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The GraceKennedy headquarters in downtown KIngston.

GK’s acquisition of Scotia Insurance hailed as positive move

The GraceKennedy headquarters in downtown KIngston.

ASSISTANT general manager for trading and treasury at Jamaica Money Market Brokers (JMMB) Greig Lindo has described the acquisition of Scotia Insurance Eastern Caribbean Limited (SIECL) by the GraceKennedy Group as a positive investment for the company.

The GK Group recently announced that the transaction to acquire 100 per cent of the SIECL shares was complete; however, the cost of the deal has not been disclosed.

GK also announced that the company will be rebranded under the name GraceKennedy Life Insurance Eastern Caribbean Limited (GK Life).

Lindo told Kalilah Reynolds, on the first live episode of Taking Stock with Kalilah Reynolds, that while the acquisition may not be significant for GraceKennedy in terms of clientele, it should help them increase their bottom line through GK Life’s offerings. He pointed out that the deal, first announced in March, also gives the GK Group a greater presence in the Eastern Caribbean.

According to the group, GK Life will continue to offer credit protection on personal loans, residential mortgages, personal lines of credit, and personal and small business credit cards in the seven eastern Caribbean countries in which SIECL previously operated, namely Anguilla, Antigua and Barbuda, Dominica, Grenada, St Kitts and Nevis, St Lucia, and St Vincent and the Grenadines.

GK Life will complement the group’s existing portfolio of general insurance operations in St Lucia, Dominica, Antigua and St Vincent and the Grenadines.

“If you look at the total population of those countries that Scotia Eastern Caribbean operates in, it’s about 650 [thousand] people, so that’s a little over half the population of Kingston, but the GDP per capita for those countries are very high. In some cases, they are five times Jamaica’s gross domestic product (GDP) per capita, so there is depth of market,” said Lindo.

“GraceKennedy is a well managed company and I’m sure they’ll make it work, and I’m pretty sure they got a good deal from it so I look forward to how positively that will come out for Grace at the end of the day”

Greig Lindo, assistant general manager — trading and treasury, Jamaica Money Market Brokers

Lindo said GK’s increased exposure in the insurance segment bodes well for its diversification strategy. However, he projected that the group’s food and money services segments will continue to be the main drivers of the company’s overall top line and profitability.

He also cautioned that greater coverage in the Eastern Caribbean could pose added risks for the GK Group.

“The Eastern Caribbean is prone to hurricanes and that’s not necessarily a good thing when it comes to insurance, but nonetheless it’s still a move in the right direction for GraceKennedy and we see the platform for insurance growing…and now they have a conduit to offer some of those products and services in the wider Caribbean,” he reasoned.

Banana trees in St Lucia destroyed by the passage of Hurricane Elsa
(Photo: Primus Hutchinson/CMC)

At the same time, Lindo said the management structure of the GK group will ensure value comes out of the transaction.

“GraceKennedy is a well managed company and I’m sure they’ll make it work, and I’m pretty sure they got a good deal from it so I look forward to how positively that will come out for Grace at the end of the day,” he said.

In commenting on the completion of the acquisition, Group CEO of GraceKennedy, Don Wehby noted that the move was strategic for the group, having recognised the significant opportunities for growth in the insurance sector.
He said GK Life will strengthen GraceKennedy Financial Group’s (GKFG) position as one of the leading financial groups in the Caribbean.

“The granting of the necessary approvals by regulators and completion of the transaction to acquire SIECL marks the culmination of months of hard work by our team,” said Wehby.

CEO of GraceKennedy Group Don Wehby (File photo)

The acquisition of Scotia Insurance Eastern Caribbean follows the acquisition of Key Insurance last year. Customers who held policies with SIECL will see no changes to their existing policies or premiums by GK Life as a result of the acquisition.

GK Life is now the newest member of GKFG. Other companies in the group are: GK General Insurance, Canopy Insurance, Key Insurance, Allied Insurance Brokers, GK Insurance Eastern Caribbean, GraceKennedy Remittance Services, GraceKennedy Money Services, GK Capital Management, and First Global Bank.