GTM will participate in any project to curb
‘traffic lawlessness’
Guyana Chronicle
October 27, 2001

THE Guyana and Trinidad Mutual Fire Insurance Company Limited (GTM) said it stands ready to participate fully in any authorised, national consideration aimed at minimising the menace of traffic lawlessness.

Chairman of the GTM Board of Directors, Mr. Harold Davis, said that as a result of judicious underwriting and an enlightened claims settlement policy, claims paid and provided for the last financial year, which ended on June 30, 2001 were contained to $21.6M compared to $27.4M for the previous year.

Davis made the disclosure while presenting a review of the Report and Accounts for the year ended June 30, 2001 on the occasion of the company’s 121st Annual General Meeting on September 27, 2001 at the National Cultural Centre.

Noting that the year under review was more challenging than anticipated, Davis said the erosion of fire premium rates continued. This, together with increased costs, fuelled by depreciation of the value of the Guyana dollar and a series of increases in electricity charges during the year, compounded the pressure.

In this competitive environment, he told shareholders, Management was required to re-engineer the Company’s marketing strategies in order to maintain a satisfactory share of the market, while focusing on the conservation of existing business.

At the same time, the Company’s budgetary processes continued to be refined to ensure that costs were contained, the Chairman said.

“I am happy to report that during the year under review, your Company wrote new business amounting to $21.1B in Sums Insured with Premium Income of $97M (and) after taking into account policies written off, the net increase in business amounted to $12.9B in Sums Insured and $45M in Premium Income,” Davis said.

According to him, the report shows that the Company ended the year with business in force amounting to $83.4B in Sums Insured and Premium Income of $421.2M compared with $70.5B and $376.2M respectively at the end of the preceding year.

These figures, he said, represented modest increases of 18 per cent and 12 per cent in Sums Insured and Premium Income respectively, which can be regarded as satisfactory given the erosion in premium rates previously alluded to.

Fire claims, paid and provided for and reinsurance recoveries amounted to $298.7M compared with $127.1M in the preceding year, he said.

A substantial portion of the increase was attributable to the losses associated with the unrest after the March 19 national general elections, when there were fires of unknown origin.

Davis said the increased incidence of claims impacted the company’s results both directly and indirectly, as increased reinsurance costs were a consequence of the higher claims. He also pointed out that the recent events of terrorism in the United States of America will undoubtedly further exacerbate the pricing of reinsurance.

However, he proudly noted that the Company’s sales representatives in Guyana as well as those at the Caribbean Offices, have again turned out good performances. Those from Guyana, who performed with distinction, were accorded due recognition at the end of the meeting on September 27.

The Chairman stated that despite the depressed state of the economy, the branch at Linden, exceeded its quotas and earned special recognition. The St. Lucia Branch also turned out a creditable performance and deserves special commendation, he told the shareholders and staff at the meeting.

“As you are aware, yours is a mutual Company, and one of the benefits to holders of ‘with profit’ policies, is that at the end of the financial year, based on the performance of the portfolio, a return of premiums is made to those policyholders whose policies are due for profit on a three-year cycle,” Davis said in his review.

“You would be happy to learn that your Directors, despite the severe competition, increased costs and the substantial claims that were incurred for the year, have declared a cash profit return of 50 per cent of the premiums received during the last triennium,” he added.

The declaration for the year amounts to $48.5M after making allowance for unexpired time, he said.

Davis said too that cheques payable to the policyholders who are entitled to receive Cash Profit returns this year have already been prepared for dispatch through the post.

“The enforcement of traffic laws and regulations is absolutely necessary if we are to make any real impact on the question of safety on our roads, but it is realised that the Traffic Department is short of resources,” Davis said.

This, along with non-functional traffic lights, non-existent street signs and road markings, and suitable traffic legislation, needs to be addressed urgently by the relevant authorities, he said.

“In the meanwhile, your Company has been involved in providing materials and manpower to repaint pedestrian crossings in the vicinity of schools (and) in collaboration with a Rotaract Club also provided printed material on Road Safety for distribution at a street fair,” he said.

“I would like to reiterate that your Company stands ready to participate fully in any authorised, national consideration aimed at minimising the menace of traffic lawlessness,” the Chairman of the Board said.

“Your Company has been able again, with satisfactory reinsurance facilities, to meet the growing demands for liability insurance, for example, Contractors’ All Risks, Employers’ Liability, Public Liability, Cash-in-Transit, Goods-in-Transit, and Performance Bonds,” he said.

“Our experienced staff and sales representatives stand ready to assist businesses and individuals in meeting their needs in this area,” he assured.

Davis said mortgage and other loans increased by $27.5M while securities increased by $7.5M. Statutory deposits, Treasury Bills and short-term investments decreased by $17.3M while securities increased by $7.5M. He also informed the shareholders that their Directors continued to seek opportunities for suitable investment, both locally and in the Caribbean.

The Chairman said that the Directors have approved a final dividend at 4.85 per cent in respect of Preferent Scrip and 5.10 per cent for First Preferent Stock, and recommend a final dividend at 4.10 per cent on the Ordinary Scrip Capital.

This, he said, will make a total payment of 7.10 per cent for the year, a marginally lower return than in the preceding year, reflecting a continued decline in interest rates generally.

In the area of staff relations, the Chairman said that despite the pressures experienced generally in the country, GTM continues to maintain cordial relations with its staff.

“Training and re-training of staff in the fields of Insurance, Accountancy and Management have permitted us to maintain a satisfactory level of service to our customers,” he added.

“In this regard,” he said the Company has continued to encourage its staff members to undertake professional courses in these fields, and some of whom continue to qualify for the diplomas offered by the educational institutions.

In the light of wide publicity suggesting that insurance companies generally have applied substantial increases in fire insurance premiums following recent losses, Davis said it is appropriate that he should unequivocally state that the Company has maintained unchanged, the rating structure in place prior to those losses. He said this was even though they were aware that some companies have indeed increased rates.

He said, too, that the recent entry into the market of two new general insurance companies has been noted.

“Any increase in the number of providers is bound to lead to increased competition for business, but I am confident that our hard-working sales force will remain equal to the task, trained and motivated, as they are to cope with the pressures of today’s reality,” he added.

“All in all, your Company has successfully coped with the many challenges of the year under review (and) it is fitting that I should recognise that this was made possible through the concerted effort of our sales representatives and indoor staff, in Guyana and our Caribbean Offices, management and your Board all working together as a team,” Davis concluded.