Search Share Prices
GBGI Limited's rising revenue fail to offset 'disappointing' Angolan business
(WebFG News) - GBGI Limited's shares plummeted on Monday after the company reported that its profits suffered in 2017 as rising numbers of claims and the impairment on its Angolan business undid revenue progress.
The insurance firm's pretax profit fell by 68% to $3.6m despite revenue shooting up 31% to $155.9m as the AIM-traded insurance company enjoyed robust sales in the Latin American private medical market which the company entered into courtesy of its partnership with AXA.
Bob Dubrish, chief executive of GBGI, said: "We continued to make significant progress driven by our global, well-diversified approach, delivering GWP growth of 17.5 percent to $193.9m and growth in adjusted operating profit of 17.1 percent to $14.2m."
The company's Angolan operations sapped its profits however, with reorganisation of its activities in the country costing $12.3m in light of the devaluation of the Angolan Kwanza currency.
Under the new approach, GBGI will transfer its risk book and operations to local partners while GBGI will continue to act as an excess loss insurer, with an agreement facilitating the transfer stipulating that a settlement amount of $17.5m in Angolan Kwanza would be paid to GBGI over the next three years by a local insurance partner.
However, it has subsequently become clear that the company may not have the ability to convert Angolan Kwanza into a tangible western currency in the near future, or at all.
"The decisions taken in Angola followed our standard risk assessment procedures. Although the outcome of the restructuring of our operations in the country is disappointing, we firmly believe we took the right course of action. Looking across the breadth of our portfolio, I am confident this is a non-recurring event," said Dubrish.
As of 1405 BST, GBGI Limited's shares were down 20.09% at 89.10p.