Asha Javeed

Lead Ed­i­tor In­ves­ti­ga­tions

asha.javeed@guardian.co.tt

The Bea­con In­sur­ance Com­pa­ny is on the mar­ket for US$30 mil­lion.

Bea­con en­gaged pro­fes­sion­al ser­vices firm EY to han­dle the trans­ac­tion and en­gage cus­tomers on whether they wished to pur­sue ac­qui­si­tion of the com­pa­ny.

The Busi­ness Guardian was told that on of­fer is 100 per cent of the shares of Bea­con for a min­i­mum pur­chase price of US$30 mil­lion.

In ad­di­tion, three prop­er­ties lo­cat­ed in Port of Spain- 7, 9A and 13 Stan­more Av­enue are in­clud­ed.

The Busi­ness Guardian un­der­stands that in ad­di­tion to the re­port­ed prop­er­ties, which were val­ued at $26.3 mil­lion, Bea­con (if ac­quired) will be trans­ferred with an ad­di­tion­al $34.5 mil­lion in prop­er­ty.

Bea­con’s chief ex­ec­u­tive Christo­pher Wood­hams, who has been with the com­pa­ny for 27 years, told the Busi­ness Guardian that the in­sur­ance in­dus­try was go­ing through a “try­ing time” and as part of their strat­e­gy, the or­gan­i­sa­tion was look­ing for a strate­gic part­ner­ship.

In writ­ten com­ments sent on Wednes­day morn­ing, in which he pro­vid­ed Bea­con’s com­ments on its cur­rent sit­u­a­tion: Wood­hams said: “As many com­pa­nies are at this time, Bea­con is in the process of eval­u­at­ing its strate­gic op­tions and has been en­gaged in this type of eval­u­a­tion for some time now, with the as­sis­tance of Ernst & Young. I would like to em­pha­size that, as of now, no agree­ments or fi­nal de­ci­sion re­gard­ing our strate­gic di­rec­tion have been reached, but rest as­sured that we will prompt­ly in­form all stake­hold­ers, in­clu­sive of the press, once we have made any sig­nif­i­cant de­ci­sions,” said Wood­hams.

Bea­con was found­ed and head­quar­tered in T&T, but has a Caribbean foot­print, hav­ing set up shop in Bar­ba­dos, Do­mini­ca, Grena­da, St Vin­cent and the Grenadines, St Kitts and St Lu­cia. Its fo­cus is prop­er­ty and ca­su­al­ty in­sur­ance. The com­pa­ny al­so of­fers pre­mi­um fi­nanc­ing through its whol­ly owned North West Pre­mi­um Fi­nance Ltd.

It was al­ways a to­tal­ly fam­i­ly-owned busi­ness un­til 2018 when Bea­con sold 34.35 per cent of its shares to the Bermu­da-based Coral­isle Group of Com­pa­nies.

The Busi­ness Guardian un­der­stands that in the EY trans­ac­tion brief, Coral­isle is iden­ti­fied as the sell­er.

Ac­cord­ing to its web­site, Bea­con grew from $35 mil­lion in pre­mi­ums in 1996 to be­come the fifth largest in­sur­ance com­pa­ny in Trinidad. Its gross as­sets in 2016 ex­ceed­ed $551 mil­lion, with pre­mi­ums sur­pass­ing the $381 mil­lion bench­mark.

While the com­pa­ny is sol­vent, in its 2022 fi­nan­cial state­ments it post­ed a loss of $9.92 mil­lion.

The com­pa­ny was found­ed in 1972 by busi­ness­man Az­iz Hadeed, and was then known as Caribbean In­sur­ance Com­pa­ny Lim­it­ed.

His son, Ger­ald Hadeed, took over the busi­ness in 1996 and re­brand­ed it as Bea­con.

Hadeed served as for­mer Gov­ern­ment min­is­ter in the Peo­ple’s Part­ner­ship ad­min­is­tra­tion, and was as ap­point­ed a Sen­a­tor and Min­is­ter of Com­mu­ni­ca­tions in Sep­tem­ber 2013. He al­so served as Min­is­ter of Tourism be­tween April 2014 and June 2016.

Hadeed, who was an ex­ec­u­tive di­rec­tor of Bea­con up to June 30 this year, told the Busi­ness Guardian in an in­ter­view on Tues­day night that he stepped down from that po­si­tion for health rea­sons.

Prop­er­ty and ca­su­al­ty con­sol­i­da­tion

Fol­low­ing its ac­qui­si­tion of a mi­nor­i­ty stake in Bea­con in 2018, the sec­ond ma­jor ac­qui­si­tion Coral­isle did in the re­gion was the pur­chase in Sep­tem­ber 2021, of Massy Unit­ed In­sur­ance.

Massy Hold­ings sold its in­sur­ance com­pa­ny, Massy Unit­ed In­sur­ance Ltd to the Bermu­da-based com­pa­ny for US$90.5 mil­lion (TT$606 mil­lion).

In a reg­u­la­to­ry no­tice at the time, Massy said it ac­quired the in­sur­ance com­pa­ny as part of the Massy Group’s ac­qui­si­tion of Bar­ba­dos Ship­ping and Trad­ing in 2008. The prin­ci­pal ac­tiv­i­ty of the com­pa­ny is the pro­vi­sion of prop­er­ty and ca­su­al­ty in­sur­ance prod­ucts and ser­vices in the re­gion.

At that time, Massy Unit­ed In­sur­ance’s foot­print in­clud­ed the the Eng­lish and Dutch-speak­ing Caribbean ter­ri­to­ries of An­guil­la, An­tigua and Bar­bu­da, Aru­ba, Ba­hamas, Bar­ba­dos, Be­lize, Bonaire, British Vir­gin Is­lands, Cay­man Is­lands, Cu­raçao, Do­mini­ca, Grena­da, Guyana, Ja­maica, Mon­ster­rat, St Kitts and Nevis, St Lu­cia, St Vin­cent and the Grenadines, Trinidad and To­ba­go and the Turks and Caicos. They are now iden­ti­fied on Coral­isle’s web­site as CG Unit­ed.

In its 2020 fi­nan­cial year, Massy Unit­ed In­sur­ance gen­er­at­ed rev­enue of TT$536.8 mil­lion (US$80 mil­lion) and prof­it be­fore tax of TT$41.3 mil­lion (US$6.1 mil­lion). The in­sur­ance com­pa­ny held as­sets of $2.1 bil­lion (US$313 mil­lion).

AM Best said the Coral­isle Group is a whol­ly owned in­ter­me­di­ate hold­ing com­pa­ny of Ed­mund Gib­bons Ltd, the Group’s ul­ti­mate par­ent com­pa­ny. The com­pa­nies are domi­ciled in Bermu­da.

The non-ex­ec­u­tive chair­man of Coral­isle Dr. The Ho­n­ourable E. Gra­ham (Grant) Gib­bons, the non-ex­ec­u­tive deputy chair­man of Coral­isle J. David Gib­bons and the ex­ec­u­tive di­rec­tor and group chief ex­ec­u­tive of Coral­isle, S. Naz Far­row all sit on the Bea­con board.

Ac­cord­ing to its web­site, Coral­isle on­ly iden­ti­fies CG Unit­ed In­sur­ance Ltd as its busi­ness in T&T.

Both Bea­con and CG Unit­ed of­fer the same prin­ci­pal prod­uct prop­er­ty and ca­su­al­ty in­sur­ance; es­sen­tial­ly Coral­isle is com­pet­ing with it­self in sev­er­al ter­ri­to­ries, in­clud­ing T&T.

As of 2020, the five biggest play­ers in the gen­er­al in­sur­ance busi­ness in terms of as­sets were Guardian Gen­er­al, Tatil, Mar­itime, Colfire and Sagi­cor, ac­cord­ing to The Pre­mi­um, a pub­li­ca­tion by pro­fes­sion­al ser­vices firm EY, which takes an in-depth look at the in­sur­ance in­dus­try in T&T.. Bea­con was ranked sixth.

In April, ANSA McAL com­plet­ed its ac­qui­si­tion of Colfire.

Com­bined, two groups - Guardian Gen­er­al and Ansa will con­trol an es­ti­mat­ed 49 per cent of the gen­er­al in­sur­ance mar­ket.

While gen­er­al in­sur­ance com­pa­nies are con­sol­i­dat­ing, there are con­cerns about the bro­ker­age busi­ness.

Last month, in­sur­ance bro­ker Neil Go­sine, of Com­pre­hen­sive In­sur­ance Bro­kers, raised con­cern about changes in the in­sur­ance bro­ker­age busi­ness af­ter 16 in­sur­ance agen­cies ceased to hold reg­is­tra­tion cer­tifi­cates as at June 20, 2023.

In a let­ter pub­lished in the Guardian, Go­sine said: “It’s com­ing down to the point where in­sur­ers will not need bro­kers or agen­cies any­more once they es­tab­lish that link to di­rect­ly deal with the bro­ker’s clients. They will no longer need nor re­spect the bro­kers thus even­tu­al­ly forc­ing them out of the mar­ket. It’s an un­ten­able sit­u­a­tion!

“This seems to be the plan that many large in­sur­ers in the mar­ket are con­sid­er­ing. Of­fer­ing re­duced rates to di­rect clients and ad­di­tion­al dis­counts to cap­ture their busi­ness di­rect­ly.

“One ma­jor in­sur­ance com­pa­ny re­cent­ly ad­vised their agen­cies and bro­kers that they have ab­sorbed a sub­stan­tial pro­por­tion of ad­di­tion­al cost while on­ly trans­fer­ring a small el­e­ment to our mu­tu­al cus­tomers by their in­creased pre­mi­ums.

“What a farce, as in­creased pre­mi­ums have tak­en ef­fect across the board by sub­stan­tial amounts since last year. They ad­vised that the ef­fects of these costs have placed con­sid­er­able pres­sure on their mar­gins. Mind you this is one of the largest in­sur­ance com­pa­nies in the mar­ket and with­in the re­gion that made huge prof­its pre­vi­ous­ly and now af­ter their re­view and eval­u­a­tion of their prof­itabil­i­ty they have de­cid­ed to look over their com­mis­sion pol­i­cy, with bro­kers and agen­cies. Their de­ci­sion was to re­duce and or re­vise their nor­mal com­mis­sion struc­ture ef­fec­tive Au­gust 1, 2023 to all bro­kers. Once one ma­jor in­sur­er in AT­TIC (As­so­ci­a­tion of Trinidad and To­ba­go In­sur­ance Com­pa­nies) makes this move our ex­pe­ri­ence is that oth­er in­sur­ers fol­low suit,” he had ex­plained.

“The plan al­leged­ly is that AT­TIC and the Cen­tral Bank have de­cid­ed to re­duce the num­ber of pro­duc­ers in our mar­ket. First strat­e­gy of the plan will shrink the amount of com­peti­tors out there, clear­ly af­fect­ing the agen­cies first, ev­i­dent from what we are see­ing by many clo­sures then tar­get the small­er bro­kers. The mid-sized bro­kers will have no al­ter­na­tive but to merge or fold up if they want to sur­vive. The plan seems clear to any­one with­in the in­dus­try,” he had said.