The Financial Services Commission (FSC) in its latest overview of Jamaica’s insurance sector says that for the quarter ended June 30, 2021, the island’s six life insurance companies continued their dominance within the insurance sector which is comprised of 17 active companies.
The life insurance companies accounted for 78 per cent of total assets, while the general insurance companies accounted for 22 per cent as at end June 2021.
However, general insurance companies grew at a faster rate year over year. While aggregate total assets for life insurance companies increased by 4.8 per cent to JM$377.3 billion as at end June 2021, the FSC reported that for general insurance companies total assets were JM$106.9 billion as at June 2021, representing growth of 8.0 per cent over the amount recorded as at June 2020.
Meanwhile, the recovery of the equities market improved investment income, fair value gains, for both sectors.
Combined net investment income for the life insurance companies increased to JM$13.4 billion from the JM$647.7 million for the first six months of 2020. This was primarily due to fair value gains as a result of the recovery of the equities market.
Consequently, total revenue increased by 32.9 per cent to JM$52.6 billion (June 2020: JM$39.6 billion).
Total expenses excluding taxes for the life insurers rose by 82 per cent to JM$43.3 billion (June 2020: JM$23.8 billion). The FSC stated that the hike in expenses was due to a growth in claims and an increase in net actuarial reserves. Net Income before tax fell 38.6 per cent to reach $9.3 billion at June 2021, (June 2020: JM$15.2 billion)
Invested assets for the life insurance companies grew by 3.1 per cent to JM$335.4 billion as at June 30, 2021 from the JM$325.2 billion as at June 2020.
Combined capital rose by 7.3 per cent to JM$123.0 billion, from JM$114.6 billion at June 2020. Meanwhile, return on capital (ROC) for the life industry was 7.6 per cent at June 2021 (June 2020: 13.3 per cent).
For the six-month period ending June 2021, net premiums earned (NPE) for the life industry was relatively the same as for the corresponding period in 2020.
Aggregate other income declined by 16.3 per cent from the $4.1 billion recorded for the comparative period in 2020, to reach $3.4 billion at June 2021. The FSC stated that this was mainly due to a drop in a number of miscellaneous income items.
Aggregate invested assets for insurance companies increased by 3.0 per cent to $54.2 billion at the end of June 2021. (June 2020: $52.7).
Total liabilities rose by 9.1 per cent to $79.0 billion at the end of June 2021 from the $72.4 billion seen as at June 2020. The accumulated capital base for the sector grew by 7.0 per cent to JM$27.9 billion compared to the JM$26.0 billion as at June 2020.
Aggregate net premium earned for the six-month period that ended June 2021 was relatively the same as the amount seen for the corresponding period in 2020.
Driven by unrealised gains as the equities market recovered, combined net investment income for general insurers increased by 50 per cent to JM$1.0 billion in the reporting period.
Other income climbed by 56.3 per cent to JM$679.4 million as there was growth in miscellaneous line income items. Therefore total revenue was JM$12.3 billion, which was 3.8 per cent more than the corresponding period in 2020.
With aggregate total underwriting expenses falling by six per cent to JM$10.4 billion, net income before tax was approximately JM$2 billion. (June 2020: JM$853.4 million).