LONDON (Alliance News) - GBGI Ltd on Wednesday reported a sharp decrease in interim profit despite a slight rise in revenue in a "disappointing but not entirely unexpected" first half.
In the six months ended June, the insurance company's pretax profit decreased to USD1.2 million from USD8.7 million the year before.
GBGI, trading as The Global Benefits Group, said the fall in profit was due to several premium programs not being booked, as was expected, in the first half but instead in the second half.
The company also incurred USD2.1 million of non-recurring, one-off expenses in the first half - including a USD1.5 million investment in its distribution channels.
GBGI's revenue increased to 2.2% USD73.8 million from USD72.2 million. The low revenue growth was attributed to lower commissions and fees.
The insurer's income from gross premium written decreased 3.4% in the period to USD74.9 million from USD77.5 million.
Income from net premiums written increased 43%, however, to USD42.6 million from USD29.8 million as outward reinsurance premiums fell to USD32.3 million from USD47.6 million.
Net claims increased to USD29.7 million from USD25.9 million, giving GBGI a loss ratio of 70%.
The insurer's "proven underwriting excellence" and higher retention levels drove its net written premium growth.
GBGI said its underwriting performance, the "bedrock" of its profitability, has continued to improve year on year.
The insurer declared an interim dividend of USD0.014. The payout is in line with the company's new policy announced in its 2017 full year results.
The company said the new policy is "consistent" with its "prudent approach to maintaining capital adequacy".
Looking ahead, GBGI is confident in its "ability to continue to deliver profitable growth".
The insurer believes it is seeing "continued momentum" in the second half, with gross written premiums "trending well" and a "solid" revenue outlook for the full year.
Chief Executive Officer Bob Dubrish said: "Although our first-half financial results were down from prior year, we anticipate that gross written premiums and underlying net income 2018 will be broadly in line with management expectations.
"There remains a clear market demand for our innovative, international benefits insurance solutions, and we have the people and infrastructure in place to serve these markets. Our ability to have business in 120 jurisdictions is testament to the worldwide expertise that we have developed.
"Our commitment to underwriting discipline continues with the delivery of excellent loss ratio performance over the interim period. Our underwriting results underpin our highly profitable business, and we expect continued positive underwriting performance momentum through the end of 2018."
Shares in GBGI were down 6.6% Wednesday at 99.00 pence each.
