ANALYST BRIEFING GUARDIAN HOLDINGS LIMITED 1 GUARDIAN...

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ANALYST BRIEFING

GUARDIAN HOLDINGS LIMITED

1 GUARDIAN DRIVE

WESTMOORINGS • TRINIDAD


Financial Results –Year Ended 31st December 2015

Analyst Briefing

15 March 2016


RAVI TEWARI GROUP CHIEF EXECUTIVE OFFICER


3

A new T&T Insurance Act is anticipated that will enact a new reserving methodology called CPPM. We implemented this method in our 2015 Financial Statements, which also resulted in removing accounting for Embedded Values

In accordance with IFRS, we restated our 2014 results due to the adoption of CPPM and elimination of embedded value accounting, so as to make a proper comparison for these two items

CHANGES IN ACCOUNTING POLICY


CHANGES IN ACCOUNTING POLICY

4

Benefits of Moving to CPPM It belongs to a class of reserving methods considered international best

practice Greater consistency between asset and liability valuations, as interest

rates move in the future. If interest rates rise in the future, bond values will fall and so will CPPM reserves. It therefore dampens the volatility on our Income Statement

CBTT has no objection to an immediate adoption of CPPM. Adopting this reserving basis for IFRS reported results leads to less complex reporting

More consistent reserving across the Group, as CPPM is similar to the methodology used by Guardian Life Limited (Jamaica)

Improved comparability with our peer group internationally Better acceptance of reported reserves by rating agencies


5

RESTATEMENT OF 2014 INCOME STATEMENT

Changes in accounting policy: a) CPPM adopted as

the actuarial reserving methodology for long-term insurance contracts

b) Cessation of embedded value accounting in all life insurance subsidiaries

Consolidated Statement of IncomeAs previously

reported

Change in accounting

policy

Re-classifications

Restated balances

$'M $'M $'M $'MInsurance activitiesNet underwriting revenue 3,841 (154) 1 3,688 Underwriting expenses (3,295) 97 – (3,198) Net result from insurance activities 546 (57) 1 490

Net income from investing activities 923 – (53) 870

Income from brokerage activities - - 52 52

Net income from all activities 1,469 (57) 0 1,412 Operating expenses (905) – – (905) Finance charges (130) – – (130) Operating profit 434 (57) 0 377 Share of profit of associated companies 22 – – 22 Taxation (91) 5 – (86) Profit/(loss) after taxation 364 (53) 0 312 Amount attributable to par. policyholders (2) (7) – (9) Profit/(loss) from continuing operations 362 (60) – 303 Profit attributable to equity shareholders 401 (60) – 341


6

Changes in accounting policy: a) CPPM adopted as

the actuarial reserving methodology for long-term insurance contracts

b) Cessation of embedded value accounting in its life insurance subsidiaries

RESTATEMENT OF 2014 BALANCE SHEET

Consolidated Statement of Financial Position

As previously reported

Change in accounting

policyRestated

$'M $'M $'MFinancial assets 13,933 – 13,933 Reinsurance assets 696 (30) 666 Cash and cash equivalents 2,340 2,340 Value of inforce life insurance business 1,046 (1,046) – Other Assets 4,562 (8) 4,554 Total Assets 22,577 (1,084) 21,493

Total Equity 2,956 (345) 2,611

Insurance contracts 13,510 (732) 12,779 Financial liabilities 2,160 – 2,160 Other liabilities 3,951 (7) 3,943 Total Liabilities 19,621 (739) 18,882

Total Equity and Liabilities 22,577 (1,084) 21,493


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SUMMARY CONSOLIDATED FINANCIALS

Note 1

Note 2

Note 1 Driven by LHP segment (mainly GLOC and GLL net reserve release) Note 2 -$94MM negative swing in fair values mainly from bonds and overseas equities Note 3 -$27MM higher operating expenses mainly from GLL special levy and asset tax

Note 3

TT$'MMYear Ended

Dec 2015

Year Ended Dec 2014

(Restated) Var $ Var %

Net income from insurance activities 662 490 172 35%

Net fair value (losses)/gains (7) 87 (94) -108%

Net income from other investing activities 796 783 12 2%

Net income from other brokerage activities 8 5 2 43%

Net income from all activities 1,458 1,366 93 7%

Operating expenses (excl brokerage exps) (886) (859) (27) 3%

Finance charges (141) (130) (11) 8%

Share of associate results 17 22 (4) -20%

Net profit before tax - continuing ops 449 398 51 13%

Taxation & other (115) (95) (20) 20%

Net profit after tax - continuing ops 334 303 31 10%

Net gain on discontinued operations 2 26 (23) -90%

Profit/(Loss) attributable to NCI 2 (12) 14 -113%

Profit to equity shareholders 335 341 (6) -2%


LIFE HEALTH AND PENSION

ASSET MANAGEMENT

STRATEGIC ALTERNATIVE INVESTMENTS

GLOC (100%)

GLL (100%)

FATUM LIFE

(100%)

RGM (33%)

ECGPC (15%)

LAEVULOSE (100%)

GGTL (100%)

BUSINESS SEGMENTS

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GAMISL (100%)

PROPERTY & CASUALTY

ROYALSTAR ASSURANCE

(26%)

FATUM GENERAL

GGI (OECS) (54%)

CURACAO (100%)

ARUBA (100%)

TRINIDAD (100%)

BARBADOS (100%)

BOOGAARD GROUP (100%)

GUARDIAN RE

(100%) THOMA & KRUIT (100%)

GGIL (100%)

GGIJL (100%)

GAM MUTUAL FUNDS


• We have the premiere portfolio of non-bank financial institutions in the Caribbean

• Number one market position in Trinidad and Tobago

• Either number one or number two market position in all other markets

• Diversified by line of business: life, health, pensions; general insurance;

and asset management

• Judiciously diversified by country

• Diversified investment portfolio

DIVERSIFICATION OF BUSINESS UNITS PRODUCES CONSISTENT RETURNS AND GROWTH

9


4,007 4,365 4,911 5,011 5,152

0

1,000

2,000

3,000

4,000

5,000

6,000

2011 2012 2013 2014 2015

GPW ($million)

GROSS PREMIUMS WRITTEN

10

YTD 2015 GPW increase mainly from: i. LHP higher $0.2Bn ii. P&C lower mainly

due to lower premiums from multi-national partners and fall in global premium rates

7% CAGR


GEOGRAPHIC DISTRIBUTION OF REVENUE

Geographic distribution continues to be stable, with approximately 55% earned in Trinidad and Tobago

11

Excludes realized and unrealized gains


ANAND PASCAL PRESIDENT GUARDIAN LIFE OF THE CARIBBEAN

Life, Health and Pensions (LHP)


LIFE, HEALTH AND PENSIONS (LHP)

13

LIFE, HEALTH AND PENSION

GLOC (100%)

GLL (100%)

FATUM LIFE

CURACAO (100%)

FATUM LIFE

ARUBA (100%)

FATUM HEALTH (100%)

The leading life insurer in the Caribbean: # 1 In Trinidad Over 600 dedicated life sales agents GLOC AM Best A- Excellent rating

# 2 In Jamaica Over 300 dedicated life sales agents

Fatum has approximately 50% of the Dutch Caribbean market Sales primarily broker-driven


225 207

303 278 301

65 68

71 58

59 120 123

120 116

108

-

100

200

300

400

500

600

2011 2012 2013 2014 2015

Settled API ($million)

GLOC GLL FATUM

ANNUALIZED PREMIUM INCOME

14

3.5% growth over 2014 Strong 2015 by GLOC

Shift to higher margin protection business in 2014

Shift away from bulk annuity business in 2014 in Jamaica


1,347 1,427 1,762 1,836 1,983

552 631

557 490 498

403 471

476 496 542

2,302

2,529

2,794 2,821 3,023

-

500

1,000

1,500

2,000

2,500

3,000

3,500

2011 2012 2013 2014 2015

GPW ($million)

GLOC GLL FATUM

LHP – GROSS PREMIUMS WRITTEN

15

CAGR 7%

GPW showed an overall increase of 7% over 2014

Fatum grew 9% and GLOC grew 8% over 2014


1,589 1,737 2,030 2,154 2,005 2,111

806 925

832 747 728 703

635 751

714 732 722 806 3,029

3,413 3,576 3,633

3,455 3,619

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2011 2012 2013 2014 2014 Restated 2015

Revenue ($million)

GLOC GLL FATUM

LHP – REVENUE

16

Excludes realized and unrealized gains/losses

Revenue is largely driven by premiums Investment income continues to be pressured by the low interest rate environment, especially in Trinidad 4.7% growth over 2014 (restated)

6% CAGR 5% CAGR


RICHARD ESPINET EXECUTIVE DIRECTOR / GROUP PRESIDENT PROPERTY & CASUALTY

Property & Casualty (P&C)


PROPERTY & CASUALTY (P&C)

18

PROPERTY & CASUALTY

ROYALSTAR ASSURANCE

(26%)

FATUM GENERAL

GGI (OECS) (54%)

CURACAO (100%)

ARUBA (100%)

TRINIDAD (100%)

BARBADOS (100%)

BOOGAARD GROUP (100%)

GUARDIAN RE

(100%) THOMA & KRUIT (100%)

GGIL (100%)

GGIJL (100%)

An established and distinguished P&C Insurer, long recognized as the largest and strongest indigenous Caribbean Insurer

Profitably underwrites in every English-speaking Commonwealth country in the Caribbean and the Dutch Antilles

Market Leader in the following territories: Trinidad & Tobago; Jamaica; Dutch Antilles; Grenada; and overall Caribbean

Boogaard – new broker acquisition in the Dutch Antilles is an additional source of fee income (together with Thoma & Kruit)

Financial strength and consistently applied underwriting discipline are competitive advantages Consistently delivers high profit margins Successfully manages the underwriting cycles Reputable claims service Good geographic spread Robust reinsurance program Strong global network

“A-” Excellent rating reaffirmed by AM Best


1,120 1,267 1,315 1,387 1,316

287 238

402 431 457 228 257

326 297 294

70 75

74 75 62

1,705 1,837

2,117 2,190 2,129

-

500

1,000

1,500

2,000

2,500

2011 2012 2013 2014 2015

GGIL FATUM GGIJL GRE

P&C – GROSS PREMIUMS WRITTEN

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6% CAGR

GPW of $2.1Bn decreased 2.8% compared to 2014 mainly due to: Premium

reductions on multinational accounts obtained through our global network partners

Fall in regional

and international premium rates


COMBINED RATIO - PROPERTY & CASUALTY

20

Combined Ratio is consistently below 90%, reflecting the P&C’s:

Strong technical underwriting discipline: Strong net claims ratio of 44% (2014: 44%)

Operating expense discipline: Expense ratio of 35% (2014: 33%)

Distinctive reinsurance strategies


BRENT FORD GROUP CHIEF INVESTMENT OFFICER / GROUP PRESIDENT ASSET MANAGEMENT

Asset Management (AM)


ASSET MANAGEMENT

22

ASSET MANAGEMENT

GGTL (100%)

GAMISL (100%)

Acts as investment manager for the group

Offers investment opportunities to retail and institutional market

13 independent mutual funds – covering all asset classes Financial advisory services to high net worth individuals –

Discretionary Private Wealth Service Non-Discretionary Trading Accounts – client directed trades

Effective July 1, 2015, GAM was reorganized as follows:

Guardian Group Trust Limited – (CBTT & SEC) will perform trust services and non-bank finance activities

Guardian Asset Management & Investment Services Limited – (SEC) will perform roles as investment adviser, broker-dealer and underwriter

GAM MUTUAL FUNDS


8.2 8.9

9.3 9.7 10.4

-

2.0

4.0

6.0

8.0

10.0

12.0

2011 2012 2013 2014 2015

(TT$Bn)

ASSETS UNDER MANAGEMENT

23

* GAM plus GAM Mutual Funds

6% CAGR

Assets under Management show an increase of 7% in 2015. Captive Funds 7% NDS Funds 34%


AM – GAM REVENUE & AUM MIX

24

Third Party Business contributes largest portion to revenue, represents 18% of AUM

82%

18%

Captive Third Party

AUM Mix

44%

56%

Captive Third Party

Revenue Mix


AM – GAM REVENUE & PROFITS

25

Revenue for 2015 was marginally higher by 1% from 2014

Profit After Tax for 2015 was lower by 8% from 2014

60.0 61.9 60.4 58.9 59.5

19.7 23.1 20.6 20.7 19.0

-

10.0

20.0

30.0

40.0

50.0

60.0

70.0

2011 2012 2013 2014 2015

Revenue & Profitability

Revenue ($MM) PAT ($MM)


INVESTMENT MIX

26

Group’s investment mix shows no major changes; more cash and deposits mainly due to lack of new issues coupled with net premium income growth


QUESTIONS

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