First Mutual Holdings Ltd (FML) has reported a US$1 million technical profit in the first four months of 2014 to April despite a difficult operating environment, group CEO Douglas Hoto said. In a trading update to shareholders at an annual general meeting held in the capital this week, Hoto said the business remained profitable from operations with the second half of the year expected to be much better.
“The operations are positive, but the market has not been very good,” said Hoto. “We hope that it might improve as we go into the second half of the year, but that is not part of our main plans as we are trying to be prudent.”
Revenues for the period under review stood at US$41 million and are largely in line with the group’s target of US$100 million revenues annually.
Hoto said gross premium written stood at US$38,2 million, 14% up from US$33,6 million in the same period in the prior year while retrocession stood at US$2,8 million, a 31% drop from US$4 million in the corresponding period in 2013.
“Retrocession has gone down from US$4 million to US$2,8 million signifying more retention of business internally and also the signing of some of the projects contracts,” he said.
Net premium written grew by 20% to US$35,4 million while net premium earned grew 22% to US$34,6 million compared to US$28, 4 million in 2013. Investment income for the period was at US$1,97 million compared to US$4,7 million in the same period in 2013. Claims for the period under review amounted to US$21 million, up 30% from US$14,7 million.
“Remember I said we are going to implement a robust approach on claims. Claims are up 30% when net revenues are up 20% which may indicate something is not very well, but in fact the claims provisions were still at formative stage and have now been incorporated into the actuarial cycle which is now being implemented,” Hoto said.
“Some of our business is cyclical and will even out at the end of the year.” Hoto said total expenses went up 17% to US$36,8 million.
The company’s statement of financial position shows total assets amounted to US$216, 5 million at the end of the period under review, up 6% from US$205 million as at December 2013.
A 38% growth was registered on trade receivables to US$11,3 million while cash and cash equivalents also grew by 24% to US$22,8 million.
Property investment also grew by 9% to US$125,9 million. Policy holder’s funds were flat, shedding 1% in value terms between December 2013 and April 2014 to US$83,5 million.
Hoto said the company’s low cost mobile-based funeral assurance product, e-FML, launched late 2013 has registered a huge number of policies.
In its last full year results for the period ended December 2013, FML reported a 14% growth in gross premium written to US$101,1 million mainly driven by its FML Health business and a US$1,1 million technical profit which was 93% down from prior year.