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GBGI pleased with progress despite regulatory headwinds in Angola
International benefits insurance provider GBGI updated the market on its trading for the 2017 calendar year on Monday, reporting continued commercial momentum in line with management expectations in the second half of the year across its diversified product and regional footprint.
The AIM-traded firm said that as a result, its recorded gross written premiums of approximately $195m in the period, compared to $165m across the same period in 2016.
As it had previously announced, the group continued to make further investments in its operations to support both sales efforts and outstanding service levels, which the board said underpinned the "robustness" of its growth platform.
It said its global strategic partnership with AXA continued to develop, with progress being made across two key areas of collaboration - reinsurance and access to new markets.
"In particular, the group has utilised its partnership with AXA to enter new Latin American markets and create a product line focused on the needs of individuals," the GBGI board said in its statement.
GBG Assist fully integrated its QHM acquisition during the year, and was now leveraging the cost containment network across the entire set of group policies.
In addition, the group said it would be recording more than $5.5m of GBG Assist fees for the year, including approximately $1.6m from the QHM acquisition.
"GBGI continues to deliver strong growth in group corporate policies establishing a new record policy count, increasing the account base by approximately 15% over the 12 month period," the board added.
"GBGI bolstered its regional leadership team with the hiring of two key senior managers."
David Carter was now the regional vice-president for GBG Asia Pacific, taking on the role to build premium growth in the region and increase GBGI's distribution platform.
Cathy Garner, meanwhile, was now the global head for life and long term disability.
She would be working closely with the GBGI Sales teams, brokers and distributors to develop customized life and disability products to expand GBG's brand globally.
Andy Thorburn, previously an executive director of the group serving as director of strategic planning, had now assumed a non-executive director role on the board.
That followed on from the end of his employment contract with the company on 1 January.
Additionally, and pursuant to the board's self-described vigilance in managing risk exposure and in light of the Angolan AOA currency devaluation and GBGI's view on the inability to transfer funds to USD, or equivalent currency, in a timely manner, the group said it had reorganised its approach in the Angolan market.
"The company expects that this change in approach would result in a reduction in CY2018 GWP of approximately $20m in the region.
"Due to the low margin nature of this stream, the company expects the net reduction in profitability to be under $1m in CY2018."
Under its new approach in Angola, GBGI was moving from a primary risk taker, transferring its risk book and operations to its local partner in the market.
GBGI said it would continue in Angola as an excess of loss reinsurer to its local partner.
In return, for transferring the business, the local partner agreed to pay GBGI, in Angolan AOA, $17.5m for its undistributed profits and expertise, over the next three years, with the first payment starting in April.
Due to the currency controls introduced by the Angolan government under its macroeconomic stabilisation programme, the company said it was considering its approach in relation to the surety of that balance, and the effect on the group, which was expected to include a consequent effect on CY2017 statutory profits.
The board said a prudent approach would be taken on an interim dividend for the six-month stub period ended 31 December.
"We believe we made great strides in transitioning into a public company listed on AIM in London during calendar year 2017," said CEO Bob Dubrish.
"Although we are disappointed with the developments in Angola we do believe it is a unique situation within our portfolio and our core business remains strong and continues to grow."
Looking forward, Dubrish said the company was focussing its balance sheet resources on areas that it believed would reduce its overall risk profile and generate enhanced risk adjusted returns for its shareholders.
"We continue to see strong demand in the marketplace for our products and services and we are well set to continue on our positive growth trajectory."