MAKING Peace OF MIND
COMMON PLACE
Annual Report 2015
For more information, visit www.genac.com
Your risk
solution partner
Homeowners premiums increased by
19 % when compared to 2014.
Property premiums grew to $3.9 billion, up
23 % from 2014. This portfolio contributed
more than half of our total written premiums
for 2015.
The motor portfolio is the second largest contributor to our total gross written premium and during
2015 we grew by 11 % recording a gross written premium of $990 million.
General Accident resides at the
intersection of intelligent protection
and utmost good faith
We offer products that help a wide
range of customers to manage their
risks and exposures
General Accident Insurance Company Jamaica Limited. ANNUAL REPORT 2015
About General Accident
OUR PROMISE
the changing
regulatory and operating
environment. As one of the leading providers of
We aim to provide first-rate risk management
risk transfer solutions we have implemented best
solutions. We pledge to put our customers at the
practices in our everyday activities.
centre of what we do by understanding their needs,
going the extra mile to ensure that our products
We measure our long-term success by our ability
contribute positively to their risk management
to deliver value for our shareholders, meet our
while we provide prompt and efficient service.
customers’ needs and attract and develop the
best talent and support to the communities where
OUR PURPOSE
we live and work.
General Accident has a clear and simple purpose
Our Annual Report and accounts for 2015 are
- To make available an affordable risk transfer
presented into two (2) parts:
mechanism through a wide range of insurance
products designed to transfer the risk to our
shoulders enabling businesses to strive which we
1. Strategic Report
Our Strategic Report provides details about us,
believe will ultimately help families to realize their
our business model and how we create value
ambitions and fulfill their hopes and aspirations.
for our stakeholders. It also includes market
and key performance indicators as well as our
We believe that this is the best long-term growth
approach to sustainable risk management.
path. Our defined purpose and our operational
efficiencies will help us to keep our promise to
all our stakeholders and realize our vision of
accelerating growth.
2. Governance and Financial Report
The Governance and Financial Report contain
corporate governance information, committee
Our purpose and vision are consistent with the
reports, risk mitigation procedures plus our
ever-changing needs of our customers. Our
Audited Financial Statements and Notes.
unwavering commitment to our business model
has made us not only competitive but an insurer
of choice delivering consistent profitable growth
for more than a decade.
Online Information
HOW WE MEASURE OUR PREFORMANCE
Additional information about us may be found on
line at www.genac.com. Our full Financial Report
We track our progress by using a variety of financial
and Annual Report may be viewed on our website.
and non-financial key performance indicators. In
2015, we revised our targets to easily respond to
For more information, visit www.genac.com
Contents
Overview
Financial Highlights
Chairman’s Statement
Board of Directors
Notice of Annual General Meeting
Director’s Report
Strategic Priorities
Business Model
Chief Executive Officer’s Review
Management Discussion and Analysis
Our Community
Governance
Corporate Governance
General Accident Board
Leadership Team
Corporate Data
Shareholders Information
Disclosure of Shareholding
Appendices
Audited Financial Statements
Proxy Form
1
4
9
11
12
13
14
17
18
21
24
26
29
33
34
For more information, visit www.genac.com
We are a Great Force
$6.1Billion
GROSS
IN
WRITTEN
$4.4Billion
IN TOTAL
ASSETS
IN NET
PROFI T
IN UNDERWRITING
PROFITS
Our long term goal of creating value for our employees, customers, shareholders and business partners
remains steadfast.
General Accident Insurance Company Jamaica Limited. ANNUAL REPORT 2015
1
Who We Are
General Accident is the leading general insurer
in Jamaica.
Market share
Policies in force
Employees (December 31, 2015)
Market capitalization
Our Shareholders
For more information, visit www.genac.com
2
Where We Operate
We operate in Jamaica and our offices are located at 58 Halfway Tree Road, Kingston 10. We are,
however, serviced island wide through an extensive broker and agency network. This distribution channel
means that we can be reached in all Parishes.
3
General Accident Insurance Company Jamaica Limited. ANNUAL REPORT 2015
Business growth: overall
Business growth: segments
Business Segments
General Accident offers a wide range of product lines designed to meet the evolving needs of our
customers. We offer a suite of commercial solutions to help business owners protect their legacies.
We help individuals and their families protect what matters to them most. We provide an opportunity for
professionals to protect their businesses.
General Accident Insurance Company Jamaica Limited. ANNUAL REPORT 2015
5
Key Performance Indicators
For more information, visit www.genac.com
6
9-Year Financial Statistics
General Accident Insurance Company Jamaica Limited. ANNUAL REPORT 2015
7
For more information, visit www.genac.com
8
Chairman’s Report
CONSISTENT DELIVERY OF LONG TERM
GROWTH FOR SHAREHOLDERS
After a challenging start to the year, General
customers and stand behind some of largest and
Accident recovered and recorded another full
most complicated risks in Jamaica.
year of solid financial results.
Operating Performance
This year Management was able to underwrite
profitably while growing premiums for 17 years in
As a result of our underwriting and investment
results, General Accident produced an 18% return
our average shareholders’ equity in 2015. In line
with our dividend policy we returned $172 million to
shareholders while still growing our net worth.
a row. This accomplishment is impressive in light of
the continued decline in premium rates in Jamaica
Outlook
and across the world. Insuring an asset of equal
value than in 2015 was significantly cheaper than in
In the immediate future we expect the demand
2014. To maintain our premiums (let alone increase
for general insurance services to remain stagnant,
premium volume) our underwriters insured more
premium rates to remain depressed and interest
homes, commercial properties and motor vehicles
rates to hover at historic lows. These forces create
for a growing number of clients. In addition, despite
a difficult operating environment for all general
fierce competition from other insurers also seeking
insurers including General Accident.
to defend premiums General Accident generated
an underwriting profit. This profitable growth is the
Thankfully we have built a strong franchise over many
direct product of strong relationships with brokers
years capable of weathering such conditions. More
and policyholders built over many years and the
recently, we’ve developed new growth initiatives
strict adherence to our core underwriting principles.
that will come to market in 2016. The combination
of the resilience of our existing core business and
Our profitable growth also increased our investment
the potential these new opportunities present will
float or the premiums we receive and invest before
drive General Accident going forward.
we pay claims to our clients. Last year, we invested
this float prudently. Considering the rent, interest
On behalf of the Board of Directors,
and dividends we received as well as the increase
in the value of the shares we own, General Accident
enjoyed a return of 12% on our investment portfolio.
P.B. Scott
Chairman
Capital Management
We are privileged to enjoy the support of some of
largest and best capitalized reinsurers in the world.
Their vast financial resources compliment our own
capital base and allow us to serve thousands of
General Accident Insurance Company Jamaica Limited. ANNUAL REPORT 2015
9
P.B. Scott
Chairman
For more information, visit www.genac.com
10
Developing responsible policy products with integrity lies at the heart of our business philosophy and we have made it a priority to develop and deliver products and services that promote the culture of good risk management practices and protect our clients in the face of adversity. Board of Directors
Paul B. Scott
Chairman
Melanie Subratie
Deputy Board Chair
Sharon Donaldson
Chief Executive Officer
Nicholas Scott
Non-Executive Director
Nigel Clarke
Non- executive Director
Christopher Nakash
Non- executive Director
Geoffrey Messado
Company Secretary
Ralph Thompson
Non-executive Director
Jennifer Scott
Non- executive Director
Duncan Stewart
Non-executive Officer
Mathew Lyn
Non- executive Director
11
General Accident Insurance Company Jamaica Limited. ANNUAL REPORT 2015
Notice of the Annual General Meeting
4. To authorise the Board of Directors to fix the
remuneration of the Directors.
5. To approve the aggregate amount
of
interim dividends declared by the
Board during the financial year ended 31st
December 2015, being $72,187,500 or 7.0 cent
per ordinary share, as the final dividend for
that year.
Dated this the 15th day of April 2016 By
order of the Board.
P.B. Scott
Chairman
GENERAL ACCIDENT INSURANCE
COMPANY (JAMAICA) LIMITED
NOTICE IS HEREBY GIVEN THAT the annual general
meeting of General Accident Insurance Company
(Jamaica) Limited (the “Company”) will be held
at 10 am on 1 June, 2016 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, 2015.
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 Paul Scott as a Director
of the Board of the Company.
(b)To re-appoint Melanie Subratie as a
Director of the Board of the Company.
(c)To re-appoint Christopher Nakash as
a Director of the Board of the Company.
For more information, visit www.genac.com
12
Directors Report
The Directors are pleased to present their report
but being eligible, will offer themselves for re-
for General Accident
Insurance Company
election.
Jamaica Limited for the financial year ended
December 31, 2015.
Auditors
Financial Results
The auditors of the Company, Pricewater
houseCoopers of Scotiabank Centre, Duke
The Statement of Comprehensive Income for
Street, Kingston, Jamaica have expressed their
the Company shows pre-tax profits for the year
willingness to continue in office. The Directors
of $303.4 million, taxation recoverable of $0.97
recommend their re-appointment.
million and a net profit after tax of $304.4 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
Dividend
the Financial Statements which are included as
part of this Annual Report.
A dividend of $0.07 per share paid on
December 31, 2015 is proposed to be the final
dividend in respect of the financial year ended
December 31, 2015.
On behalf of the Board of Directors,
P.B. Scott
Chairman
Directors
The Directors of the Company as at December
31, 2015 are: P.B. Scott, Melanie Subratie,
Sharon Donaldson, Ralph Thompson, Geoffrey
Messado, Christopher Nakash, Jennifer Scott,
Nicholas Scott, Nigel Clarke, Duncan Stewart
and Mathew Lyn.
The Directors to retire by rotation in accordance
with the Articles of Incorporation are: Paul
Scott, Melanie Subratie and Christopher Nakash
13
General Accident Insurance Company Jamaica Limited. ANNUAL REPORT 2015
Our Strategic Priorities
VALUE CREATION AND LONG TERM
SUSTAINABILITY
Our strategy drives how we conduct our
together to create a facility for our customers to
business. We create value by using extensive
securely and conveniently protect their assets.
risk knowledge and disciplined underwriting
We work hard to make sure that we are easy
techniques to ensure that risks from private and
to deal with and we work together with our
business life are manageable for our customers
intermediaries in the mutual interest of retaining
and us.
our customers.
Our 2015 strategic priorities include, inter alia:
Claims Service
Operating a high performance culture
We strive to make our claims service meet our
customers expectations so that our brokers and
This is achieved by pursuing a responsible
policyholders will want to insure with us rather
investment approach, protecting our distribution
than someone else. It is conventional wisdom
channels and delivering excellent claims service.
that claims service is the shop window of the
insurance business where our products are on
Investment Position
display.
Solid financial management based on effective
We consider claims and complaints fairly and
risk management, an investment policy geared
we will never seek to avoid our responsibilities.
towards proper asset liability needs and robust
We want to make sure that we give our brokers
capital management supports our business
and insureds the kind of service they would like
model. Our investment policy takes into account
by being collaborative and technically sound,
cash flow imperatives, currencies and inflation
making our processes simple and effective. At
sensitivity of our underwriting liabilities. We try at
the heart of our claims strategy is a culture that
all times to ensure that our capital base meets
focuses on fairness, a proactive process and
regulatory benchmarks.
Distribution Channel
speed of turnaround time. We accept that one
size does not fit all and the unit is so structured
to ensure that the appropriate resources are
available for different types of claims.
We write business directly and through an
extensive broker network.
Our distribution
partners are essential to our business. We make
available to our intermediaries our many years
Nurture a culture of excellence
of experience in assessing, identifying risks and
The efforts of our staff are crucial to our success
structuring insurance solutions which we believe
and we take seriously our promise to deliver
will redound to our mutual benefit as we work
the best possible operational performance.
For more information, visit www.genac.com
14
Our Strategic Priorities
Our staff is the single most important resource
provide us with the financial strength to pursue
together with our financial capital. It is essential
new opportunities consistent with our long-term
that we find the right people, retain them and
strategy of profitable growth.
keep them engaged and motivated while we instill
a culture of excellence and opportunity. Training
Risk and effective capital management is an
and development are crucial to us and we strive
ongoing process that drives a culture from top
to create a working environment that promotes
management.
equality for all staff.
Meet Shareholders Expectations
We create value for our employees by investing in
their capabilities and expertise so each may fulfill
Profitable Growth
his or her potential.
Robust Risk and Capital Management
only by our profitability objective and our ability to
Our goal is to grow as fast as we can constrained
deliver excellent customer service. We believe that
Our business is subject to risks and uncertainties.
profitable growth should be responsible growth.
We employ a risk management framework at all
This approach guides our path and determines our
levels of the organization. Our risk policy ensures
strategic road map. Our business model begins
that our risk profile remains conservative and
with our customers’ needs, which informs our
is aligned with our risk appetite. Our strategic
policy innovation, often times in collaboration with
priorities reflect our risk management priorities.
our business partners.
Our principal business
risks are
liquidity
risks,
We aim to sustain our performance by focusing on
funding
risks, capital adequacy, compliance
the following priorities:
risk, reputational risk and sustainability risk. Our
operations are increasingly dependent on I.T
1. Growth of
the overall business and
systems and management information as clients
dividends. In order to create value and drive
place greater reliance on reliable and secure I.T
sustainable profit growth we ensure that risk is
systems. Disruption of our IT systems could impede
maintained at acceptable and appropriate
our business operations in many ways that could
levels.
negatively impact our profit objectives.
2.
Implementation of best practices standards
We continually assess these threats as they evolve
We
remain committed
to best practices
and adopt controls to mitigate them. We have
standards that drive a conservative risk profile
invested significantly in staff training and enhanced
based on our core philosophy of maintaining
multi-layered controls to protect our information
technology infrastructure.
balance sheet strength, liquidity and capital
adequacy.
Effective capital management remains a primary
3.
Improvement in operational efficiencies
focus and an essential element of our overall
We aim to deliver service that exceeds our
strategy. Strong capital and liquidity positions
clients and our business partners’ expectations.
15
General Accident Insurance Company Jamaica Limited. ANNUAL REPORT 2015
Our Strategic Priorities
Central to this outcome is making it easier for our
customers to do business with us. In support of this
approach we have streamlined our processes
and procedures, making them less complex and
affording our clientele and business partners
electronic transfer of data.
Corporate Responsibility
Our reputation is a long-term asset that we zealously
guard. We seek to protect this asset by embedding
corporate responsibility throughout our business.
Our responsible approach includes our corporate
governance procedures that are not just a matter
of regulatory compliance. We are aware that good
corporate governance promotes and supports
integrity and ethical conduct.
We create value for our shareholders by acting
responsibly in all business transactions and paying
attractive and sustainable dividends while seeking
to increase the value of the company.
Travel Insurance
WHY PAY FOR LOST LUGGAGE AND OTHER EXPENSIVE
FEES WHEN YOU CAN BE COVERED FOR:
• 24 Hour Worldwide Emergency Medical Expenses
• 24 Hour Accidental Death and Dismemberment
• 24 Hour Total & Permanent Disability
• Medical Expenses, Accident or Sickness
• Emergency Medical Evacuation
• Trip Cancellation
•• Trip Interruption
• Baggage Delay
• Emergency Dental Expenses
• In-hotel Recovery
• Anticipated Return
• Prescribed Drugs
• Death Repatriation
ALL AT A VERY AFFORDABLE COST!
Contact your Broker or any GAJ Representative at
Tel: (876) 929-9643-8 or 929-8450/1/4
58 Half Way Tree Road
Kingston 10, Jamaica
Email: gainfo@genac.com
Website: www.genac.com
For more information, visit www.genac.com
16
Business Model
We aim to be a leader in the insurance market providing a well-established
brand that offers intelligent solutions that anticipate the needs of our clientele.
Our business model is supported by sound financial management based
on disciplined risk management and a policy geared towards meeting our
liquidity and capital requirements.
17
General Accident Insurance Company Jamaica Limited. ANNUAL REPORT 2015
Management Discussion and Analysis
favourably for 2015, General Accident posted a
net profit of $304.04 million compared to prior year
$320.1 million. Notwithstanding the year on year
decreased performance, the positive technical
results are gratifying and reflect the success of our
strategy of a well-balanced insurance portfolio
with a diverse spread of risk.
Our premium income grew by 21% to $6.1
billion boosted by increased business from our
commercial portfolio. Our performance in the
motor segment was flat but we enjoyed good
volume growth in all other significant lines of
Sharon Donaldson
Chief Executive Officer
business.
General Accident delivered yet another year
of profitable growth in a market characterized
by fierce global competition that continued
unabated for the greater part of 2015.
We achieved reasonably good financial results;
improved underwriting profitability, net written
premium growth and an improved combined
ratio.
We also made good progress in improving our
above prior year by 13%, due in the main to
operating efficiencies that contributed to our
increases
in our net premiums earned and
profitability.
relatively small marginal increases in technical
Underwriting profit of $115 million was marginally
FINANCIAL PERFORMANCE
Profitability
costs.
Complementing
our
underwriting
profit,
Investment and other income were $221.5 million
compared to $248.5 million for 2014. The adverse
The year 2015 was a relatively quiet loss year for
movement being entirely as a result of decreases
the industry as the market completed another
cycle without any major catastrophe or fire
losses. However, the price levels of the insurance
in foreign currency gains compared to prior
year. The company enjoyed an overall increase
in return on our investment portfolio from 10% in
products trended downwards with the effect
2014 to 10.36% in 2015. Including the increase in
that profitability margins fell below expectations.
the value of our securities, our performance was
Although the competitive landscape turned less
12%.
For more information, visit www.genac.com
18
Management Discussion and Analysis
HIGHLIGHTS FOR THE YEAR
2015($m) 2014 ($m)
Gross written premium
6,100 5, 100
Underwriting profit
115 102
Investment and other income 222 249
Net Profit before tax
304 320
to prior year $183.5 million. This variance was
as a result of Increases in premium due to strong
sales performance in the last quarter of the year,
payment of which is not due until early 2016.
The net cash outflow from investing activities was
$200.0 million higher than the prior year due to
a strategic acquisition of investments.
Equity at book value
1, 800 1, 600
Free cash flow is
FINANCIAL STRENGTH
During the year under review the stock market
rebounded with the result that the company’s
market capitalization improved over prior year to
$2.144 billion, an increase of 33% up from $1.58
billion, an indication of investor’s confidence.
During in 2015, we maintained our financial strength
and we are pleased to present an improved
balance sheet position for 2015. Total assets of
$4.4 billion increased by 13% up from $3.9 billion
of prior year. Investment portfolio of $2.376 billion
grew by 6%, up from $2.25 billion. Cash and cash
the aggregate
of cash flows
from operating
activities less
taxes deducted
at source plus
net cash from
investing activities.
equivalent were $3.45 million compared to $2.94
Capital Position
million in 2014.
General Accident’s capital base remains stable
Insurance liabilities were $2.549 billion due mainly to
and
is
in compliance with the main capital
actuarial increases in our insurance reserves.
adequacy and liquidity metrics prescribed by the
The company continues to demonstrate careful
company to maintain a minimum of 250% capital
use of capital across all divisions, generating a
to risk weighted asset [MCT] and a liquidity ratio of
Financial Services Commission that requires the
strong return on equity of 18%.
Free Cash Flow
95%. At our reporting date the MCT ratio was 279%
and our liquidity ratio 108%.
Free cash flow for the year was relatively flat
liquidity and capital positions, as we believe this
when compared to prior year. Cash flow from
provides us with a distinct advantage that will allow
operating activities was $157.4 million compared
us to respond promptly to market changes.
We remain committed to maintaining excess
19
General Accident Insurance Company Jamaica Limited. ANNUAL REPORT 2015
Management Discussion and Analysis
We are pleased to report that we continue to
We are mindful that information technology plays
enjoy the support of our reinsurance partners
and we successfully renewed our 2016 treaty.
a key role in our growth strategy. Efforts are well
in flight that will produce improvements in our
Our combined ratio of 85% is a significant
processes and we are optimistic that next year
will bring even better results. We have entered
improvement over prior year [2014 91%]; this
2016 with great momentum and we believe that
provides an
income
coverage for claims costs and overheads. In the
indication of premium
our new website platform will give us the ability to
transform the way we do business so that as our
main we aim to keep the combined ratio as low
as possible by employing disciplined underwriting
customer expectations change we will be able
to adapt and continue to produce the superior
and judicious claims management.
customer experience that they deserve.
Looking Forward
We are on solid financial ground and well
position to deliver on our strategy to further
strengthen our company with the help our
General Accident expects
the underlying
staff. We work hard to attract the right talent
profitability to continue despite the ongoing
and we are cognizant of our responsibility to
fierce competition in the market. We are
provide a high morale-working environment.
confident that our diversified investment portfolio
We have implemented an intern programme,
is well positioned to provide a stable yield.
which has been very successful in attracting
some of the country’s best graduate talent.
Despite the challenges of today’s business
environment that is generally characterized by
Our strategy to create long-term value combines
rapidly changing trends, we will continue to look
clear portfolio choices supported by information
for growth opportunities. We are prepared to
technology.
face the continuing fierce competition, which is
still being fueled by an excessive liquid market.
I would like to acknowledge the Board of Directors
for providing insight, guidance and support to
We intend to use innovation to garner profitable
the management and staff. For the employees’
business and reduce overheads. Our 2016
hard work over the past year, I say thank you. Your
strategy will see us combining greater personal
dedication and commitment are what make
lines coverage with wider business risk coverage.
General Accident great. To our brokers, thank
Although this will move us into unfamiliar market
you for your continued support and involvement.
segments we believe that we are well equipped
You are important to our business.
to deliver a profitable outcome.
We remain committed to our strategic drivers
of prioritizing investments in distinctive positions,
growing operating earnings and pursuing other
income streams. We believe this approach will
produce increased growth, and allow us to
maintain our profitability and meet our financial
targets.
We will continue to work hard and make every
effort to fulfill your expectations again in 2016.
For more information, visit www.genac.com
20
Our Community
We aim to conduct our business in a manner
Environment
consistent with good corporate citizenship. We
have long held the belief that we can create
We
remain committed
to
supporting
the
lasting changes in our communities if we work
maintenance of a healthy natural environment.
together. We believe this can be achieved
For the past 25 years General Accident has
through volunteerism, workplace-giving, support
contributed both resources and funding to the
in education, sports, child welfare and the
Jamaica Environment Trust.
environment.
Sports
We are a proud sponsor of Gibson Relays and
other sporting events such as tennis and netball.
We recognize the invaluable contribution of
sports to the development of the nation’s youth.
Jamaica has a rich sporting history and we are
committed to making a contribution as long as
we can.
21
General Accident Insurance Company Jamaica Limited. ANNUAL REPORT 2015
Our Community
Child Welfare
General Accident continues its support of the
sports club activities by providing much needed
financial assistance in cash and kind to Sophie’s
Place, a home for children with disabilities.
Education
We recognize that the fostering of educational
opportunities will go a long way to promoting
nation building. For the year under review
we supported Chess Foundation of Jamaica
through our sponsorship of the chess competition
for high schools. This year we also extended
much needed support to the Maisie Green
Early Learning Development Centre in Grants
Pen through the upgrading of the canteen,
bathrooms, classrooms and playground.
For more information, visit www.genac.com
22
Our Community
Other Support
We encourage our staff to be change leaders
and to give of self and in keeping with this
mandate our staff participated in a number of
CSR events such as; Sigma Run, Relay for Life, The
Digicel Run Walk and the annual Beach Clean
Up of the Palisadoes strip.
23
General Accident Insurance Company Jamaica Limited. ANNUAL REPORT 2015
Governance
Good corporate governance promotes sustainable
value for all our stakeholders.
Our corporate governance report describes the
structure, rules and procedures that we believe
are necessary for effective governance of the
company’s affairs.
affairs of the company and is responsible for
reviewing the strategic plans and performance
objectives, financial plans and annual budget,
key operational initiatives, major funding and
investment proposals, financial performance and
corporate governance practices. This is achieved
through the Board Committees.
General Accident is subject to the supervision of
the Financial Services Commission and as public
interest entity we are required to establish and
maintain strong corporate governance and risk
management system as well as effective internal
controls that are appropriate for our business
activities.
Our corporate governance principles are
incorporated in our corporate governance policies,
which are reviewed annually to ensure continuing
relevance and appropriateness.
Board of Directors
The Board consists of eleven (11) members under
the leadership of the chairman, Mr. Paul Scott, and
is responsible for determining the overall strategy
of the company and the supervision of senior
management. Board members are elected by
shareholders at the AGM.
We recognize that the directors’ contribution
is a key factor in our success and so board
selection
is carefully considered. Our Board
consists of individuals with wide-ranging relevant
backgrounds, experience, skills and knowledge
that create a good balance. The Board benefits
from broad educational, professional and cultural
backgrounds of its members, which collectively
include financial services, engineering, accounting
and manufacturing as well as legal and regulatory
experience.
The primary function of the Board is to provide
effective leadership and direction to enhance
long-term value to the shareholders and other
stakeholders. The Board operates the business
General meetings
Face to face meetings are held at least four (4)
times each year and more often if so warrant-
ed. This year the Board met 5 times with good
attendance from all members including a presen-
tation on the company’s reinsurance strategies.
Board committees
Board appointed committees are in place to
provide guidance and oversight on all opera-
tional and strategic matters. There are four (4)
committees currently in place: - the Compensation
Committee, the Conduct Review Committee, the
Audit Committee and the Investment and Loan
Committee.
The Compensation Committee
This committee is responsible for overseeing the
decisions on the remuneration package and to
ensure that it promotes a high performance
culture and is aligned with our risk management
principles. This committee met two (2) times during
the year and all members were present.
The Conduct Review Committee
The conduct review committee has responsibil-
ity for oversight of and advice to the Board on
policies and procedures to ensure that the
company conducts its affairs responsibly and in
keeping with our values and the broad regulatory
requirements. This committee met 4 times during
2015.
For more information, visit www.genac.com
24
Governance
The Audit Committee
Audit Committee
The committee has responsibility for the oversight
and advice to the Board on all matters relating to
financial reporting, internal controls and approval
of financial reports for distribution to external bod-
ies. The Audit Committee held five (5) meetings
with good attendance from all members.
(Chair)
Geoffery Messado
Mathew Lyn
Christopher Nakash
Duncan Stewart
Nigel Clarke
Investment and Loan Committee
Investment and Loan Committee
The Investment and Loan Committee has the respon-
sibility to drive the company’s investment strategy
ensuring that all compliance requirements are met,
inter alia liquidity, quality and term of investments.
This Committee met four (4) times and all members
were present.
Melanie Subratie
Nicholas Scott
Sharon Donaldson
Duncan Stewart
Christopher Nakash
Mathew Lyn
(Chair)
Committees composition
The composition of Board committee is governed
by regulatory dictates designed to ensure that
adequate independence is preserved.
Compensation Committee
Paul B. Scott (Chair)
Christopher Nakash
Duncan Stewart
Sharon Donaldson
Conduct Review Committee
(Chair)
Dr. Ralph Thompson
Mathew Lyn
Christopher Nakash
Duncan Stewart
Jennifer Scott
25
General Accident Insurance Company Jamaica Limited. ANNUAL REPORT 2015
General Accident Board
P.B. Scott
(appointed November 1998)
Chairman
Sharon Donaldson
(appointed March 2008)
Managing Director
P.B. Scott is the Chairman of the Company. In
addition to his role with the Company, Mr. Scott is
the Chairman, Chief Executive Officer and principal
shareholder of the Musson Group, one of the largest
privately held groups in the region with business units
in some 30 Caribbean and Central American countries
including Facey Group Limited, T. Geddes Grant
Mr. Scott serves as a Director of several
local companies and organisations
including,
Seprod and its subsidiaries (Chairman), Scotia Life
Insurance Company Limited, the Jamaica Chamber
of Commerce and the American International School
in Kingston. He currently serves as Honorary Consul
General in Jamaica for the Republic of Guatemala.
Sharon Donaldson is the Managing Director
of the Company. She has been responsible for driv-
ing its recent growth in and for overseeing its prudent
underwriting and risk management strategy.
Ms. Donaldson has been with the Company for over
25 years, first joining as the Financial Controller in
1989 before becoming Managing Director 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
University 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.
Christopher Nakash
(appointed December 2006)
Independent Non Executive Director
Christopher Nakash is an independent non
executive Director of the Board of the Company.
Mr. Nakash brings to the Board his management
experience, gained as Chief Executive Officer 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 Intelligent Multimedia
Limited. Mr. Nakash holds a BBA from University of New
Brunswick, Canada.
Melanie Subratie
(appointed March 2002)
Deputy Chairman
Melanie Subratie is the Deputy Chairman of
General Accident Insurance Company Jamaica Ltd,
and Chairman of the Investment and Loan Committee
of the Board.
Mrs. Subratie is Vice Chairman of T. Geddes
Grant Ltd. She is on the Executive Board at Seprod
Ltd, and an Executive Board member at Facey
Commodity Co. Ltd.
She also serves on the board of Falmouth
Heritage Renewal. 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 Division of Deloitte & Touche
and also worked for startup political newswire
service DeHavilland prior to returning to Jamaica
in 2002 and joining the Musson Board at that time
with responsibility for Business Development, and
specifically Managing Director of Productive
Business Solutions Ltd.
For more information, visit www.genac.com
26
General Accident Board
Geoffrey Messado
(appointed May 2001)
Non Executive Director
Jennifer Scott
(appointed December 2009)
Non Executive Director
Geoffrey Messado
is a non executive
director of the Company and is Chairman of the
Audit Committee of the Board.
Mr. Messado is also the Financial Controller of the
Musson Group, and he serves as a director of certain
subsidiaries and affiliated companies. He also serves
as Chairman of Mapco Printers Limited and as a
director of Edgechem(Jamaica) Limited, the Coffee
Industry Board, Clarendon DistillersLimited, Spirits Pool
Association and Caribbean Molasses Company
(Jamaica) Limited.
Jennifer Scott is a non executive director 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
Diploma 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
Attorney-at-Law of the Supreme Court of Jamaica.
She is a member of the legal practice of Clinton Hart
& Co., Attorneys-at-Law.
Mr. Messado is a Chartered Accountant,
FCA, FCAA, ATII. He is also the Past President of the
Jamaica Exporters Association.
Nicholas A. Scott
(appointed July 2011)
Non Executive Director
Dr. Ralph Thompson, C.D.
(appointed January 1993)
Non Executive Director
Nicholas Scott is a non executive director of
the Company. Mr. Scott is the Chief Investment Officer
of the Investment and Financial Services businesses of
the Musson Group. In that capacity he is the Manag-
ing Director of Eppley Limited. He is also a Director of
Sperod Limited. 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 (Mag-
na Cum Laude) from the Wharton School at the
University of Pennsylvania, an M.B.A (Beta Gamma
Sigma) from Columbia Business School and a M.P.A.
from the Harvard Kennedy School of Government.
Thompson
Dr. Ralph
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 Manag-
ing Director of C.D. Alexander Realty Company
Limited and was formerly the Chief Executive Officer of
Seprod 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.
27
General Accident Insurance Company Jamaica Limited. ANNUAL REPORT 2015
General Accident Board
Duncan Stewart
(appointed August 2011)
Independent Non Executive Director
Dr. Nigel L. Clarke
(appointed August 2011)
Non Executive Director
Duncan Stewart is an independent non
executive director of the Company. Mr. Stewart is the
General Manager of Stewart Motors Limited and is
also involved in related family businesses Stewart’s
Auto Sales Limited and its affiliated companies,
Stewart’s Auto Paints Limited, Tropic Island Traing
Company Limited and Silver Star Motors Limited.
Mr. Stewart joined as a third generation member
after graduating from McGill University with a B.Eng.
(Mech).
Mr. Stewart
is also a director of
the
Automobile Dealers Association and the Richard and
Diana 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.
Matthew Lyn
(appointed July 2015)
Non Executive Director
Matthew Lyn
independent non-
executive Director of the Board of the Company.
Mr. Lyn is the Chief Operating Officer of CB Group.
is an
Mr. Lyn is a past student of Campion College
and holds a Bachelor of Business Administration
(Accounting) from Emory University.
Dr. Nigel Clarke is a Non Executive Director of
the Company. Dr. Nigel Clarke is Deputy Chairman
and Chief Financial Officer of the Musson Group.
He joined the Group in 2003 as Chief Operating
Officer and played a leadership role in the expansion
of the Group from a substantially Jamaican base to a
presence in over 30 countries. In 2009 he assumed the
additional responsibilities of CEO of the Facey Group
where he led transformative transactions, improving
performance.
Dr. Clarke is a director of all the Group’s
subsidiaries and associate companies and is Deputy
Chairman of the PBS Group, and Chairman of Eppley
Limited.
He
is Chairman and co-founder of the
National Youth Orchestra of Jamaica and co-founder
and host of TEDx Jamaica, both public education
non-profit organisations. In addition, he has been a
Director of several large private and public sector
companies.
He is a recipient of the “50 Under 50 Business
Leader Award” as well as the Kiwanis Community
Service Award.
Dr. Clarke holds a B.Sc. in Mathematics from
the University of the West Indies, as well as M.Sc. and
D.Phil. degrees in Mathematics from Oxford University.
In his academic career he has been a Jamaica
Independence Scholar, a Commonwealth Scholar
and a Rhodes Scholar.
For more information, visit www.genac.com
28
Leadership Team
Maureen Hall
General Manager
Ms. Maureen Hall is the General Manager 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 appointed 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 Insurance 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 coaching committee. Ms. Hall
holds a B. Ed (Hons) degree from the University of Sussex,
England, as well as a Diploma in Mass Communication
from the University of the West Indies, and a M.B.A
from Manchester, University England. Ms. Hall is also an
associate member of the Chartered Insurance Institute
(UK).
Cheryll Henry
Human Resources & Facilities
Manager
Ms. Cheryll Henry is the Human Re¬sources
and Facilities Manager of the Company. Ms. Henry has
been with the Company for over 20 years. She joined the
Company in 1996 as an Administrative Supervisor and,
notably, within a 10 year period she rotated through
every division, and was also appointed Operations
Manager of Orrett & Musson Investment Company
Limited, a former subsidiary of the Company.
Ms. Henry holds a Bachelors degree
in
Management Studies from the University of the West
Indies and a Diploma in Human Resource Management
from the Institute of Management & Production.
29
General Accident Insurance Company Jamaica Limited. ANNUAL REPORT 2015
Leadership Team
Gregory St Hugh Foster
Chief Financial Officer.
Mr. Gregory Foster is the Chief Financial Offer
with responsibility for leading the finance, accounting
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 Department. He has
accumulated over seven years of experience
in
providing audit services to a wide spectrum of clients,
including government/public sector, financial services,
and manufacturing and distribution.
Mr. Foster is also part-time lecturer at Richmond
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)
Douglas Hayden
Information Technology Manager
Mr. Douglas Hayden join the company 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 professional certifications including Information
Technology Infrastructure Library (ITIL v3).
For more information, visit www.genac.com
30
Leadership Team
Janette Cole Smith
Compliance Manager
Janette Cole Smith is the Compliance Manager
of the Company. She rejoined 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 Accountant
and a fellow member of the Institute of Chartered
Accountants of Jamaica.
Andrea Muir Gibbs
Underwriting Manager
Mrs. Andrea Muir-Gibbs joined the company
in 2013. She is the Underwriting Manager in charge of
Underwriting and Broker Services.Mrs. Muir-Gibbs has
over 15 years of experience in the insurance industry.
She is the holder of the Jamaican Insurance
Diploma from the College of Insurance Professional
Studies and a member of the Chartered Insurance
Institute (UK) where she holds the Dip CII Designation.
31
General Accident Insurance Company Jamaica Limited. ANNUAL REPORT 2015
Leadership Team
Tracey-Ann Thompson
Operations Manager
Miss Tracey-Ann Thompson joined the company
in 2008. She is the Operations Manager for Underwriting
Department of the Company. Miss Thompson has over 7
years of experience in the insurance industry.
She is the holder of a Bachelor of Science
Degree
in Banking and Finance and
is currently
pursuing a Master of Science Degree in Enterprise Risk
Management and is a Certified Insurance Technician
from the College of Insurance Professional Studies.
Joseyane Nevers
Assistant Claims Manager
Miss Joseyane Nevers joined the company in
2009. She is the Assistant Claims Manager for the Claims
Department of the Company. Miss Nevers has over 7
years of experience in the insurance industry.
She is the holder of a Bachelor of Science
Degree in Marketing and International Business and a
LLB and holds certificates in Property, Motor and Liability
Insurance form the College of Insurance Professional
Studies.
For more information, visit www.genac.com
32
Corporate Data
Chairman
Deputy Chair
Managing Director
Directors:
P.B. Scott
Melanie Subratie
Sharon Donaldson
Ralph Thompson
Geoffrey Messado
Jennifer Scott
Christopher Nakash
Nicholas Scott
Nigel Clarke
Duncan Stewart
Matthew Lyn
CORPORATE SECRETARY:
Geoffrey Messado
APPOINTED ACTUARY:
Josh Worsham, FCAS, MAAA
AUDITORS:
PricewaterhouseCoopers
BANKERS
First Caribbean International Bank
LEADERSHIP TEAM:
Managing Director
Sharon Donaldson
Maureen Hall General Manager
Gregory Foster
Cheryll Henry Human Resources & Facilities Manager
Andrea Muir Gibbs
Douglas Hayden
Janette Cole Smith Compliance Manager
Tracey-Ann Thompson
Joseyane Nevers
Underwriting Manager
Information Technology Manager
Operations Manager
Assistant Claims Manager
Chief Financial Officer
ATTORNEYS:
DunnCox
Kingston, Jamaica W.I.
Patterson Mair Hamilton
REGISTERED OFFICE:
58 Half Way Tree Road
Telephone: (876) 929-2451
Fax: (876)929-1074
Email: info@genac.com
Website: www.genac.com
Registrar:
Jamaica Central Securities Depository
33
General Accident Insurance Company Jamaica Limited. ANNUAL REPORT 2015
Disclosure of Shareholdings
SHAREHOLDINGS OF TOP 10 SHAREHOLDERS
Shareholders
Shares
Percentage
1. Musson Jamaica Limited
824,999,989
80.00
2. Mayberry West Indies Limited
3. Apex Pharmacy
4. Mayberry Managed Client Account
5. First Caribbean Int’l Sec. Ltd. A/C B.U.T
6. Lloyd Badal
32,081,629
11,588,279
6,235,894
5,174,666
5,000,000
7. JCSD Trustee Services Ltd. Sigma Optima
4,801,700
8. Barita Investments Ltd Long A/C (Trading)
4,571,693
9. Sagicor Pooled Equity Fund
10. P.A.M Ltd – Pooled Pension Equity Fund
4,251,700
4,128,000
3.11
1.12
0.60
0.50
0.48
0.47
0.44
0.41
0.40
Shareholdings of Directors
Director/Connected persons
P.B. Scott
Musson Jamaica Limited
Melanie Subratie
Musson Jamaica Limited
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
Matthew Lyn
Shares
Nil
824,999.989
Nil
824,999,989
3,250,000
200,198
177,758
2,475,248
2,475,190
1,980,198
1,698,020
1,000,000
Nil
Nil
Nil
For more information, visit www.genac.com
34
Disclosure of Shareholdings
Shareholdings of the Management Team
Manager/Connected Person
Maureen Hall
And Anthony Dunbar
And Errol Kellyman
Cheryll Henry
Gregory Foster
Douglas Hayden
Andrea Muir Gibbs
Janette Cole-Smith
Tracey Thompson
Joseyane Nevers
2,362,000
38,000
1,980,198
350,000
Nil
Nil
Nil
50,000
Nil
35
General Accident Insurance Company Jamaica Limited. ANNUAL REPORT 2015
Appendices
For more information, visit www.genac.com
General Accident
Insurance Company
Jamaica Limited
Financial Statements
31 December 2015
General Accident Insurance Company Jamaica Limited
Index
31 December 2015
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 - 55
Independent Auditor’s Report
To the Members of
General Accident Insurance Company Jamaica Limited
Report on the Financial Statements
We have audited the accompanying financial statements of General Accident Insurance Company Jamaica
Limited, set out on pages 1 to 55, which comprise the statement of financial position as at 31 December
2015, and the statements of comprehensive income, changes in equity and cash flows for the year then
ended, and notes, comprising a summary of significant accounting policies and other explanatory
information.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation of financial statements that give a true and fair view in
accordance with International Financial Reporting Standards and with the requirements of the Jamaican
Companies Act, and for such internal control as management determines is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud or
error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted
our audit in accordance with International Standards on Auditing. Those standards require that we
comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditor’s judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the entity’s
preparation of financial statements that give a true and fair view in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies
used and the reasonableness of accounting estimates made by management, as well as evaluating the
overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
PricewaterhouseCoopers, Scotiabank Centre, Duke Street, Box 372, Kingston, Jamaica
T: 876 922 6230, F: 876 922 7581, www.pwc.com/jm
L.A. McKnight P.E. Williams L.E. Augier A.K. Jain B.L. Scott B.J. Denning G.A. Reece P.A. Williams R.S. Nathan
C.I. Bell-Wisdom D.D. Dodd G.K. Moore
Members of General Accident Insurance Company Jamaica Limited
Independent Auditor’s Report
Page 2
Opinion
In our opinion, the financial statements give a true and fair view of the financial position of General
Accident Insurance Company Jamaica Limited as at 31 December 2015 and of its financial performance
and its cash flows for the year then ended in accordance with International Financial Reporting Standards
and the requirements of the Jamaican Companies Act.
Report on Other Legal and Regulatory Requirements
As required by the Jamaican Companies Act, we have obtained all the information and explanations
which, to the best of our knowledge and belief, were necessary for the purposes of our audit.
In our opinion, proper accounting records have been kept, so far as appears from our examination of those
records, and the accompanying financial statements are in agreement therewith and give the information
required by the Jamaican Companies Act, in the manner so required.
Chartered Accountants
31 March 2016
Kingston, Jamaica
General Accident Insurance Company Jamaica Limited
Statement of Comprehensive Income
Year ended 31 December 2015
(expressed in Jamaican dollars unless otherwise indicated)
Page 1
Gross Premiums Written
Reinsurance ceded
Excess of loss reinsurance cost
Net premiums written
Changes in unearned premiums, net
Net Premiums Earned
Commission income
Commission expense
Claims expense
Management expenses
Underwriting Profit
Investment income
Other income
Other operating expenses
Profit before Taxation
Taxation
Net Profit for the Year
Other Comprehensive Income:
Items that may be subsequently reclassified to profit or loss
Unrealised gains on available-for-sale investments
Tax credit
Total Other Comprehensive Income
TOTAL COMPREHENSIVE INCOME
Note
2015
$’000
2014
$’000
6,112,355
5,072,375
(4,832,142)
(3,878,197)
(89,248)
(127,640)
1,190,965
1,066,538
(70,910)
2,560
1,120,055
1,069,098
361,886
(224,443)
10
(696,480)
(446,362)
114,656
175,653
45,391
(32,252)
303,448
970
11
12
15
335,967
(182,938)
(678,558)
(441,628)
101,941
160,396
88,124
(30,496)
319,965
113
304,418
320,078
61,288
2,428
63,716
6,192
46
6,238
368,134
326,316
EARNINGS PER SHARE
16
$0.30
$0.31
General Accident Insurance Company Jamaica Limited
Statement of Changes in Equity
Year ended 31 December 2015
(expressed in Jamaican dollars unless otherwise stated)
Page 3
Balance at 31 December 2013
470,358
152,030
48,323
786,233
1,456,944
Share
Capital
$’000
Capital
Reserves
$’000
Fair Value
Reserve
$’000
Retained
Earnings
$’000
Note
Total
$’000
Comprehensive income :
Net profit for the year
Other comprehensive income
Total comprehensive income
Transactions with owners
Dividends
17
-
-
-
-
-
-
-
-
-
320,078
320,078
6,238
6,238
-
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
Comprehensive income :
Net profit for the year
Other comprehensive income
Total comprehensive income
Transactions with owners
Dividends
17
-
-
-
-
-
-
-
-
-
304,418
304,418
63,716
63,716
-
63,716
304,418
368,134
-
(172,219)
(172,219)
Balance at 31 December 2015
470,358
152,030
118,277
1,034,632
1,775,297
General Accident Insurance Company Jamaica Limited
Statement of Cash Flows
Year ended 31 December 2015
(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
Gains on unit trust funds
Gain on disposal of property, plant and equipment
Interest income
Dividend income
Deferred taxation
Foreign exchange gains
Increase in deferred policy acquisition cost
Increase/(decrease) 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 repaid
Acquisition of property, plant and equipment
Acquisition of intangible asset
Proceeds from disposal of property, plant and equipment
Proceeds from disposal and maturity of investments
Dividend received
Interest received
Net cash (used in)/provided by investing activities
Cash Flows from Financing Activities
Dividends paid
Net cash used in by financing activities
(Decrease)/increase in cash and cash equivalents
Effect of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at beginning of year
CASH AND CASH EQUIVALENTS AT END OF THE YEAR (NOTE 18)
Note
2015
$’000
2014
$’000
304,418
320,078
25
26
11
11
12
11
11
15
25
26
17
27,665
4,587
5,166
(6,957)
(1,741)
(151,092)
(11,961)
(970)
(26,159)
(22,142)
174,792
295,606
(183,458)
(16,505)
(409)
24,887
4,726
55,235
180,082
(22,717)
157,365
(636,818)
-
32,051
(59,767)
(711)
2,710
252,345
12,778
131,397
(266,015)
24,066
6,430
2,790
-
-
(147,652)
(7,789)
(113)
(79,354)
(39,273)
(376,085)
(296,902)
128,790
1,577
(2,076)
(3,294)
(2,153)
383,714
209,656
(26,162)
183,494
(486,646)
(143,549)
51,514
(52,584)
(730)
-
543,377
6,972
148,578
66,932
(172,219)
(172,219)
(280,869)
10,658
1,272,527
1,002,316
(203,878)
(203,878)
46,548
56,449
1,169,530
1,272,527
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2015
(expressed in Jamaican dollars unless otherwise indicated)
Page 5
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 insurance company under the Insurance Act, 2001. Its principal
activity is the underwriting of commercial and personal property and casualty insurance.
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.
Standards, interpretations and amendments to published standards effective in the current year
Certain new accounting standards, interpretations and amendments to existing standards have been
published that became effective during the current financial year. The company has assessed the relevance
of all such new standards, interpretations and amendments and and has adopted the following which are
relevant to its operations:
Annual Improvements 2012, (effective for annual periods beginning on or after 1 July 2014, unless
otherwise stated below). The improvements comprise changes to a number of standards, the following of
which are relevant to the company’s operations.
IFRS 3 was amended to clarify that (1) an obligation to pay contingent consideration which meets the
definition of a financial instrument is classified as a financial liability or as equity, on the basis of the
definitions in IAS 32, and (2) all non-equity contingent consideration, both financial and non-financial, is
measured at fair value at each reporting date, with changes in fair value recognised in profit and loss.
Amendments to IFRS 3 are effective for business combinations where the acquisition date is on or after
1 July 2014.
IFRS 8 was amended to require (1) disclosure of the judgements made by management in aggregating
operating segments, including 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, and (2) a reconciliation of segment assets to the entity’s assets when
segment assets are reported.
The basis for conclusions on IFRS 13 was amended to clarify that deletion of certain paragraphs in IAS
39 upon publishing of IFRS 13 was not made with an intention to remove the ability to measure short-
term receivables and payables at invoice amount where the impact of discounting is immaterial.
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2015
(expressed in Jamaican dollars unless otherwise indicated)
Page 6
2. Summary of Significant Accounting Policies (Continued)
(a) Basis of preparation (continued)
Standards, interpretations and amendments to published standards effective in the current year
(continued)
Annual Improvements 2012 (continued)
IAS 24 was amended to include, as a related party, an entity that provides key management personnel
services to the reporting entity or to the parent of the reporting entity (‘the management entity’), and to
require to disclose the amounts charged to the reporting entity by the management entity for services
provided. There was no significant impact from adoption of these amendments during the year.
Annual Improvements 2013, (effective for annual periods beginning on or after 1 July 2014). The
improvements consist of changes to a number of standards, of which the following are relevant to the
company’s operations.
IFRS 13 was amended to clarify that the portfolio exception in IFRS 13, which allows an entity to measure
the fair value of a group of financial assets and financial liabilities on a net basis, applies to all contracts
(including contracts to buy or sell non-financial items) that are within the scope of IAS 39 or IFRS 9.
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 was no significant impact from adoption of these amendments during the year.
Standards, interpretations and amendments to published standards that are not yet effective
At the date of authorisation of 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:
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.
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.
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2015
(expressed in Jamaican dollars unless otherwise indicated)
Page 7
2. Significant Accounting Policies (Continued)
(a) Basis of preparation (continued)
Standards, interpretations and amendments to published standards that are not yet effective
(continued)
IFRS 9, ‘Financial instruments’, addresses the classification, measurement and recognition of financial
assets and financial liabilities.The complete version of IFRS 9 was issued in July 2015. It 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.
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 result of a
convergence project between the two Boards. IFRS 15 applies to nearly all contracts 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 informative, relevant
disclosures. The standard supersedes IAS 18, 'Revenue', IAS 11, '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.
IFRS 16, ‘Leases’, (effective for annual periods beginning on or after 1 January 2019). In January 2016,
the IASB published IFRS 16 which replaces the current guidance in IAS 17. Under IAS 17, lessees were
required to make a distinction between a finance lease (on balance sheet) and an operating lease (off
balance sheet). IFRS 16 now requires lessees to recognise a lease liability reflecting future lease
payments and a ‘right-of-use asset’ for virtually all lease contracts. There is an optional exemption for
lessees
assets.
The company is assessing the impact of future adoption of the amendments on its financial statements.
short-term
low-value
certain
leases
leases
and
for
of
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2015
(expressed in Jamaican dollars unless otherwise indicated)
Page 8
2. Significant Accounting Policies (Continued)
(a) Basis of preparation (continued)
Standards, interpretations and amendments to published standards that are not yet effective
(continued)
Amendments to IAS 16 and IAS 38 (effective for annual period beginning on or after 1 January 2016)
The amendments clarify that a revenue-based method of depreciation or amortisation is generally not
appropriate. The IASB has amended IAS 16 Property, Plant and Equipment to clarify that a revenue-
based method should not be used to calculate the depreciation of items of property, plant and equipment.
IAS 38 Intangible Assets now includes a rebuttable presumption that the amortisation of intangible assets
based on revenue is inappropriate. This presumption can be overcome if either
(i)
(ii)
The intangible asset is expressed as a measure of revenue (ie where a measure of revenue is the
limiting factor on the value that can be derived from the asset), or
It can be shown that revenue and the consumption of economic benefits generated by the asset
are highly correlated
Amendment to IAS 1, ‘Presentation of Financial Statements’, (effective for annual periods
beginning on or after 1 January 2016). This amendment forms part of the IASB’s Disclosure Initiative,
which explores how financial statement disclosures can be improved. It clarifies guidance in IAS 1 on
materiality and aggregation, the presentation of subtotals, the structure of financial statements and the
disclosure of accounting policies. The amendment also clarifies that the share of other comprehensive
income (OCI) of associates and joint ventures accounted for using the equity method must be
presented in aggregate as a single line item, classified between those items that will or will not be
subsequently reclassified to profit or loss. The company is currently assessing the impact of future
adoption of the amendments on its financial statements.
Annual Improvements 2014, (effective for annual periods beginning on or after 1 January 2016). The
improvements consist of changes to a number of standards, of which the following may be relevant to
the Company’s operations. The amendment of IFRS 13 clarifies that the portfolio exception in IFRS
13, which allows an entity to measure the fair value of a group of financial assets and financial liabilities
on a net basis, applies to all contracts (including contracts to buy or sell non-financial items) that are
within the scope of IAS 39 or IFRS 9. The company is currently assessing the impact of future adoption
of the new standard on its financial statements.
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 2015
(expressed in Jamaican dollars unless otherwise indicated)
2. Summary of Significant Accounting Policies (Continued)
Page 9
(b) Revenue and income recognition
Revenue comprises the fair value of the consideration received or receivable for the provision of services in
the ordinary course of the company’s activities. Revenue is shown net of General Consumption Tax and is
recognised as follows:
Insurance services
Gross premiums written are recognised on a pro-rated basis over the life of the policies written. The portion
of premiums written in the current year which relates to coverage in subsequent years is deferred as unearned
premiums (Note 2(p)(i)).
Commissions payable on premium income and commissions receivable on reinsurance of risks are charged
and credited to profit or loss, respectively, over the life of the policies.
Interest income
Interest income is recognised on a time-proportion basis using the effective interest method. When a
receivable is impaired, the company reduces the carrying amount to its recoverable amount, being the
estimated future cash flow discounted at the original effective interest rate of the instrument, and continues
unwinding the discount as interest income.
Dividend
Dividend income for equities is recognised when the right to receive payment is established.
Rental income
Rental income is recognised on an accrual basis.
(c) Foreign currency translation
(i) Functional and presentation currency
Items included in the financial statements of the company are measured using the currency of the primary
economic environment in which it operates (the functional currency). The financial statements are
presented in Jamaican dollars which is also the company’s functional currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates
prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at year-end exchange rates of monetary assets
and liabilities denominated in foreign currencies are recognised in profit or loss.
Translation differences resulting from changes in the amortised cost of foreign currency monetary assets
classified as available-for-sale are recognised in profit or loss. Other changes in the fair value of these
assets are recognised in other comprehensive income. Translation differences on non-monetary financial
assets classified as available-for-sale are reported as a component of the fair value gain or loss in other
comprehensive income.
(d) Financial instruments
Financial instruments carried on the statement of financial position include investments, due to and from related
parties, due to and from reinsurers and coinsurers, due from policyholders, brokers and agents, loans and other
receivables, cash and short term investments, other liabilities and claims liabilities. The particular recognition
methods adopted are disclosed in the individual policy statements associated with each item.
The fair values of the company’s financial instruments are discussed in Note 6.
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2015
(expressed in Jamaican dollars unless otherwise indicated)
2. Summary of Significant Accounting Policies (Continued)
Page 10
(e) Cash and cash equivalents
Cash and cash equivalents are stated at cost. For purposes of the cash flow statement, cash and cash
equivalents comprise balances with maturity dates of less than 90 days from the dates of acquisition including
cash and bank balances and deposits held on call with banks.
(f) Investments
Investments are classified as held-to-maturity, available-for-sale and fair value through profit or loss.
Management determines the appropriate classification of investments at the time of purchase. Purchases and
sales of investments are recognised on the trade date, which is the date that the company commits to
purchase or sell the asset.
(i)
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.
Equity securities for which fair values cannot be measured reliably are recognised at cost less impairment.
When securities classified as available-for-sale are sold or impaired, the accumulated fair value
adjustments in equity at the date of disposal or impairment are reclassified to profit or loss.
(iii) Impairment of financial assets
A financial asset is considered impaired if its carrying amount exceeds its estimated recoverable amount.
The company assesses at each year end whether there is objective evidence that a financial asset or
group of financial assets is impaired. The amount of the impairment loss for assets carried at amortised
cost is calculated as the difference between the asset’s carrying amount and the present value of
expected future cash flows discounted at the original effective interest rate. The recoverable amount of
a financial asset carried at fair value is the present value of expected future cash flows discounted at the
current market interest rate for a similar financial asset. In the case of equity securities classified as
available-for-sale, a significant or prolonged decline in the fair value of the security below its cost is
considered as an indicator that the securities are impaired. If any such evidence exists for available-for-
sale financial assets, the cumulative loss - measured as the difference between the acquisition cost and
the current fair value, less any impairment loss on that financial asset previously recognised in other
comprehensive income – is recycled through other comprehensive income and recognised in profit or
loss for the current year. Impairment losses recognised in profit or loss on equity instruments are not
reversed through profit or loss.
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2015
(expressed in Jamaican dollars unless otherwise indicated)
2. Summary of Significant Accounting Policies (Continued)
Page 11
(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 2015
(expressed in Jamaican dollars unless otherwise indicated)
2. Summary of Significant Accounting Policies (Continued)
Page 12
(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.
result of
Casualty insurance contracts protect the company’s customers against the risk of causing harm to third parties
as a
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).
legitimate activities. Damages covered
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 2015
(expressed in Jamaican dollars unless otherwise indicated)
2. Summary of Significant Accounting Policies (Continued)
Page 13
(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. If there is objective evidence that the reinsurance
asset is impaired, the Company reduces the carrying amount of the reinsurance asset to its recoverable amount
and recognises that impairment loss in profit or loss.
(l) Deferred policy acquisition costs
The cost of acquiring and renewing insurance contracts, including commissions, underwriting and policy issue
expenses, which vary with and are directly related to the contracts, are deferred over the unexpired period of
risk carried. Deferred policy acquisition costs are subject to recoverability testing at the time of policy issue
and at the end of each accounting period.
(m) Property, plant and equipment
Land is stated at historical cost. All other property, plant and equipment are stated at historical cost less
accumulated depreciation and impairment. Depreciation is computed on the straight line method at rates
estimated to write off the assets over their expected useful lives as follows:
Buildings
Furniture, fixtures and equipment
Motor vehicles
5% and 2.5%
10%
25%
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2015
(expressed in Jamaican dollars unless otherwise indicated)
Page 14
2. Summary of Significant Accounting Policies (Continued)
(m) Property, plant and equipment (continued)
Property, plant and equipment are reviewed periodically for impairment. Where the carrying amount of an
asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable
amount. Gains and losses on disposals are determined by comparing proceeds with carrying amount and
are included in operating profit.
Repairs and maintenance expenses are charged to profit or loss during the financial period in which they are
incurred. The cost of major renovations is included in the carrying amount of the asset when it is probable that
future economic benefits in excess of the originally assessed standard of performance of the existing asset
will flow to the 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 statement
of financial position and is computed by applying the “365th” method to gross written premiums for the
period, except for marine where the unearned premium reserve is calculated as 20% of the year’s gross
written premiums.
(ii) Unearned commission
The unearned commission represents the actual commission income on premium ceded on proportional
reinsurance contracts relating to the unexpired period of risk carried. The income is deferred as unearned
commission reserves, and amortised over the period in which the commissions are expected to be earned.
These reserves are calculated on the 365th method.
(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 2015
(expressed in Jamaican dollars unless otherwise indicated)
Page 15
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.
(v) The provision for unexpired period of risks is determined by the appointed actuary and represents the
expected future costs associated with the unexpired portion of policies in force as of the reporting date,
in excess of the net unearned premium minus deferred policy acquisition costs
(vi) At the end of each reporting period, liability adequacy tests are performed to ensure the adequacy of the
policy liabilities, net of related deferred policy acquisition costs. In performing these tests, current best
estimates of future contractual cashflows are compared to the carrying amount of policy liabilities and
any deficiency is immediately recognised in profit or loss as unexpired risk provision.
(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.
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2015
(expressed in Jamaican dollars unless otherwise indicated)
Page 16
2. Summary of Significant Accounting Policies (Continued)
(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.
(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 2015
(expressed in Jamaican dollars unless otherwise indicated)
3. Responsibilities of the Appointed Actuary and External Auditors
Page 17
The Board of Directors, pursuant to the Insurance Act, appoints the Actuary. His responsibility is to carry out an
annual valuation of the company’s claims liabilities and insurance reserves in accordance with accepted actuarial
practice and regulatory requirements and report thereon to the shareholders. In performing the valuation, the Actuary
analyses past experience with respect to number of claims, claims payment and changes in estimates of outstanding
liabilities.
The shareholders, pursuant to the Companies Act, appoint the external auditors. Their responsibility is to conduct
an independent and objective audit of the financial statements in accordance with International Standards on
Auditing and report thereon to the shareholders. In carrying out their audit, the auditors also make use of the work
of the appointed Actuary and his report on claims liabilities and insurance reserves.
4.
Insurance and Financial Risk Management
(a) Insurance risk
The company’s activities expose it to a variety of insurance and financial risks and those activities necessitate
the analysis, evaluation, control and/or acceptance of some degree of risk or combination of risks. Taking
various types of risk is core to the financial services business and operational risks are an inevitable
consequence of being in business. The company’s aim is therefore to achieve an appropriate balance
between risk and return and minimise potential adverse effects on the company’s financial performance.
The Board of Directors is ultimately responsible for the establishment and oversight of the risk management
framework. The Board of Directors has established committees and departments for managing and monitoring
risks, as follows:
(i)
Investment and Loan Committee
The Investment and Loan Committee is responsible for monitoring and approving investment strategies
for the company.
(ii) Finance Department
The Finance Department is responsible for managing the company’s assets and liabilities and the
overall financial structure. It is also primarily responsible for managing the funding and liquidity risks of
the company.
(iii) Conduct Review Committee
The Conduct Review Committee is responsible for monitoring the company’s adherence to regulatory
and statutory requirements.
(iv) Audit Committee
The Audit Committee oversees how management monitors compliance with the company’s risk
management policies and procedures and reviews the adequacy of the risk management framework in
relation to the risks faced by the company.
(v) Remuneration Committee
The remuneration committee is responsible for reviewing and recommending for approval, the
remuneration arrangements of the directors and senior officers.
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2015
(expressed in Jamaican dollars unless otherwise indicated)
Page 18
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
reject fraudulent claims. Where applicable, contracts are underwritten by reference to the commercial
replacement value of the properties or other assets and contents insured. Claims payment limits are always
included to cap the amount payable on occurrence of the insured event. The cost of rebuilding properties, of
replacement or indemnity for other assets and contents and time taken to restart operations for business
interruption are the key factors that influence the level of claims under these policies.
Claims on insurance contracts are payable on a claims-occurrence basis. The company is liable for all insured
events that occurred during the term of the contract, even if the loss is discovered after the end of the contract
term. This is however subject to the policy limit. Liability claims are settled over a long period of time and a
portion of the claims provision relates to incurred but not reported (IBNR) claims. There are several variables
that affect the amount and timing of cash flows from these contracts. These mainly relate to the inherent risks
of the business activities carried out by individual contract holders and the risk management procedures they
adopted. The compensation paid on these contracts is the monetary awards granted for bodily injury suffered
by employees (for employer’s liability covers) or members of the public (for public liability covers). Such awards
are lump-sum payments that are calculated as the present value of the lost earnings and rehabilitation
expenses that the injured party will incur as a result of the accident.
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2015
(expressed in Jamaican dollars unless otherwise indicated)
Page 19
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, it is likely that the final outcome will prove to be different from the original liability established. The
liability for these contracts comprises a provision for IBNR, a provision for reported claims not yet paid and a
provision for unexpired risks at the date of financial position. The amount of casualty claims is particularly
sensitive to the level of court awards and to the development of legal precedent on matters of contract and tort.
Casualty contracts are also subject to the emergence of new types of latent claims, but no allowance is included
for this at the date of the statement of financial position.
In calculating the estimated cost of unpaid claims (both reported and not), the company uses estimation
techniques that are a combination of loss-ratio-based estimates (where the loss ratio is defined as the ratio
between the ultimate cost of insurance claims and insurance premiums earned in a particular financial year in
relation to such claims) and an estimate based upon actual claims experience using predetermined formulae
where greater weight is given to actual claims experience as time passes.
The initial loss-ratio estimate is an important assumption in the estimation technique and is based on previous
years’ experience, adjusted for factors such as premium rate changes, anticipated market experience and
historical claims inflation. The initial estimate of the loss ratios used for the current year (before reinsurance) is
analysed by type of risk for current and prior year premiums earned.
The estimation of IBNR is generally subject to a greater degree of uncertainty than the estimation of the cost
of settling claims already notified to the company, where information about the claim event is available. IBNR
claims may not be apparent to the insured until many years after the event that gave rise to the claims. For
casualty contracts, the IBNR proportion of the total liability is high and will typically display greater variations
between initial estimates and final outcomes because of the greater degree of difficulty of estimating these
liabilities.
In estimating the liability for the cost of reported claims not yet paid, the company considers any information
available from loss adjusters and information on the cost of settling claims with similar characteristics in
previous periods. Large claims are assessed on a case-by-case basis or projected separately in order to allow
for the possible distortive effect of their development and incidence on the rest of the portfolio.
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2015
(expressed in Jamaican dollars unless otherwise indicated)
4.
Insurance and Financial Risk Management (Continued)
Page 20
(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
2015
2014
Policy
Limit
’000
Maximum
Net Retention
’000
Policy
Limit
’000
Maximum
Net Retention
’000
US$7,000
US$7,000
US$5,000
J$40,000
US$750
J$10,000
J$30,000
J$5,000
J$5,000
J$5,000
J$40,000
J$5,000
J$7,500
US$700
US$700
US$125
J$20,000
US$125
J$5,000
J$2,000
J$1,000
J$1,000
J$1,000
J$8,000
J$1,000
J$1,500
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$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
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2015
(expressed in Jamaican dollars unless otherwise indicated)
Page 21
4.
Insurance and Financial Risk Management (Continued)
(a) Insurance risk (continued)
Sensitivity Analysis of Actuarial Liabilities
The determination of actuarial liabilities is sensitive to a number of assumptions, and changes in those
assumptions could have a significant effect on the valuation results.
In applying the noted methodologies, the following assumptions were made:
(i) Claims inflation has remained relatively constant and there have been no material legislative changes in
the Jamaican civil justice system that would cause claim inflation to increase dramatically.
(ii) There is no latent environmental or asbestos exposure embedded in the company’s loss history.
(iii) The company’s case reserving and claim payments rates have remained, and will remain, relatively
constant.
(iv) The overall development of claims costs gross of reinsurance is not materially different from the
development of claims costs net of reinsurance. This assumption is supported by the following:
The majority of the company’s reinsurance program consists of proportional reinsurance agreements;
and
The company’s non-proportional reinsurance agreements consist primarily of high attachment points.
(v) Claims are expressed at their estimated ultimate undiscounted value, in accordance with the requirement
of the Insurance Act, 2001.
ScenarioTesting:
The two major assumptions that determine reserve levels are:
The selection of a-priori loss ratios within the Bornhuetter-Ferguson methods
The selection of loss development factors.
These factors have been stochastistically modelled using various confidence intervals to determine the impact
on the net reserves. The net reserves of $1,056,307,000 (Note 30) were determined at the 50% confidence
interval. Had
reserves would
the confidence
increase/(decrease) by $42,312,000/($52,761,000).
increased/(decreased) by 10%,
the net
interval
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2015
(expressed in Jamaican dollars unless otherwise indicated)
4.
Insurance and Financial Risk Management (Continued)
(a) Insurance risk (continued)
Page 22
Development Claim Liabilities
In addition to sensitivity analysis, the development of insurance liabilities provides a measure of the company’s ability to estimate the ultimate value of claims. The table below illustrates how the company’s estimate of the ultimate
claims liability for accident years 2010 - 2015 has changed at successive year-ends, up to 2015. 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.
2008
2008
2009
2009
2010
2010
2011
and
prior
$’000
$’000
and
prior
$’000
$’000
and
prior
$’000
$’000
$’000
2011
and
prior
$’000
2012
2012
2013
2013
2014
2014
2015
And
Prior
$’000
$’000
and
prior
$’000
and
prior
$’000
$’000
$’000
$’000
2015
and
prior
$’000
2008
Paid during year
180,368
258,800
UCAE, end of year
150,154
305,606
IBNR, end of year
30,030
58,733
Ratio: excess
(deficiency)
-
-
-
-
2009
Paid during year
92,444
155,743
175,935
331,678
UCAE, end of year
85,910
147,754
200,976
348,730
IBNR, end of year
10,644
15,037
58,042
73,079
Ratio: excess
(deficiency)
2010
Paid during year
UCAE, end of year
IBNR, end of year
Ratio: excess
(deficiency)
(4.89%)
12.57%
-
-
-
-
54,841
50,182
3,698
77,304
92,674
4,809
98,674
175,978
171,620
347,598
96,738
189,412
235,477
424,889
9,744
14,553
68,193
82,746
(11.64%)
9.28%
20.79%
9.93%
-
-
-
-
2011
Paid during year
18,688
41,616
38,747
80,363
100,861
181,224
183,148
364,372
UCAE, end of year
36,714
58,059
61,664
119,722
120,936
240,659
232,245
472,903
IBNR, end of year
Ratio: excess
626
1,005
6,200
7,205
15,834
23,039
65,680
88,719
(deficiency)
(12.84%)
8.40%
20.74%
9.14%
21.75%
12.35%
2012
Paid during year
UCAE, end of year
IBNR, end of year
Ratio: excess
11,894
24,107
3,105
16,962
43,065
3,105
16,227
45,535
5,154
33,189
88,599
8,260
43,783
76,972
142,264
219,236
210,963
210,963
60,033
148,633
155,272
303,904
272,082
575,987
8,241
16,501
20,258
36,759
60,864
97,263
(deficiency)
(13.82%)
7.29%
21.11%
8.4%
29.89%
16.61%
(6.67%)
0.31%
-
-
2013
Paid during year
UCAE, end of year
IBNR, end of year
Ratio: excess
14,337
13,342
-
22,490
31,074
-
11,394
35,281
2,993
33,884
66,043
2,993
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
(deficiency)
(14.63%)
5.26%
21.35%
6.79%
28.44%
14.41%
(13.13%)
(5.11%)
(3.91%)
(6.44%)
-
-
-
-
2014
Paid during year
UCAE, end of year
IBNR, end of year
Ratio: excess
6,057
5,645
3,488
14,240
24,046
4,463
4,151
31,526
2,399
18,391
55,572
6,862
9,763
35,219
4,258
28,154
90,791
11,120
46,319
94,206
5,984
74,473
54,090
128,563
152,205
280,768
222,509
503,277
184,997
129,287
314,284
190,624
504,908
322,488
827,396
17,104
17,729
34,833
33,965
68,798
76,216
145,014
(deficiency)
(15.10%)
2.05%
21.58%
4.17%
28.29%
12.14%
(20.19%)
(10.90%)
(7.55%)
(13.08%)
(2.97%)
(6.95%)
2015
Paid during year
UCAE, end of year
IBNR, end of year
Ratio: excess
501
5,496
1,700
5,776
9,200
18,688
23,763
1,701
4,329
14,976
42,451
6,030
8,438
22,031
3,542
23,414
64,482
9,572
25,812
49,226
49,137
98,363
60,574
158,937
185,354
344,291
269,589
613,880
69,795
134,277
83,192
217,469
139,704
357,173
207,194
564,367
334,705
899,072
5,463
15,035
7,898
22,933
18,455
41,388
31,594
72,982
84,310
157,292
(deficiency)
(14.30%)
2.70%
20.28%
3.92%
30.09%
13.01%
(20.48%)
(10.27%)
(5.51%)
(11.54%)
(1.37%)
(4.93%)
(6.38%)
(0.95%)
-
-
-
-
-
-
-
-
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2015
(expressed in Jamaican dollars unless otherwise indicated)
4.
Insurance and Financial Risk Management (Continued)
(a) Insurance risk (continued)
Development Claim Liabilities
2008
Paid during year
180,368
258,800
UCAE, end of year
150,154
305,606
IBNR, end of year
30,030
58,733
Ratio: excess
(deficiency)
-
-
2009
Paid during year
92,444
155,743
175,935
331,678
UCAE, end of year
85,910
147,754
200,976
348,730
IBNR, end of year
10,644
15,037
58,042
73,079
-
-
-
-
(4.89%)
12.57%
54,841
50,182
3,698
77,304
92,674
4,809
98,674
175,978
171,620
347,598
96,738
189,412
235,477
424,889
9,744
14,553
68,193
82,746
-
-
-
-
2011
Paid during year
18,688
41,616
38,747
80,363
100,861
181,224
183,148
364,372
(11.64%)
9.28%
20.79%
9.93%
-
-
UCAE, end of year
36,714
58,059
61,664
119,722
120,936
240,659
232,245
472,903
626
1,005
6,200
7,205
15,834
23,039
65,680
88,719
Ratio: excess
(deficiency)
2010
Paid during year
UCAE, end of year
IBNR, end of year
Ratio: excess
(deficiency)
IBNR, end of year
Ratio: excess
2012
Paid during year
UCAE, end of year
IBNR, end of year
Ratio: excess
2013
Paid during year
UCAE, end of year
IBNR, end of year
Ratio: excess
2014
Paid during year
UCAE, end of year
IBNR, end of year
Ratio: excess
2015
Paid during year
UCAE, end of year
IBNR, end of year
Ratio: excess
Page 22
In addition to sensitivity analysis, the development of insurance liabilities provides a measure of the company’s ability to estimate the ultimate value of claims. The table below illustrates how the company’s estimate of the ultimate
claims liability for accident years 2010 - 2015 has changed at successive year-ends, up to 2015. 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.
2008
2008
2009
2009
2010
2010
2011
2012
2012
2013
2013
2014
2014
2015
and
prior
$’000
and
prior
$’000
and
prior
$’000
$’000
$’000
$’000
$’000
$’000
$’000
and
prior
$’000
$’000
and
prior
$’000
$’000
2011
and
prior
$’000
And
Prior
$’000
2015
and
prior
$’000
(deficiency)
(12.84%)
8.40%
20.74%
9.14%
21.75%
12.35%
11,894
24,107
3,105
16,962
43,065
3,105
16,227
45,535
5,154
33,189
88,599
8,260
43,783
76,972
142,264
219,236
210,963
210,963
60,033
148,633
155,272
303,904
272,082
575,987
8,241
16,501
20,258
36,759
60,864
97,263
(deficiency)
(13.82%)
7.29%
21.11%
8.4%
29.89%
16.61%
(6.67%)
0.31%
-
-
-
-
14,337
13,342
-
22,490
31,074
-
11,394
35,281
2,993
33,884
66,043
2,993
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
(deficiency)
(14.63%)
5.26%
21.35%
6.79%
28.44%
14.41%
(13.13%)
(5.11%)
(3.91%)
(6.44%)
-
-
-
-
14,240
24,046
4,463
4,151
31,526
2,399
18,391
55,572
6,862
9,763
35,219
4,258
28,154
90,791
11,120
46,319
94,206
5,984
74,473
54,090
128,563
152,205
280,768
222,509
503,277
184,997
129,287
314,284
190,624
504,908
322,488
827,396
17,104
17,729
34,833
33,965
68,798
76,216
145,014
(deficiency)
(15.10%)
2.05%
21.58%
4.17%
28.29%
12.14%
(20.19%)
(10.90%)
(7.55%)
(13.08%)
(2.97%)
(6.95%)
-
-
-
-
5,776
9,200
18,688
23,763
1,701
4,329
14,976
42,451
6,030
8,438
22,031
3,542
23,414
64,482
9,572
25,812
49,226
49,137
98,363
60,574
158,937
185,354
344,291
269,589
613,880
69,795
134,277
83,192
217,469
139,704
357,173
207,194
564,367
334,705
899,072
5,463
15,035
7,898
22,933
18,455
41,388
31,594
72,982
84,310
157,292
(deficiency)
(14.30%)
2.70%
20.28%
3.92%
30.09%
13.01%
(20.48%)
(10.27%)
(5.51%)
(11.54%)
(1.37%)
(4.93%)
(6.38%)
(0.95%)
-
-
6,057
5,645
3,488
501
5,496
1,700
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2015
(expressed in Jamaican dollars unless otherwise indicated)
Page 23
4.
Insurance and Financial Risk Management (Continued)
(a) Insurance risk (continued)
The concentration of insurance risk before and after reinsurance by territory in relation to the type of insurance
risk accepted is summarized below, with reference to the carrying amount of the insurance liabilities (gross
and net of reinsurance) arising from insurance contract
Territory
Jamaica : Gross
Net
(b) Reinsurance risk
Motor
Liability
Property
$Millions
$Million
$Millions
Other
types of
risk
$Millions
Total
$Millions
24,495
23,996
32,299
32,299
107,921
20,805
185,520
8,863
3,482
68,640
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 90%:10% Quota Share of premiums i.e. 90% ceded premiums and 10%
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
2015
A+
A+
2014
A+
A+
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2015
(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 24
Property
Motor
Marine
Liability
Burglary
Miscellaneous Accidents
2015
$’000
27,507
10,257
19,167
5,120
138
22,544
84,733
2014
$’000
54,875
8,988
15,720
8,918
3,962
13,255
105,718
(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 2015
(expressed in Jamaican dollars unless otherwise indicated)
Page 25
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 2015
(expressed in Jamaican dollars unless otherwise indicated)
Page 26
4.
Insurance and Financial Risk Management (Continued)
(c) Financial risk (continued)
(i) Credit risk (continued)
Maximum exposure to credit risk
The maximum exposure to credit risk, of the company, equal the respective carrying amounts on the
statements of financial position, for all financial assets which are subject to credit risk.
Ageing analysis of premium receivables past due but not impaired:
Premium receivables that are less than forty-five (45) days old are not considered impaired. At year end,
premium receivables of $231,640,000 (2014 - $174,406,000) 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
2015
$’000
39,669
56,081
135,890
231,640
2014
$’000
37,708
53,092
83,606
174,406
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
2015
$’000
416,076
153,996
570,072
2014
$’000
272,378
108,228
380,606
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
2015
$’000
898,730
142,359
98,920
1,140,009
2014
$’000
513,319
139,597
94,852
747,768
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2015
(expressed in Jamaican dollars unless otherwise indicated)
Page 27
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 factors in assessing the liquidity of the company and its exposure
to changes in interest rates and exchange rates.
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2015
(expressed in Jamaican dollars unless otherwise indicated)
Page 28
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 2015:
Cash and short term investments
Due from policyholders, brokers
592,034
412,375
and agents
448,240
121,832
-
-
-
-
16,883
115,416
13,506
27,012
-
-
-
-
3,423
175,249
-
-
-
-
-
-
1,347
2,585
5,439
65
-
-
-
-
-
-
-
-
-
-
1,004,409
570,072
172,817
29,958
29,958
3,871
3,871
-
-
178,672
9,436
36,187
1,098,114
56,398
883,855
561,893
580,838
500,900
527,977
129,563
129,563
256,424
290,253
1,541,365
3,510,600
Due from reinsurers and
coinsurers
Other receivables
Due from related parties
Loans receivable
Leases receivable
Investment securities
Total financial assets
Due to reinsurers and coinsurers
Other liabilities
Claims liabilities
21,156
3,352
55,600
-
239,189
143,513
191,351
382,702
-
-
-
-
80,108
956,755
Total financial liabilities
260,345
146,865
246,951
382,702
-
- 1,036,863
Net Liquidity Gap
837,769
736,990
333,887
145,275
129,563
290,253
2,473,737
Cumulative gap
837,769 1,574,759
1,908,646
2,053,921
2,183,484
2,473,737
-
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2015
(expressed in Jamaican dollars unless otherwise indicated)
Page 29
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
$’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
-
-
-
-
-
-
-
-
1,273,588
380,606
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
-
-
167,487
-
-
-
-
-
-
-
-
-
-
18,356
18,356
2,275
2,275
1,922
3,844
17,297
92,250
270,984
4,554
7,089
27,724
9,436
-
-
-
386,297
48,803
32,053
1,396,822
10,451
430,474
250,051
313,171
436,386
574,271
168,402
439,386
-
20,631
897,343
3,174,755
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
207,086
360,747
-
-
-
-
-
-
-
-
-
-
268,437
61,188
901,870
1,231,495
Net Liquidity Gap
1,116,638
46,996
106,085
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
-
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 2015
(expressed in Jamaican dollars unless otherwise indicated)
Page 30
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 2015 includes aggregate net foreign assets
of approximately US$6,175,000 (2014 – US$7,517,000), 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 represents
management’s assessment of the possible change in foreign exchange rates. The sensitivity analysis
shows the impact of translating outstanding foreign currency denominated monetary items, assuming
changes in currency rates shown in the table below. The sensitivity analysis includes cash and short term
deposits, investment securities, premium and other receivables and claims liabilities. The percentage
change in the currency rate will impact each financial asset/liability included in the sensitivity analysis
differently. Consequently, individual sensitivity analyses were performed. The effect on pre-tax profit
below is the total of the individual sensitivities done for each of the assets/liabilities. There was no impact
on the other components of equity.
% Change in
Currency Rate
2015
1%
8%
Increase/
(decrease) in
Pre-tax
Profit
2015
$’000
(7,387)
59,099
% Change in
Currency Rate
2014
1%
10%
Increase/
(decrease) in
Pre-tax
Profit
2014
$’000
(8,512)
85,122
USD – J$ Revaluation
USD – J$ Devaluation
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2015
(expressed in Jamaican dollars unless otherwise indicated)
Page 31
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 2015:
Cash and short term investments
592,324
409,954
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
-
-
-
-
-
170,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,229
2,397
5,188
63
-
-
-
-
-
-
-
38
1,002,316
570,072
570,072
105,286
105,286
29,958
29,958
3,871
3,871
-
-
170,000
8,877
246,347
52,910
510,280
242,185
88,287
256,424
1,396,433
839,900
465,261
685,468
242,248
88,287 965,649 3,286,813
Due to reinsurers and coinsurers
Other liabilities
Claims liabilities
Total financial liabilities
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
378,768
378,768
80,108
80,108
956,755
956,755
- 1,415,631
1,415,631
Total interest repricing gap
839,900
465,261
685,468
242,248
88,287 (449,982) 1,871,182
Cumulative gap
839,900
1,305,161
1,990,629
2,232,877 2,321,164 1,871,182
-
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2015
(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)
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
76,989
18,356
18,356
2,275
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 2015
(expressed in Jamaican dollars unless otherwise indicated)
4.
Insurance and Financial Risk Management (Continued)
Page 33
(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:
Increase/(decrease)
in Profit before
Taxation
Increase/(decrease)
in Other
Components of
Equity
2015
JMD/USD
-150/-50
+150/+100
2015
$’000
(6,154)
9,232
2015
$’000
2,771
(4,890)
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)
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 20% (2014 - 10%) with all other variables held constant.
Increase/
(decrease)
in Profit
before
Taxation
2015
$’000
(5,391)
Change in index:
-20% (2014 – 10%)
+20% (2014 – 10%)
5,391
Equity Securities
Pooled real estate investment
Increase/
(decrease)
in Profit
before
Taxation
2014
$’000
-
-
Effect on
Other
Components
of Equity:
2015
JMD/USD
(45,893)
Effect on
Other
Components
of Equity
2014
$’000
(16,238)
Effect on
Other
Components
of Equity
2015
$’000
(28,710)
45,893
16,238
28,710
Effect on
Other
Components
of Equity
2014
$’000
(14,355)
14,355
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2015
(expressed in Jamaican dollars unless otherwise indicated)
Page 34
5. Capital Management
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 2015 is as follows:
MCT
6. Fair Value Estimation
Actual
Required
Actual
2015
279 %
2015
250%
2014
270%
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 2015
(expressed in Jamaican dollars unless otherwise indicated)
6. Fair Value Estimation (Continued)
Page 35
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 2015
Assets
Financial assets at fair value through profit or loss
Equity securities
Available-for-sale financial assets –
Equity securities
Debt securities
Pooled real estate investment
Total assets measured at fair value
At 31 December 2014
Assets
Available-for-sale financial assets –
Equity securities
Debt securities
Pooled real estate investment
Total assets measured at fair value
Level 1
Level 2
$’000
$’000
Levell 3
$’000
26,957
229,467
-
-
-
-
569,076
-
256,424
569,076
-
-
-
143,549
143,549
Total
balance
$’000
26,957
229,467
569,076
143,549
969,049
162,377
-
-
-
451,892
-
162,377
451,892
-
-
143,549
143,549
162,377
451,892
143,549
757,818
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
value or other estimation and valuation techniques. These valuation techniques maximise the use of observable
market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs
required to fair value an instrument are observable, the instrument is included in Level 2. If one or more of the
significant inputs is not based on observable market data, the instrument is included in Level 3.
The following methods have been used to value financial instruments:
(a) Investment securities classified as available-for-sale and fair value through profit or loss are measured at fair
value by reference to quoted market prices when available. If quoted market prices are not available, then fair
values are estimated on the basis of pricing models or other recognised valuation techniques;
(b) The fair value of short-term assets and liabilities maturing within one year is assumed to approximate their
carrying amount. This assumption is applied to liquid assets and the short-term elements of all other financial
assets and financial liabilities;
(c) The fair value of variable rate financial instruments is assumed to approximate their carrying amounts, as these
instruments are expected to reprice at the prevailing market rates;
(d) Loans and leases are carried at amortised cost which is assumed to approximate fair value as loans are issued
at terms and conditions available in the market for similar transactions.
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2015
(expressed in Jamaican dollars unless otherwise indicated)
7. Critical Accounting Estimates and Judgements in Applying Accounting Policies
Page 36
The company makes estimates and assumptions that affect the reported amounts of assets and liabilities in the
future. Estimates and judgements are continually evaluated and are based on historical experience and other
factors, including expectations of future events that are believed to be reasonable under the circumstances. The
resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and
assumptions that will have a significant risk of causing a material adjustment to the carrying amounts of assets
and liabilities within the next financial year are as follows:
(a) Liabilities arising from claims made under insurance contracts
The determination of the liabilities under insurance contracts represents the liability for future claims payable
by the company based on contracts for the insurance business in force at the date of the statement of
financial position using several methods, including the Paid Loss Development method, the Incurred Loss
Development method, the Bornhuetter-Ferguson Paid Loss method, the Bornhuetter-Ferguson Incurred
Loss method and the Frequency-Severity method. These liabilities represent the amounts that will, in the
opinion of the actuary, be sufficient to pay future claims relating to contracts of insurance in force, as well as
meet the other expenses incurred in connection with such contracts. A margin for risk or uncertainty (adverse
deviations) in these assumptions is added to the liability. The assumptions are examined each year in order
to determine their validity in light of current best estimates or to reflect emerging trends in the company’s
experience.
Claims are analysed separately between those arising from damage to insured property and consequential
losses. Claims arising from damage to insured property can be estimated with greater reliability, and the
company’s estimation processes reflect all the factors that influence the amount and timing of cash flows
from these contracts. The shorter settlement period for these claims, allows the company to achieve a higher
degree of certainty about the estimated cost of claims, and relatively little IBNR is held at year-end. However,
the longer time needed to assess the emergence of claims arising from consequential losses makes the
estimation process more uncertain for these claims.
(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 2015
(expressed in Jamaican dollars unless otherwise indicated)
Page 37
8. Segment Information
Management has determined the operating segments based on the reports reviewed by the board of directors
that are used to make strategic decisions. All operating segments used by management meet the definition of a
reportable segment under IFRS 8.
The company is organised into 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 2015
(expressed in Jamaican dollars unless otherwise indicated)
8. Segment Information (Continued)
Page 38
The segment information provided to the board of directors for the reportable segments for the year ended 31
December 2015 is as follows:
2015
Fire
$’000
Motor
Marine
Liability
Homeowners
& Burglary
Misellaneous
Accident
$’000
$’000
$’000
$’000
$’000
Total
$’000
Gross Premiums Written
3,940,780
989,928
152,369
491,812
142,585
394,881
6,112,355
Reinsurance ceded
(3,886,359)
(18,296)
(128,262)
(361,035)
(126,078)
(312,112)
(4,832,142)
Excess of loss reinsurance cost
(46,960)
(27,138)
-
(4,445)
(10,705)
-
(89,248)
Net premiums written
Changes in unearned premiums, net
Net Premiums Earned
Commission income
Commission expense
laims expense
7,461
944,494
24,107
126,332
1,990
9,451
(59,894)
(1,475)
(9,310)
884,600
22,632
117,022
5,802
(812)
4,990
82,769
1,190,965
(1,409)
(70,910)
81,360
1,120,055
237,337
1,919
18,661
19,898
27,545
56,526
361,886
(85,876)
(81,528)
(1,951)
(11,263)
(15,703)
(28,122)
(224,443)
(2,194)
(602,474)
1,105
(77,548)
(167)
(15,202)
(696,480)
Management expenses
(18,972)
(338,723)
(8,404)
(45,590)
(5,755)
(28,918)
(446,362)
Segment results
139,746
(136,206)
32,043
2,519
10,910
65,644
114,656
Unallocated income -
Investment income
Other income
Depreciation and amortisation-
Profit before tax
Taxation
Net profit
175,653
45,391
221,044
(32,252)
303,448
970
304,418
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2015
(expressed in Jamaican dollars unless otherwise indicated)
8. Segment Information (Continued)
Page 39
2014
Fire
$’000
Motor
Marine
Liability
Homeowner
& Burglary
Misellaneous
Accident
$’000
$’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
Changes in unearned premiums,
net
Net Premiums Earned
Commission income
Commission expense
Claims expense
7,447
846,073
29,801
116,234
5,160
61,823 1,066,538
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)
(6,970)
(591,043)
(6,029)
(64,702)
Management expenses
(30,954)
(324,649)
(11,021)
(44,890)
115,230
(127,286)
36,921
20,227
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
(1,568)
(7,250)
4,052
(8,246)
(678,558)
(22,864)
(441,628)
52,797
101,941
160,396
88,124
248,520
(30,496)
319,965
113
320,078
2015
$’000
59,767
711
60,478
2014
$’000
52,584
730
53,314
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 2015
(expressed in Jamaican dollars unless otherwise indicated)
Page 40
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)
2015
$’000
32,399
-
-
32,399
2014
$’000
25,741
104
72
25,917
1,106
959
16,514
15,630
1,835
30,506
205,751
160,107
398,199
109
7,225
34,158
-
41,492
2,311
31,414
243,750
211,669
489,144
506
8,129
20,693
7,549
36,877
2,955
137,775
140,730
3,818
166,072
169,890
76,021
68,243
1,720
1,853
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2015
(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 41
Due from related parties -
Receivables -
Affiliated company
Due from policyholders, brokers and agents -
Fellow subsidiary
Parent company
Affilated company
Loans receivable -
Parent (Note 21)
Fellow subsidiary (Note 21)
Investment securities -
Shares in affiliated entity (Note 23)
Claims liabilities
Parent company
Affiliated company
Fellow subsidiary
2015
$’000
2014
$’000
3,871
2,275
121,397
114,223
207
-
146
1,152
121,604
115,521
170,000
-
170,000
-
169,591
169,591
117,197
83,198
10,356
-
12,305
22,661
6,917
26,482
6,550
39,949
Included in the investments of the company are shares in related parties. At 31 December 2015, these shares
represented 2.65% of the total assets (2014 – 2.13%).
Affiliates represents companies that are associated with the parent company, which 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.
Intrest income was earned from shot term and mortgage loans.
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2015
(expressed in Jamaican dollars unless otherwise indicated)
Page 42
10. Claims Expense
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 money market fund
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
2015
$’000
2014
$’000
781,203
784,291
(84,723)
(105,733)
696,480
678,558
2015
$’000
2014
$’000
3,688
11,966
-
104
32,399
25,741
-
72
115,005
109,769
151,092
147,652
(5,166)
(2,790)
145,926
144,862
6,957
11,961
10,809
-
7,789
7,745
175,653
160,396
2015
$’000
2014
$’000
35,306
2,551
1,741
5,793
45,391
79,978
2,654
-
5,492
88,124
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2015
(expressed in Jamaican dollars unless otherwise indicated)
Page 43
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
2015
$’000
9,717
5,352
25,465
1,720
32,252
1,609
36,488
20,421
4,340
13,333
16,514
17,037
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
272,379
259,939
5,398
16,589
7,164
18,396
478,614
472,124
2015
$’000
2014
$’000
207,696
199,948
17,507
3,772
43,404
17,055
3,817
39,119
272,379
259,939
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2015
(expressed in Jamaican dollars unless otherwise indicated)
Page 44
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 5 100%
Years 6 to 10 50%
The financial statements have been prepared on the basis that the company will have the full benefit of the
tax remissions. Subject to agreement with the Minister of Finance and Planning, the income tax payable
for which remission has been granted is $102,070,000 (2014 - $117,015,000).
(b) Taxation is based on the profit for the year adjusted for taxation purposes and represents income tax at
33 ⅓ %
Deferred income taxes (Note 29)
2015
$’000
(970)
(970)
2014
$’000
(113)
(113)
(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 ⅓ %
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
2015
$'000
2014
$'000
303,448
319,965
101,149
106,655
(102,070)
(117,015)
(34,197)
(24,985)
27,925
6,223
(970)
29,829
5,403
(113)
16. Earnings Per Share
The calculation of earnings per share is based on the net profit for the year and 1,031,250,000
(2014 - 1,031,250,000) ordinary shares in issue.
Net profit from continuing operations ($’000)
Weighted average number of ordinary shares in issue (‘000)
Earnings per share ($)
2015
304,418
1,031,250
0.30
2014
320,078
1,031,250
0.31
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2015
(expressed in Jamaican dollars unless otherwise indicated)
Page 45
17. Dividends per Share
The dividends paid in 2015 and 2014 were as follows:
Interim dividends:-
9.7 cents per stock unit – April 2015
7.0 cents per stock unit – December 2015
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
2015
$’000
100,031
72,188
-
-
172,219
2014
$’000
-
-
78,787
125,091
203,878
2015
$’000
345,361
656,955
-
1,002,316
2014
$’000
290,378
966,917
15,232
1,272,527
Short term deposits comprise term deposits and repurchase agreements with an average maturity of 57 days
(2014 – 47 days), and include interest receivable of $4,627,000 (2014 – $5,927,000).
The weighted average effective interest rate on short term investments and deposits were as follows:
J$
US$
2015
%
6.1
2.1
The weighted average effective interest rates on cash balances for the year were as follows:
J$
US$
GBP
2015
%
1.0
0.1
0.1
2014
%
7.0
2.1
2014
%
1.0
0.1
0.1
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2015
(expressed in Jamaican dollars unless otherwise indicated)
19. Due from Reinsurers and Coinsurers
Page 46
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
Short-term loan receivable from parent (Note 9) (a)
Mortgage receivable from fellow subsidiary (Note 9) (b)
2015
$’000
2014
$’000
400,558
71,915
105,287
577,760
361,097
90,498
76,989
528,584
2015
$’000
12,003
29,958
41,961
2014
$’000
7,917
18,356
26,273
2015
$’000
170,000
-
170,000
2014
$’000
-
169,591
169,591
(a) Short-term loan represents loan extended by the company to parent company at rate of 12.25% for 6 months
to mature June 2016.
(b) Mortgage receivable which was repaid during the year represented a loan extended by the company to a
fellow subsidiary for land and building sold to that fellow subsidiary. The loan attracted an interest of 12%
per annum and had original 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
2015
$’000
9,341
95
9,436
(559)
8,877
8,814
63
8,877
2014
$’000
39,366
9,437
48,803
(4,247)
44,556
36,675
7,881
44,556
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2015
(expressed in Jamaican dollars unless otherwise indicated)
Page 47
23. Investment Securities
Debt securities -
Available for sale – at fair value
Government of Jamaica Securities
Benchmark Investment Notes
United States Dollar Benchmark Notes
United States Dollar Indexed Notes
Certificate of Deposits
United States Dollar Corporate Bond
Other Government Securities
Interest receivable
Equity securities -
Available for sale, at fair value –
Quoted shares
Fair value through profit or loss
Unit Trust Funds
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
2015
$’000
2014
$’000
328,323
4,022
52,642
487,199
872,186
97,826
138,903
31,094
1,140,009
216,668
3,830
-
284,478
504,976
93,786
137,608
11,398
747,768
229,467
162,377
26,957
-
105
105
(105)
-
256,424
1,396,433
(105)
-
162,377
910,145
2015
%
8.40
5.25
6.25
6.12
2014
%
8.00
4.00
6.25
6.12
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2015
(expressed in Jamaican dollars unless otherwise indicated)
Page 48
23. Investment Securities (Continued)
Included in investments, are Government of Jamaica Benchmark Investment Notes valued at $45,000,000 (2014-
$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
$89,312,000 (2014 - $55,385,000). 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 $10,809,000.
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 2015
(expressed in Jamaican dollars unless otherwise indicated)
25. Property, Plant and Equipment
Furniture,
Fixtures &
Equipment
$’000
Buildings
$’000
Motor
Vehicles
$’000
Work-In-
Progress
$’000
At Cost -
At 1 January 2014
Additions
Disposals
At 31 December 2014
Additions
Disposals
25,310
22,396
76,530
14,679
-
(1,555)
47,706
25,539
89,654
19,769
-
(2,540)
At 31 December 2015
73,245
106,883
Depreciation -
At 1 January 2014
Charge for the year
On disposals
At 31 December 2014
Charge for the year
On disposals
8,381
2,385
44,335
10,112
-
(1,555)
10,766
3,662
52,892
11,257
-
(1,571)
At 31 December 2015
14,428
62,578
51,772
15,509
-
67,281
8,879
(6,249)
69,911
34,276
11,569
-
45,845
12,746
(6,249)
52,342
Page 49
Total
$’000
153,612
52,584
(1,555)
204,641
59,767
(8,789)
-
-
-
-
5,580
-
5,580
255,619
-
-
-
-
-
-
-
86,992
24,066
(1,555)
109,503
27,665
(7,820)
129,348
Net Book Value -
31 December 2015
31 December 2014
58,817
36,940
44,305
36,762
17,569
21,436
5,580
126,271
-
95,138
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2015
(expressed in Jamaican dollars unless otherwise indicated)
26. Intangible Assets
At Cost -
At 1 January 2014
Additions
At 31 December 2014
Additions
At 31 December 2015
Amortisation -
At 1 January 2014
Charge for the year
At 31 December 2014
Charge for the year
At 31 December 2015
Net Book Value -
31 December 2015
31 December 2014
27. Due to reinsurers and coinsurers
Local reinsurers
Overseas reinsures
28. Other Liabilities
Statutory contributions payable
Accrued expenses
General consumption tax
Other payables
2015
$’000
28,397
350,371
378,768
2015
$’000
4,329
40,756
15,609
39,354
100,048
Page 50
Computer
Software
$’000
76,691
730
77,421
711
78,132
63,528
6,430
69,958
4,587
74,545
3,587
7,463
2014
$’000
14,220
254,217
268,437
2014
$’000
4,144
41,917
9,901
19,197
75,159
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2015
(expressed in Jamaican dollars unless otherwise indicated)
Page 51
29. Deferred Income Taxes
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
Accelerated depreciaton
Unrealised fair value losses
Deferred income tax liabilities
Accelerated tax depreciation
2015
$’000
3,897
-
3,897
2015
$’000
499
970
2,428
3,897
2015
$’000
1,726
2,171
3,897
2014
$’000
1,200
(701)
499
2014
$’000
340
113
46
499
2014
$’000
-
1,200
1,200
-
(701)
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2015
(expressed in Jamaican dollars unless otherwise indicated)
Page 52
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
2015
$’000
2014
$’000
943,168
1,128,221
91,976
2,163,365
844,525
1,063,053
80,995
1,988,573
(400,558)
(71,915)
(472,473)
(361,097)
(90,498)
(451,595)
542,610
1,056,306
91,976
1,690,892
483,428
972,555
80,995
1,536,978
2015
$’000
956,755
159,485
11,982
2014
$’000
901,870
149,899
11,284
1,128,222
1,063,053
69,723
2,192
71,915
887,032
157,293
11,982
1,056,307
85,613
4,885
90,498
816,257
145,014
11,284
972,555
General Accident Insurance Company Jamaica Limited
Notes to the Financial Statements
31 December 2015
(expressed in Jamaican dollars unless otherwise indicated)
30. Insurance Reserves (Continued)
Page 53
An actuarial valuation was performed to value the policy and claims liabilities of the company as at 31 December
2015 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 actuary employed the Paid Loss Development method, the Incurred Loss
Development method, the Bornhuetter-Ferguson Paid Loss method, the Bornhuetter-Ferguson Incurred Loss
method and the Frequency-Severity method.
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 31 March 2016 the actuary found that the amount of policy and claims liabilities represented in
the statement of financial position at 31 December 2015 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
Gross reserves for claims outstanding at end of year
2015
$’000
2014
$’000
1,063,053
(90,498)
972,555
900,384
(101,468)
798,916
696,480
678,558
(613,939)
1,210
83,751
1,056,306
71,915
1,128,221
(506,353)
1,434
173,639
972,555
90,498
1,063,053
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 2015
(expressed in Jamaican dollars unless otherwise indicated)
Page 54
30. Insurance Reserves (Continued)
(c) The movement in unearned premiums is as follows:
Movement in unearned premiums:
2015
2014
Gross
$’000
Reinsurance
$’000
Net
$’000
Gross
$’000
Reinsurance
$’000
Net
$’000
Balance at 1 January
844,525
(361,097)
483,428
1,377,948
(880,411)
497,537
Premiums written
during the year
Premiums earned
during the year
Portfolio adjustment
Balance at
31 December
6,112,355
(4,921,390)
1,190,965
5,072,375
(4,005,837)
1,066,538
(6,013,712)
4,893,658
(1,120,054)
(5,605,798)
4,536,700
(1,069,098)
-
98,643
(11,729)
(39,461)
(11,729)
-
59,182
(533,423)
(11,549)
519,314
(11,549)
(14,109)
943,168
(400,558)
542,610
844,525
(361,097)
483,428
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 -
2015
$’000
446,897
448,100
8,806
39,365
2014
$’000
350,786
384,645
6,181
102,913
943,168
844,525
2015
$’000
2014
$’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 2015
(expressed in Jamaican dollars unless otherwise indicated)
Page 55
32. Capital Reserves
At beginning of and end of year
The capital reserves at year end represent realised surpluses.
33. Fair Value Reserve
2015
$’000
2014
$’000
152,030
152,030
This represents the unrealised surplus, net of tax, on the revaluation of available-for-sale investments at the year
end.
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 2014, indicated that the scheme was adequately funded at that date.
Pension contributions for the period totalled $3,772,000 (2014 – $3,817,000), and are included in staff costs
(Note 14).
35. Contingency
The company is involved in certain legal proceedings incidental to the normal conduct of business. Management
believes that none of these legal proceedings, individually or in the aggregate, will have a material effect on the
company.
36. Commitments
Operating lease commitments
The company leases its office situated at 58 Half Way Tree Road from fellow subsidiary Unity Capital
Incorporated under a non-cancellable operating lease agreement.
The lease is for a term of five (5) years, and is renewable at the end of the lease period at market rate.
The future aggregate minimum lease payments under non-cancellable operating leases are as follows
No later than 1 year
Later than 1 year and no later than
2015
US$’000
2014
US$’000
118
-
118
141
118
259
Notes
Notes
For more information, visit www.genac.com
Form Of Proxy
“ I/We _____________________________________________________________(insert name)of _________________________________
________________________________(address) being a shareholder(s) of the above-named Company, hereby
appont:________________________________________________________________(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 Meeting of the Company to be held at 10
am on June 1, 2016, 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, 2015.
For Against
2. To authorise the Board of Directors to re-appoint PWC as the Auditors
of the Company and to fix their remuneration.
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-appoint-
ment.
3.(a) To re-appoint Paul B Scott a Director of the Board of the Company..
For Against
3.(b) To re-appoint Melanie Subratie as a Director of the Board of the Company.
For Against
3.(c) To re-appoint Christopher Nakash as a Director of the Board of the Company.
For Against
4(a) To authorise the Board of Directors to fix the remuneration of the Directors.
For Against
5. To approve the aggregate amount of interim dividends declared by the
Board during the financial year ended 31st December 2015, being
$72, 187, 500 or 7.0 cent per ordinary share, as the final dividend
for that year.
For Against
Signed this day of 2016:
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)
For more information, visit www.genac.com