After experiencing a $40.9 million net loss in the first quarter of 2020, Guardian Holdings Ltd (GHL) has experienced a profitable second quarter, recording net income of $194.5 million—yet still, the net profit for the Group’s Half Year results declined by 39.5 per cent (from $253.6 million to $153.6 million) when compared to the previous year.
In GHL’s unaudited financial statements, Chairman Patrick Hylton expressed that the group “has produced a strong performance in its second quarter which is extremely positive as we have reversed the loss from the first quarter, and we have exceeded the second quarter performance of 2019.”
Hylton also acknowledged that the GHL’s performance is behind that of last year, recording a profit attributable to equity shareholders of $165 million, an $82 million or 33% reduction on the $247 million recorded in the similar period last year. GHL’s earnings per share also decreased to $0.71 versus $1.06 over the same period last year.
In the first quarter Chairman’s Report, Hylton revealed that the losses during that period arose from the company’s investment portfolios. He added that it is encouraging that, internationally, the equity markets have recovered much of their losses. However, Hylton revealed that regional markets have experienced a further decline.
He said: “This equity and bond market performance significantly affected the Group’s Net income from investing activities which generated income of $316 million, a 53% reduction on the $671 million recorded in the same period last year.”
Therefore, GHL’s net fair value losses were a major contributing factor to this decline, amounting to $309 million compared to a gain of $224 million in the prior period.Positively, Hylton noted that investment income increased by $26 million arising out of an improved investment mix and an increased investment portfolio.
He added that Net income from insurance underwriting activities produced stellar results, generating income of $551 million, a $268 million or 94% increase over the $283 million reported in the corresponding period last year.
According to Hylton, this was largely owing to improvements in the Life, Health and Pension business segment which increased income by $203 million over the prior year. The Property and Casualty business segment also increased income by $53 million over the prior year driven by growth in the Dutch markets, Hylton noted.
“Amidst the challenging economic conditions, the onset of the COVID-19 pandemic has also created significant obstacles for the collection of premiums. To overcome this, your Group launched various online portals to support customer interactions,” said Hylton.
While this proved to be generally effective, the Chairman said that some of GHL’s customers maintained a preference for the traditional methods of over the counter collection. This, he added, impacted Gross Written Premiums which showed a modest increase of 1%.
Additionally, Hylton said that GHL’s brokerage activities continue to grow primarily through inorganic means, achieving an income of $73 million which represents a 21 per cent increase over the $60 million recorded in the prior year. He expressed that segment remains an integral part of the Group’s portfolio as it represents a relatively low-risk business.
GHL’s operating expenses amounted to $618 million, a 1 per cent increase over the $610 million reported in the corresponding period last year. The Chairman disclosed that this increase is as a result of acquired businesses, primarily within the Brokerage segment.
He also revealed that core expenses reduced over the prior year, as the Group has been successful in funding its strategy to implement the mechanisms and technologies required to advance its competitive edge through cost savings within other areas.