294)
(2,153)
383,714
209,655
(26,162)
183,493
(486,646)
(143,549)
51,514
(52,584)
(730)
-
543,377
6,972
148,579
66,933
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)
(203,878)
(203,878)
46,548
56,449
1,169,530
1,272,527
(140,025)
(140,025)
(261,881)
114,208
1,317,203
1,169,530
Page 5
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2014
(expressed in Jamaican dollars unless otherwise indicated)
1.
Identification and Activities
General Accident
Insurance Company Jamaica Limited (the company) 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
principal activity is the underwriting of commercial and personal property and casualty insurance.
insurance company under the Insurance Act, 2001.
Its
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 management’s 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 2014 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 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 statement of financial position. There was no material impact on operations from the adoption of this
amendment.
IAS 36, (Amendment), Recoverabl Amount Disclosures for Non-Financial Assets’, (effective 1
January 2014). The amendments to IAS 36 require disclosure of
the recoverable amount of an
individual asset (including goodwill) or a cash – generating unit and additional information about the fair
value less costs of disposal for which an impairment loss has been recognized or reversed during the
reporting period. The requirement to disclose the recoverable amount of each cash-generating unit for
which the carrying amount of goodwill or intangible assets with indefinite life intangible assets allocated
to that unit is significant when compared to the total carrying amount of goodwill or indefinite life
intangible assets has been removed. There is no impact from the adoption of this standard.
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2014
(expressed in Jamaican dollars unless otherwise indicated)
Page 6
2. Summary of Significant Accounting Policies (Continued)
(a) Basis of preparation (continued)
Accounting pronouncements effective in 2014 which are relevant to the company’s operations
(continued)
‘Levies’, (effective 1 January 2014). This is an interpretation of
‘Provisions,
IFRIC 21,
contingent liabilities and contingent assets’. IAS 37 sets out criteria for the recognition of a liability, one
of which is the requirement for the entity to have a present obligation as a result of a past event (known
as an obligating event). The interpretation addresses what the obligating event is that gives rise to the
payment of a levy and when a liability should be recognised. There is no material
impact from the
adoption of this standard.
IAS 37,
the date of authorisation of
Standards, interpretations and amendments to published standards that are not yet effective
At
these financial statements, certain new standards, amendments and
interpretations to existing standards have been issued which were not yet effective at reporting date, and
which the company did not early adopt. The company has assessed the relevance of all such new
standards, interpretations and amendments and has determined that the following may be relevant to its
operations, and has concluded as follows:
Amendment to IAS 1, ‘Disclosure initiative’. These amendments clarify the existing requirements of
IAS 1 and provide additional assistance to apply judgement when meeting the presentation and
disclosure requirements in IFRS. The amendment does not affect recognition and measurement and
is effective for accounting periods beginning on or after 1 January 2016. The amendment is not
expected to have a significant impact on the financial statements.
instruments’, addresses the classification, measurement and recognition of
IFRS 9,
‘Financial
liabilities.The complete version of IFRS 9 was issued in July 2014. It
financial assets and financial
replaces the guidance in IAS 39 that relates to the classification and measurement of
financial
instruments. IFRS 9 retains but simplifies the mixed measurement model and establishes three primary
measurement categories for financial assets: amortised cost, fair value through OCI and fair value
through P&L. The basis of classification depends on the entity’s business model and the contractual
cash flow characteristics of the financial asset. Investments in equity instruments are required to be
measured at fair value through profit or loss with the irrevocable option at inception to present changes
in fair value in OCI not recycling. There is now a new expected credit losses model that replaces the
incurred loss impairment model used in IAS 39. For financial
liabilities there were no changes to
classification and measurement except for the recognition of changes in own credit risk in other
comprehensive income, for liabilities designated at fair value through profit or loss. IFRS 9 relaxes the
requirements for hedge effectiveness by replacing the bright line hedge effectiveness tests. It requires
an economic relationship between the hedged item and hedging instrument and for the ‘hedged ratio’
to be the same as the one management actually use for
risk management purposes.
Contemporaneous documentation is still required but is different to that currently prepared under IAS
39. The standard is effective for accounting periods beginning on or after 1 January 2018. Early
adoption is permitted. The company is yet to assess IFRS 9’s full impact.
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2014
(expressed in Jamaican dollars unless otherwise indicated)
Page 7
2. Significant Accounting Policies (Continued)
(a) Basis of preparation (continued)
Standards,
(continued)
interpretations and amendments to published standards that are not yet effective
IFRS 15, 'Revenue from Contracts with Customers'. The IASB has published its new revenue
standard, IFRS 15 'Revenue from Contracts with Customers'. The U.S. Financial Accounting
Standards Board (FASB) has concurrently published its equivalent revenue standard which is the
IFRS 15 applies to nearly all contracts
result of a convergence project between the two Boards.
with customers: the main exceptions are leases, financial instruments and insurance contracts.
It
specifies how and when an entity will recognise revenue. It also requires entities to provide more
IAS 11,
informative,
'Construction Contracts' and a number of revenue-related interpretations. Application of
the
standard is mandatory for accounting periods beginning on or after 1 January 2017.The company
is assessing the impact of future adoption of the standard.IASB Annual Improvements -
The IASB annual improvements project for the 2010 - 2012 cycle resulted in amendments to the following
standards which may be relevant to the company’s operations. The company is assessing the impact of
future adoption of the amendments.
relevant disclosures. The standard supersedes IAS 18,
'Revenue',
Amendments effective for the accounting periods beginning on or after 1 July 2014:
IFRS 8, ‘Operating Segments’. The standard is amended to require disclosure of the judgements made by
management in aggregating operating segments. This includes a description of the segments which have
been aggregated and the economic indicators which have been assessed in determining that
the
aggregated segments share similar economic characteristics. The standard is further amended to require a
reconciliation of segment assets to the entity’s assets when segment assets are reported.
IFRS 13, ‘Fair value measurements’. When IFRS 13 was published, certain paragraphs of IAS 39 were
deleted as consequential amendments. This led to a concern that entities no longer had the ability to
measure short-term receivables and payables at invoice amounts where the impact of not discounting is
immaterial. The IASB has amended the basis for conclusions of IFRS 13 to clarify that it did not intend
to remove the ability to measure short-term receivables and payables at invoice amounts in such cases.
Amendments effective for the accounting periods beginning on or after 1 January 2016:
IFRS 7, ‘Financial
instruments: Disclosures’. The amendment clarifies, among other things, that the
additional disclosure required by the amendments to IFRS 7, ‘Disclosure – Offsetting financial assets
and financial liabilities’ is not specifically required for all interim periods, unless required by IAS 34.
IAS 34, ‘Interim financial reporting’. The amendment clarifies what is meant by the reference in the
standard to ‘information disclosed elsewhere in the interim financial report’. The amendment further
amends IAS 34 to require a cross-reference from the interim financial statements to the location of that
information.
There are no other standards, interpretations or amendments to existing standards that are not yet effective
that would be expected to have a significant impact on the company.
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2014
(expressed in Jamaican dollars unless otherwise indicated)
2. Summary of Significant Accounting Policies (Continued)
Page 8
(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
instruments carried on the statement of financial position include investments, due to and from
Financial
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 2014
(expressed in Jamaican dollars unless otherwise indicated)
2. Summary of Significant Accounting Policies (Continued)
Page 9
(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) 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.
(ii) 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.
less
Equity securities for which fair values cannot be measured reliably are recognised at cost
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.
(iii) Impairment of financial assets
is considered impaired if
A financial asset
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
If any such
security below its cost is considered as an indicator that the securities are impaired.
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.
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2014
(expressed in Jamaican dollars unless otherwise indicated)
2. Summary of Significant Accounting Policies (Continued)
Page 10
(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.
(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.
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2014
(expressed in Jamaican dollars unless otherwise indicated)
Page 11
2. Summary of Significant Accounting Policies (Continued)
(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
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).
their
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.
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2014
(expressed in Jamaican dollars unless otherwise indicated)
2. Summary of Significant Accounting Policies (Continued)
Page 12
(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 company 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.M. Best or
Standard & Poors or equivalent rating of A- or better.
The Company assesses its reinsurance assets for impairment.
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.
there is objective evidence that
If
(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 2014
(expressed in Jamaican dollars unless otherwise indicated)
2. Summary of Significant Accounting Policies (Continued)
Page 13
(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 company. 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
financial position and is computed by applying the “365th” method to gross written
statement of
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.
(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.
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2014
(expressed in Jamaican dollars unless otherwise indicated)
Page 14
2. Summary of Significant Accounting Policies (Continued)
(p) Insurance reserves (continued)
(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 30). 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) Pooled Real Estate Investment
Pooled Real Estate Investment represents the company's beneficial interest in properties which are leased
to third parties and held in trust for a group of investors under a Trust Deed. The company shares in the
rental income from the lease of properties as well as fair value appreciation on the properties based on
valuations carried out by independent valuators from time to time. The company's share of lease income is
recorded in the statement of comprehensive income. The appreciation is recorded in OCI.
(t) 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 2014
(expressed in Jamaican dollars unless otherwise indicated)
Page 15
2.
Summary of Significant Accounting Policies (Continued)
(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 Board of Directors.
(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.
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2014
(expressed in Jamaican dollars unless otherwise indicated)
3. Responsibilities of the Appointed Actuary and External Auditors
Page 16
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
to a variety of
The company’s activities expose it
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,
remuneration arrangements of the directors and senior officers.
the
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2014
(expressed in Jamaican dollars unless otherwise indicated)
Page 17
4.
Insurance and Financial Risk Management (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
fraudulent claims. Where applicable, contracts are underwritten by reference to the commercial
reject
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.
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2014
(expressed in Jamaican dollars unless otherwise indicated)
Page 18
4.
Insurance and Financial Risk Management (Continued)
(a)
Insurance risk (continued)
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,
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.
the final outcome will prove to be different
from the original
is likely that
it
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 2014
(expressed in Jamaican dollars unless otherwise indicated)
4.
Insurance and Financial Risk Management (Continued)
Page 19
(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
2014
2013
Maximum
Net
Retention
’000
US$900
US$900
US$75
J$20,000
US$125
J$5,000
J$2,000
J$1,000
J$1,000
J$1,000
J$4,000
J$1,000
J$1,500
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
J$2,000
J$1,000
J$1,000
J$1,000
J$4,000
J$1,000
J$1,500
Policy
Limit
’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
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2014
(expressed in Jamaican dollars unless otherwise indicated)
Page 20
4.
Insurance and Financial Risk Management (Continued)
(a) Insurance risk (continued)
Sensitivity Analysis of Actuarial Liabilities
The determination of actuarial
assumptions could have a significant effect on the valuation results.
liabilities is sensitive to a number of assumptions, and changes in those
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
development of claims costs net of reinsurance. This assumption is supported by the following:
from the
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 2014
(expressed in Jamaican dollars unless otherwise indicated)
Page 21
4.
Insurance and Financial Risk Management (Continued)
(a) Insurance risk (continued)
Development Claim Liabilities
the development of
In addition to sensitivity analysis,
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 2010 - 2014 has changed at successive year-ends,
up to 2014. 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.
insurance liabilities provides a measure of
2010
$’000
2010
and
prior
$’000
2011
2012
2011
and
prior
$’000
$’000
$’000
2012
And
Prior
$’000
2013
$’000
2013
and
prior
$’000
2014
$’000
2014
and
prior
$’000
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
(deficiency)
2011
Paid during year
UCAE, end of year
IBNR, end of year
Ratio: excess
(deficiency)
2012
Paid during year
UCAE, end of year
IBNR, end of year
Ratio: excess
(deficiency)
2013
Paid during year
UCAE, end of year
IBNR, end of year
Ratio: excess
(deficiency)
2014
Paid during year
UCAE, end of year
IBNR, end of year
Ratio: excess
(deficiency)
9,744
14,553
68,193
82,746
20.79%
38,747
61,664
6,200
20.75%
16,227
45,535
5,154
21.11%
11,394
35,281
2,993
9.93%
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
9.14%
33,189
88,599
8,260
8.40%
33,884
66.043
2,993
21.75% 12.35%
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
29.89%
16.61%
(6.67%)
0.31%
23,866
57,750
69,298
127,048
156,978
284,026
239,700
523,726
43,048
109,091
111,383
220,474
161,264
381,738
291,198
672,936
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%)
-
-
9,973
30,927
4,476
28,154
81,360
6,654
46,319
74,473
54,090
128,563
152,205
280,768
222,509
503,277
89,683
171,043
120,005
291,048
187,444
478,492
337,765
816,257
6,418
13,072
18,724
31,796
34,383
66,179
78,835
145,014
29.64%
14.88%
(18.82%)
(7.70%)
(5.06%)
(9.18%)
(3.53%)
(4.57%)
-
-
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2014
(expressed in Jamaican dollars unless otherwise indicated)
4.
Insurance and Financial Risk Management (Continued)
Page 22
(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 85%:15% Quota Share of premiums i.e. 85% ceded premiums and 15%
retention.
(ii) Excess of loss treaty for motor and third party liability, which covers losses in excess of J$5,000,000
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$100,000,000 for any one
catastrophic event as defined.
(c) The company reinsures with several reinsurers. Of significance are Munich Reinsurance, R & V
Reinsurance, Scor Reinsurance and Swiss Reinsurance Company. 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 and Swiss Reinsurance Company.
At 31 December, the A. M. Best ratings for the major reinsurers are as follows:
Munich Reinsurance Company
Swiss Reinsurance Company
2014
A+
A+
2013
A+
A+
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2014
(expressed in Jamaican dollars unless otherwise indicated)
4.
Insurance and Financial Risk Management (Continued)
(b) Reinsurance risk (continued)
(d) The amount of reinsurance recoveries recognised during the period is as follows:
Page 23
Property
Motor
Marine
Liability
Burglary
Miscellaneous Accidents
2014
$’000
54,875
8,988
15,720
8,918
3,962
13,255
105,718
2013
$’000
87,973
11,312
5,424
162
558
10,234
115,663
(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.
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2014
(expressed in Jamaican dollars unless otherwise indicated)
Page 24
4.
Insurance and Financial Risk Management (Continued)
(c) Financial risk (continued)
(i) Credit risk (continued)
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 2014
(expressed in Jamaican dollars unless otherwise indicated)
Page 25
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 $174,406,000 (2013 - $138,724,000) 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
2014
$’000
37,708
53,092
83,606
2013
$’000
41,782
56,538
40,404
174,406
138,724
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
2014
$’000
272,378
108,228
380,606
2013
$’000
361,360
103,061
464,421
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
2014
$’000
513,319
139,597
94,852
747,768
2013
$’000
634,377
130,370
13,950
778,697
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2014
(expressed in Jamaican dollars unless otherwise indicated)
Page 26
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;
(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
the company and its
exposure to changes in interest rates and exchange rates.
factors in assessing the liquidity of
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2014
(expressed in Jamaican dollars unless otherwise indicated)
Page 27
4.
Insurance and Financial Risk Management (Continued)
(c) Financial risk (continued)
(ii) Liquidity risk (continued)
Liquidity risk management process (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 2014:
Cash and short term investments
Due from policyholders, brokers
993,141
280,447
and agents
342,527
38,079
-
-
-
-
Due from reinsurers and
coinsurers
Other receivables
Due from related parties
Loans receivable
Leases receivable
Investment securities
Total financial assets
22,625
90,564
18,099
36,199
-
-
1,922
4,554
-
-
3,844
7,089
32,053
1,396,822
10,451
430,474
-
-
17,297
27,724
250,051
313,171
92,250
270,984
9,436
436,386
574,271
-
168,402
439,386
-
-
-
-
-
-
1,273,588
-
-
380,606
167,487
18,356
18,356
2,275
2,275
-
-
386,297
48,803
-
20,631
897,343
3,174,755
-
-
-
-
-
-
-
-
268,437
61,188
901,870
1,231,495
-
-
-
-
Due to reinsurers and coinsurers
32,393
236,044
-
Other liabilities
Claims liabilities
22,323
12,153
26,712
225,468
135,281
180,374
360,747
Total financial liabilities
280,184
383,478
Net Liquidity Gap
1,116,638
46,996
207,086
106,085
360,747
213,524
439,386
20,631
1,943,260
Cumulative gap
1,116,638
1,163,634
1,269,719
1,483,243
1,922,629
1,943,260
-
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2014
(expressed in Jamaican dollars unless otherwise indicated)
Page 28
4.
Insurance and Financial Risk Management (Continued)
(c) Financial risk (continued)
(ii) Liquidity risk
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 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
25,367
88,635
20,293
40,587
-
-
-
-
-
- 1,172,843
-
-
464,421
174,882
7,088
7,088
122
122
-
-
409,360
114,271
-
-
1,922
5,126
-
-
-
-
-
-
3,844
17,297
92,250
294,047
10,252
46,134
52,759
-
11,325
675,214
244,988
1,353,509
181,924
265,648
264,237
449,833
195,153
489,200
156,690 1,054,317
163,900 3,397,304
Other receivables
Due from related parties
Loans receivable
Leases receivable
Investment securities
Total financial assets
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
471,287
871,488
70,748
143,610
489,200
163,900 2,210,233
471,287
1,342,775 1,413,523
1,557,133
2,046,333
2,210,233
-
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.
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2014
(expressed in Jamaican dollars unless otherwise indicated)
Page 29
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 is exposed to foreign exchange risk arising from currency exposures, primarily with respect
to the US dollar. Foreign exchange risk arises primarily from transactions for re-insurance and investing
activities. The statement of financial position at 31 December 2014 includes aggregate net foreign assets
of approximately US$7,517,000 (2013 – US$5,677,000), in respect of such transactions.
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.
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
The
represents management’s assessment of
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
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
assets/liabilities. There was no impact on the other components of equity.
the possible change in foreign exchange rates.
the individual sensitivities done for each of
term deposits,
% Change in
Currency Rate
2014
1%
10%
Increase/
(decrease) in
Pre-tax
Profit
2014
$’000
(8,512)
85,122
% Change in
Currency Rate
2013
1%
15%
Increase/
(decrease) in
Pre-tax
Profit
2013
$’000
(10,191)
152,870
USD – J$ Revaluation
USD – J$ Devaluation
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2014
(expressed in Jamaican dollars unless otherwise indicated)
Page 30
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.
Within 1
Month
$’000
Within 3
Months
$’000
3 to 12
Months
$’000
1 to 5
Years
$’000
Over
5 Years
$’000
Non-
Interest
Bearing
$’000
Total
$’000
At 31 December 2014:
Cash and short term investments
993,164
279,360
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
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
169,591
-
-
-
-
-
-
27,349
17,207
-
-
-
-
-
-
-
3
1,272,527
380,606
380,606
76,989
18,356
2,275
-
-
76,989
18,356
2,275
169,591
44,556
244,904
114,272
90,950
208,291
89,351
162,377
910,145
1,238,068
393,632
287,890
225,498
89,351
640,606
2,875,045
Due to reinsurers and coinsurers
Other liabilities
Claims liabilities
Total financial liabilities
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
268,437
268,437
60,365
60,365
901,870
901,870
1,230,672 1,230,672
Total interest repricing gap
1,238,068
393,632
287,890
225,498
89,351
(590,066) 1,644,373
Cumulative gap
1,238,068
1,631,700
1,919,590
2,145,088
2,234,439 1,644,373
-
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2014
(expressed in Jamaican dollars unless otherwise indicated)
4.
Insurance and Financial Risk Management (Continued)
Page 31
(c) Financial risk (continued)
(iii) Market risk (continued)
Interest rate risk (continued)
At 31 December 2013:
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
468,860
700,667
3
1,169,530
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
167,515
97,582
-
464,421
174,883
7,088
122
-
-
464,421
174,883
7,088
122
167,515
97,582
934,671
117,867
293,196
196,952
169,966
156,690
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
60,365
765,559
361,147
60,365
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 2014
(expressed in Jamaican dollars unless otherwise indicated)
4.
Insurance and Financial Risk Management (Continued)
Page 32
(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:
2014
JMD/USD
-100/-50
+250/+200
Increase/(decrease)
in Profit before
Taxation
Increase/(decrease)
in Other
Components of
Equity
2014
$’000
(3,725)
9,312
2014
$’000
305
(5,174)
Change in
Basis
points:
2013
JMD/USD
-100/-50
+250/+200
Increase/(decrease)
in Profit before
Taxation
Increase/(decrease)
in Other
Components of
Equity
2013
$’000
(1,973)
4,932
2013
$’000
3,438
(11,965)
Price risk
The company is exposed to equity securities and real estate price risk because of investments held by
the company. These investments are classified on the statement of financial position as available-for-
sale,
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% (2013 - 10%) with all other variables held constant.
Equity Securities
Pooled real estate investment
Effect on Other
Components of
Equity
Effect on Other
Components of
Equity
Effect on Other
Components of
Equity
Effect on Other
Components of
Equity
2014
$’000
(16,238)
16,238
2013
$’000
(15,597)
15,597
2014
$’000
(14,355)
14,355
2013
$’000
-
-
Change in index:
-10% (2013 -10%)
+10% (2013+ 10%)
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2014
(expressed in Jamaican dollars unless otherwise indicated)
5. Capital Management
Page 33
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;
(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 is 250%. The MCT for the company as at 31 December 2014 is as follows:
MCT
6.
Fair Value Estimation
Actual
Required
2014
270%
2014
250%
Actual
2013
308%
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 13, 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 2014
(expressed in Jamaican dollars unless otherwise indicated)
6.
Fair Value Estimation (Continued)
Page 34
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 2014
Assets
Available-for-sale financial assets –
Equity securities
Debt securities
Pooled real estate investment
Total assets measured at fair value
At 31 December 2013
Assets
Available-for-sale financial assets –
Equity securities
Debt securities
Total assets measured at fair value
Level 1
Level 2
$’000
$’000
Level 3
$’000
162,377
-
-
-
451,892
-
162,377
451,892
-
-
143,549
143,549
Total
balance
$’000
162,377
451,892
143,549
757,818
155,974
-
-
541,557
155,974
541,557
-
-
-
155,974
541,557
697,531
There were no transfers between levels 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
These valuation techniques maximise the use of
value or other estimation and valuation techniques.
If all
observable market data where it is available and rely as little as possible on entity specific estimates.
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.
The disclosure in relation to the sensitivity of the item classified as level 3 is shown under price risk in Note 4 ciii).
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2014
(expressed in Jamaican dollars unless otherwise indicated)
7. Critical Accounting Estimates and Judgements in Applying Accounting Policies
Page 35
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
the Bornhuetter-
Incurred Loss Development method,
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.
the Bornhuetter-Ferguson Paid Loss method,
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.
(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.
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2014
(expressed in Jamaican dollars unless otherwise indicated)
8.
Segment Information
Page 36
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 six 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) Motor - Losses involving motor vehicles, this includes liabilities to third parties.
(b) Fire and allied perils - Loss, damage or destruction to insured property as specified on the policy schedule.
(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.
(e) Homeowners and Burglary-
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.
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.
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2014
(expressed in Jamaican dollars unless otherwise indicated)
8.
Segment Information (Continued)
Page 37
The segment information provided to the board of directors for the reportable segments for the year ended 31
December 2014 is as follows:
2014
Fire
$’000
Motor
$’000
Marine
Liability
Homeowners
& Burglary
Misellaneous
Accident
$’000
$’000
$’000
$’000
Total
$’000
Gross Premiums Written
3,207,181
891,040
165,940
386,021
122,004
300,189
5,072,375
Reinsurance ceded
(3,123,481)
(13,176)
(136,139)
(264,636)
(102,399)
(238,366)
(3,878,197)
Excess of loss reinsurance cost
(76,253)
(31,791)
-
(5,151)
(14,445)
-
(127,640)
Net premiums written
7,447
846,073
29,801
116,234
5,160
61,823
1,066,538
Changes in unearned premiums,
net
Net Premiums Earned
Commission income
Commission expense
Claims expense
4,832
(5,082)
60
2,024
12,279
840,991
29,861
118,258
348
5,508
378
2,560
62,201
1,069,098
222,645
2,217
26,081
18,182
19,501
47,341
335,967
(81,770)
(54,802)
(1,971)
(6,621)
(12,139)
(25,635)
(182,938)
Management expenses
(30,954)
(324,649)
(11,021)
(44,890)
(6,970)
(591,043)
(6,029)
(64,702)
(1,568)
(7,250)
(8,246)
(678,558)
(22,864)
(441,628)
Segment results
Unallocated income -
Investment income
Other income
Depreciation and amortisation-
Profit before tax
Taxation
Net profit
115,230
(127,286)
36,921
20,227
4,052
52,797
101,941
160,396
88,124
248,520
(30,496)
319,965
113
320,078
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2014
(expressed in Jamaican dollars unless otherwise indicated)
8.
Segment Information (Continued)
Page 38
2013
Fire
$’000
Motor
$’000
Marine
Liability
$’000
$’000
Gross Premiums Written
2,788,787
850,344
128,746
302,810
Reinsurance ceded
(2,682,216)
(20,308)
(103,411)
(185,108)
Excess of loss reinsurance cost
(86,233)
(29,564)
-
(5,569)
Homeowner
& Burglary
Misellaneous
Accident
$’000
120,166
(95,212)
(25,635)
(681)
232
(449)
20,214
(12,670)
(3,897)
(8,187)
$’000
Total
$’000
288,902
4,479,755
(228,101) (3,314,356)
-
(147,001)
60,801
1,018,398
(2,715)
(24,205)
58,086
994,193
35,074
269,094
(24,264)
(176,920)
(1,855)
(646,791)
(18,696)
(381,073)
20,338
800,472
25,335
112,133
(2,128)
(19,186)
821
(1,229)
18,210
781,286
26,156
110,904
183,368
3,330
18,162
8,946
(62,118)
(72,402)
(1,309)
(4,157)
(7,860)
(541,913)
(5,516)
(85,750)
(34,962)
(272,303)
(8,312)
(38,613)
96,638
(102,002)
29,181
(8,670)
(4,989)
48,345
58,503
141,407
151,091
292,498
(27,299)
323,702
4,212
327,914
2014
$’000
52,584
730
53,314
2013
$’000
26,923
537
27,460
Net premiums written
Changes in unearned premiums,
net
Net Premiums Earned
Commission income
Commission expense
Claims expense
Management expenses
Segment results
Unallocated income -
Investment income
Other income
Depreciation and amortisation
Profit before tax
Taxation
Net profit
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.
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2014
(expressed in Jamaican dollars unless otherwise indicated)
Page 39
9. Related Party Transactions and Balances
(a) Related party transactions are as follows:
Interest income -
Fellow subsidiary (Note 11)
Parent
Affiliated company
Rental and maintenance income -
Affiliated company
Rental expense
Fellow subsidiary
Premium income -
Key management
Parent company
Fellow subsidiaries
Affiliates
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)
2014
$’000
25,741
104
72
25,917
2013
$’000
21,522
-
-
21,522
959
868
15,630
14,132
2,311
31,414
243,750
211,669
489,144
506
8,129
20,693
7,549
36,877
3,644
35,079
124,800
127,223
290,746
94
1,264
18,867
4,484
24,709
3,818
166,072
169,890
2,657
112,018
114,675
68,243
54,512
1,853
2,040
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2014
(expressed in Jamaican dollars unless otherwise indicated)
9. Related Party Transactions and Balances (Continued)
(b) The statement of financial position includes the following balances with group companies:
Page 40
Due from related parties -
Receivables -
Fellow subsidiary
Due from policyholders, brokers and agents -
Fellow subsidiary
Parent company
Affilated company
Loans receivable -
Fellow subsidiary (Note 21)
Investment securities -
Shares in affiliated entity (Note 23)
Claims liabilities
Parent company
Affiliated company
Fellow subsidiary
2014
$’000
2013
$’000
2,275
122
114,223
81,369
146
1,152
-
-
115,521
81,369
169,591
167,515
83,198
79,867
6,917
26,482
6,550
650
7,556
14,152
26,840
-
Included in the investments of the company are shares in related parties. At 31 December 2014, these shares
represented 2.13% of the total assets (2013 – 1.87%).
Affiliates represents companies that are associated with the parent company, which are are not subsidiaries of
the parent company and also entities that directors have significant influence.
No provisions made for receivables from related parties for either year.
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2014
(expressed in Jamaican dollars unless otherwise indicated)
10. Claims Expense
Page 41
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 parent
Loan due from fellow subsidiary (Note 9(a))
Loan due from associated company
Cash and deposits and investment securities
Bond premium amortisation
Gain on sale of investments
Dividend income
Pooled real estate investment income
12. Other Income
Foreign exchange gains
Rental income
Gain on disposal of property, plant and equipment
Miscellaneous income
2014
$’000
2013
$’000
784,291
762,454
(105,733)
(115,663)
678,558
646,791
2014
$’000
2013
$’000
11,966
18,018
104
-
25,741
21,522
72
-
109,769
(2,790)
91,312
(1,214)
144,862
129,638
-
7,789
7,745
4,498
7,271
-
160,396
141,407
2014
$’000
79,978
2,654
-
5,492
2013
$’000
143,381
2,082
1,378
4,250
88,124
151,091
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2014
(expressed in Jamaican dollars unless otherwise indicated)
13. Expenses by Nature
Management and other expenses by nature are as follows:
Advertising costs
Audit fees
Computer expenses
Directors fees
Depreciation and amortisation
Insurance
Other operating expenses
Professional fees
Printing and stationery
Registration fees
Rent
Repairs and maintenance
Staff costs (Note 14)
Transportation expenses
Utilities
14. Staff Costs
Wages and salaries
Statutory contributions
Pension costs
Other
Page 42
2013
$’000
13,810
4,982
16,859
2,040
27,299
1,779
28,861
14,830
4,493
12,505
14,132
15,148
2014
$’000
9,841
5,073
19,142
1,853
30,496
2,208
53,730
13,913
4,284
13,232
15,630
17,223
259,939
231,662
7,164
18,396
4,541
15,431
472,124
408,372
2014
$’000
2013
$’000
199,948
174,915
17,055
3,817
39,119
15,722
3,500
37,525
259,939
231,662
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2014
(expressed in Jamaican dollars unless otherwise indicated)
Page 43
15. Taxation
(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
Years 6 to 10
100%
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 $117,015,000 (2013 - $115,024,000).
(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 29)
2014
$’000
(113)
(113)
2013
$’000
(4,212)
(4,212)
(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 tax remission
Income not subject to tax
Expenses not deductible for tax
Net effect of other charges and allowances
2014
$'000
2013
$'000
319,965
323,702
106,655
107,901
(117,015)
(115,024)
(24,985)
(14,543)
29,829
5,403
(113)
19,993
(2,539)
(4,212)
16. Earnings Per Share
The calculation of earnings per share is based on the net profit for the year and 1,031,250,000 (2013 -
1,031,250,000) ordinary shares in issue.
Net profit from continuing operations ($’000)
Weighted average number of ordinary shares in issue (‘000)
Earnings per share ($)
2014
320,078
1,031,250
0.31
2013
327,914
1,031,250
0.32
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2014
(expressed in Jamaican dollars unless otherwise indicated)
17. Dividends per Share
The dividends paid in 2014 and 2013 were as follows:
Interim dividends:-
4.85 cents per stock unit – March 2013
8.72 cents per stock unit – October 2013
7.64 cents per stock unit – April 2014
12.13 cents per stock unit – December 2014
18. Cash and Cash Equivalents
Cash and bank balances
Short term deposits
Short term investments
Page 44
2013
$’000
50,017
90,008
-
-
140,025
2014
$’000
-
-
78,787
125,091
203,878
2014
$’000
290,378
966,917
15,232
1,272,527
2013
$’000
96,007
1,026,917
46,606
1,169,530
Short term deposits comprise term deposits and repurchase agreements with an average maturity of 57 days
(2013 – 67 days), and include interest receivable of $5,927,000 (2013 – $4,648,000).
The weighted average effective interest rate on short term investments and deposits were as follows:
J$
US$
2014
%
7.0
2.1
The weighted average effective interest rates on cash balances for the year were as follows:
J$
US$
GBP
2014
%
1.0
0.1
0.1
2013
%
7.6
3.2
2013
%
1.0
0.1
0.1
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2014
(expressed in Jamaican dollars unless otherwise indicated)
19. Due from Reinsurers and Coinsurers
Page 45
Reinsurers’ portion of unearned premium (Note 30)
Reinsurers’ portion of claims liabilities (Note 30)
Other amounts recoverable from reinsurers and coinsurers
20. Other Receivables
Prepayments
Other receivables
21. Loans Receivable
Mortgage receivable from fellow subsidiary (Note 9)
2014
$’000
361,097
90,498
76,989
2013
$’000
880,411
101,468
73,415
528,584
1,055,294
2014
$’000
7,917
18,356
26,273
2013
$’000
19,946
7,088
27,034
2014
$’000
169,591
2013
$’000
167,515
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.
.
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
2014
$’000
39,366
9,437
48,803
(4,247)
44,556
36,675
7,881
44,556
2013
$’000
71,384
42,887
114,271
(16,689)
97,582
60,187
37,395
97,582
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2014
(expressed in Jamaican dollars unless otherwise indicated)
Page 46
23.
Investment Securities
Debt securities -
Available for sale – at fair value
Government of Jamaica Securities
Benchmark Investment Notes
United States Dollar Benchmark Notes
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
2014
$’000
2013
$’000
216,668
3,830
284,478
-
504,976
93,786
137,608
11,398
747,768
216,741
7,127
224,815
176,575
625,258
12,613
128,502
12,324
778,697
162,377
155,974
105
(105)
-
162,377
910,145
105
(105)
-
155,974
934,671
2014
%
8.00
4.00
6.25
6.12
2013
%
7.96
6.13
11.00
6.34
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2014
(expressed in Jamaican dollars unless otherwise indicated)
23.
Investment Securities (Continued)
Page 47
Included in investments, are Government of Jamaica Benchmark Investment Notes valued at $45,000,000
(2013-$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
$55,385,000 (2013 - $52,127,000). 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.
24. Pooled Real Estate Investment
This represents the company's beneficial interest in a property which is leased to third parties and held in trust for
a group of investors under a Trust Deed managed by Scotia Investments Jamaica Limited.
Rental income from the pooled real estate investment for the year was $7,745,000.
The property was last valued at current market value in February 2014 by The C.D. Alexander Company Realty
Limited.
The fair value of the investment is at level 3 in the fair value hierarchy, as is consistent with the requirements of
IFRS 13 (Note 6).
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2014
(expressed in Jamaican dollars unless otherwise indicated)
25.
Property, Plant and Equipment
Furniture,
Fixtures &
Equipment
$’000
Motor
Vehicles
$’000
Buildings
$’000
Page 48
Total
$’000
128,839
26,923
(2,150)
153,612
52,584
(1,555)
71,753
17,352
(2,113)
86,992
24,066
(1,555)
67,281
204,641
22,395
2,915
-
25,310
22,396
-
47,706
7,116
1,265
-
8,381
2,385
-
10,766
61,538
15,142
44,906
8,866
(150)
(2,000)
76,530
14,679
(1,555)
89,654
51,772
15,509
-
36,053
8,395
28,584
7,692
(113)
(2,000)
44,335
10,112
(1,555)
52,892
34,276
11,569
-
45,845
109,503
36,940
16,929
36,762
32,195
21,436
17,496
95,138
66,620
At Cost -
At 1 January 2013
Additions
Disposals
At 31 December 2013
Additions
Disposals
At 31 December 2014
Depreciation -
At 1 January 2013
Charge for the year
On disposals
At 31 December 2013
Charge for the year
On disposals
At 31 December 2014
Net Book Value -
31 December 2014
31 December 2013
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2014
(expressed in Jamaican dollars unless otherwise indicated)
26.
Intangible Assets
At Cost -
At 1 January 2013
Additions
At 31 December 2013
Additions
At 31 December 2014
Amortisation -
At 1 January 2013
Charge for the year
At 31 December 2013
Charge for the year
At 31 December 2014
Net Book Value -
31 December 2014
31 December 2013
27. Due to reinsurers and coinsurers
Local reinsurers
Overseas reinsures
28. Other Liabilities
Statutory contributions payable
Accrued expenses
General consumption tax
Other payables
2014
$’000
14,220
254,217
268,437
2014
$’000
4,144
41,917
9,901
19,197
75,159
Page 49
Computer
Software
$’000
76,154
537
76,691
730
77,421
53,581
9,947
63,528
6,430
69,958
7,463
13,163
2013
$’000
17,158
343,989
361,147
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 2014
(expressed in Jamaican dollars unless otherwise indicated)
29. Deferred Income Taxes
Page 50
Deferred income taxes are calculated in full on temporary differences under the liability method using a
principal tax rate of 16.57⅓% (33⅓% restricted to 50% based on remission year 5 to 10).
Deferred income tax assets
Deferred income tax liabilities
Net assets
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
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
2014
$’000
1,200
(701)
499
2014
$’000
340
113
46
499
2013
$’000
1,155
(815)
340
2013
$’000
(5,027)
4,212
1,155
340
2014
$’000
2013
$’000
1,200
1,155
(701)
(815)
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2014
(expressed in Jamaican dollars unless otherwise indicated)
Page 51
30.
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
2014
$’000
2013
$’000
844,525
1,063,053
80,995
1,988,573
(361,097)
(90,498)
(451,595)
483,428
972,555
80,995
1,536,978
2014
$’000
901,870
149,899
11,284
1,063,053
85,613
4,885
90,498
816,257
145,014
11,284
972,555
1,377,948
900,384
86,326
2,364,658
(880,411)
(101,468)
(981,879)
497,537
798,916
86,326
1,382,779
2013
$’000
765,559
125,278
9,547
900,384
92,623
8,845
101,468
672,936
116,433
9,547
798,916
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2014
(expressed in Jamaican dollars unless otherwise indicated)
30.
Insurance Reserves (Continued)
Page 52
An actuarial valuation was performed to value the policy and claims liabilities of the company as at 31 December
2014 in accordance with the Insurance Act of Jamaica by the appointed actuary, Josh Worsham, FCAS, MAAA of
Mid Atlantic Actuarial. The Insurance Act requires that the valuation be in accordance with accepted actuarial
principles. The actuary has stated that his report conforms to the standards of practice as established by the
Canadian Institute of Actuaries, with such changes as directed by the Financial Services Commission, specifically,
that the valuation of some policy and claims liabilities not reflect the time value of money.
In arriving at his valuation,
the Incurred Loss
Development method, the Bornhuetter-Ferguson Paid Loss method, the Bornhuetter-Ferguson Incurred Loss
method and the Frequency-Severity method.
the actuary employed the Paid Loss Development method,
In using the Paid/Incurred Loss Development methods, ultimate losses are estimated by calculating past
paid/incurred loss development factors and applying them to exposure periods with further expected paid/incurred
loss development. The Bornhuetter-Ferguson Paid/Incurred Loss methods is a combination of the Paid/Incurred
Loss Development methods and a loss ratio method; however, these expected losses are modified to the extent
paid/incurred losses to date differ from what would have been expected based on the selected paid/incurred loss
development pattern. Finally, the Frequency-Severity method is calculated by multiplying an estimate of ultimate
claims with an estimate of the ultimate severity per reported claim.
In his opinion dated 21 March 2015 the actuary found that the amount of policy and claims liabilities represented in
the statement of financial position at 31 December 2014 makes proper provision for the future payments under the
company’s policies and meets the requirements of the Insurance Act and other appropriate regulations of Jamaica;
that a proper charge on account of these liabilities has been made in profit or loss; and that there is sufficient
capital available to meet the solvency standards as established by the Financial Services Commission.
The movement in claims outstanding was as follows:
Net reserves for claims outstanding at beginning of year –
Gross reserves for claims outstanding
Reinsurance ceded
Movement during the year –
Claims incurred, including IBNR
Claims paid
Translation differences on foreign currency claims
Net reserves for claims outstanding at end of year
Reinsurance ceded
2014
$’000
2013
$’000
900,384
(101,468)
822,246
(148,637)
798,916
673,609
678,558
646,791
(506,353)
1,434
173,639
972,555
90,498
(523,643)
2,159
125,307
798,916
101,468
Gross reserves for claims outstanding at end of year
1,063,053
900,384
Significant delays occur in the notification of claims and a substantial measure of experience and judgement
is involved in assessing outstanding liabilities, the ultimate cost of which cannot be known with certainty as at
the reporting date. The reserve for claims outstanding is determined on the basis of information currently
available; however, it is inherent in the nature of the business written that the ultimate liabilities may vary as a
result of subsequent developments.
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2014
(expressed in Jamaican dollars unless otherwise indicated)
Page 53
30.
Insurance Reserves (Continued)
(c) The movement in unearned premiums is as follows:
Movement in unearned premiums:
2014
2013
Gross
$’000
Reinsurance
$’000
Net
$’000
Gross
$’000
Reinsurance
$’000
Net
$’000
Balance at 1 January
1,377,948
880,411
497,537
1,293,349
820,016
473,333
Premiums written
during the year
Premiums earned
during the year
Portfolio adjustment
Balance at
31 December
5,072,375
4,005,837
1,066,538
4,479,755
3,461,358
1,018,397
(5,605,798)
(4,536,700)
(1,069,098)
(4,395,156))
(3,400,963)
(994,193)
-
11,549
(533,423)
(519,314)
(11,549)
(14,109)
-
84,599
-
-
60,395
24,204
844,525
361,097
483,428
1,377,948
880,411
497,537
The gross unearned premium reserve by class of business is as follows:
Fire, consequential loss and liability
Motor
Marine
Accident
31. Share Capital
Authorised -
1,100,000,000 Ordinary shares of no par value
Issued and fully paid -
2014
$’000
350,786
384,645
6,181
102,913
2013
$’000
854,900
390,118
8,507
124,423
844,525
1,377,948
2014
$’000
2013
$’000
1,031,250,000 Ordinary shares of no par value
470,358
470,358
.
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2014
(expressed in Jamaican dollars unless otherwise indicated)
Page 54
32. Capital Reserves
At beginning of and end of year
The capital reserves at year end represent realised surpluses.
33. Fair Value Reserve
2014
$’000
152,030
2013
$’000
152,030
This represents the unrealised surplus, net of tax, on the revaluation of available-for-sale investments at the year
end.
34. 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 $3,817,000 (2013 – $3,500,000), and are included in staff costs
(Note 14).
35. Contingency
The company is involved in certain legal proceedings incidental to the normal conduct of business. Management
believes that none of these legal proceedings, individually or in the aggregate, will have a material effect on the
company.
36. Commitments
Operating lease commitments
The company leases its office situated at 58 Half Way Tree Road from fellow subsidiary Unity Capital
Incorporated under a non-cancellable operating lease agreement.
The lease is for a term of five (5) years, and is renewable at the end of the lease period at market rate.
The future aggregate minimum lease payments under non-cancellable operating leases are as follows
No later than 1 year
Later than 1 year and no later than
37. Subsequent Events
2014
US$’000
2013
US$’000
141
118
259
141
246
387
In a meeting held on 26 March 2015, the board of directors approved dividend payment of 9.7 cents per share to
be paid on 27 April 2015 for shareholders on record as at 13 April 2015.
Notes
For more information, visit www.genac.com
Notes
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, 2014.
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 Geoffrey Messadoas a Director of the Board of the Company..
3.(b) To re-appoint Ralph Thompson as a Director of the Board of the Company.
3.(c) To re-appoint Duncan Stewart 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 2014, being
$203, 878,125 or 19.77 cent per ordinary share, as the final dividend for that year.
Signed this day of 2015:
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 10 am on June 8, 2015, 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, 2014.
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 Geoffrey Messadoas a Director of the Board of the Company..
For Against
3.(b) To re-appoint Ralph Thompson as a Director of the Board of the Company.
For Against
3.(c) To re-appoint Duncan Stewart 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 2014, being
$203, 878,125 or 19.77 cent per ordinary share, as the final dividend for that year.
For Against
For Against
For Against
Signed this day of 2015:
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.
Email: info@genac.com