New owners weigh breakout strategy for Advantage
Published:Friday | October 4, 2019 | 12:20 AMKarena Bennett - Business Reporter
A dvantage General Insurance Company reported record premium income of $5.8 billion last year, its best showing in reviewed accounts dating back a dozen years.
But it’s been six years since the general insurer first broke into the $5-billion revenue band, where it has remained since 2013, and now its new owners have signalled that their immediate focus is finding ways to grow the business.
The sale of Advantage General by NCB Capital Markets to a three-member consortium-led by Sagicor Investments Jamaica Limited, closed on Monday, September 30. Under the US$50.5-million deal, Sagicor will own 60 per cent of Advantage, while offshore company Fundy Bay Equity Holdings Limited will hold 34 per cent and Resources in Motion Limited, or RIM, will own six per cent.
Sagicor Investments’ stake in Advantage will be held through wholly owned subsidiary Phoenix Equity Holdings Limited. Except for Mark Thompson, the CEO of Advantage General, who retains that position under the new ownership, the other persons associated with Fundy Bay have not been disclosed. RIM is controlled by businessman and investor Donovan Lewis.
Efforts to reach Thompson for comment were unsuccessful.
The buyers have acquired a company with $4 billion of accumulated profits, more than half-billion dollars in cash that is mostly held as investments, a book value of $6.7 billion and no borrowings.
Advantage General’s portfolio is heavily weighted towards motor coverage. It operates a branch network of 11 offices across Jamaica, and holds the number three or four slot in a market of 11 general insurers, says Christopher Zacca, the chairman of Sagicor Investments Jamaica, president & CEO of Sagicor Group Jamaica, and a director on Advantage General’s newly formed board.
Advantage made a large profit of $904 million last year, but that’s far from its best performance. That happened in 2016 when the general insurer made $1.3 billion. The year before that, the company’s bottom line topped $1 billion for the first time, based on accounts viewed on its website that date back to 2007.
The new board of directors for Advantage General Insurance was to convene for its first meeting on Thursday. Its members are: Christopher Zacca; Executive Vice-President of the Employee Benefits Division of Sagicor Life Jamaica, Willard Brown; Senior Vice-President of Sagicor Group and CEO of Sagicor Investments, Kevin Donaldson; chartered insurer Dorothy Russell-Clarke; attorney-at-law Kathryn Lewis; and John Bell.
Subsequent to the closing of the deal, Sagicor Group issued a statement saying it would be integrating Advantage into the group.
But asked what that process entailed, Zacca, who heads Jamaica’s largest insurance company, which serves the life market, said on Wednesday that those details were still to be worked out.
“I won’t be able to give any details at this point, because the board has just been formed and we will be laying out a strategy in a short time. But at this point, it will be premature to speak to plans,” he told the Financial Gleaner.
Zacca noted that Advantage will continue to operate as a separate entity, but Sagicor will provide some services, including audits, financial accounting and risk management.
“It will have its own governance and board. However, Sagicor will provide some shared services for it. But for the most part, it will be self-sufficient. In other words, the core functions, they will carry out; and some of the back-end services, we will carry out,” Zacca said.