Market volatility and fallout from the COVID-19 pandemic have left Colina Holdings Bahamas Limited (CHBL) with softened year-on-year results in its half-year financial statement ended June 30, though the company maintains its balance sheet is strong enough to withstand the volatility.
According to a statement from CHBL, its net income attributable to ordinary shareholders was $3.6 million or $0.15 per ordinary share for the first half of the year, while in the same period in 2019 the company recorded net income attributable to ordinary shareholders of $6.6 million and $0.27 per ordinary share.
“The company’s results continue to be significantly impacted by mark-to-market price adjustments on its investment securities,” the statement pointed out.
“These mark-to-market revaluation losses were reflected in net investment income which has decreased to $0.9 million compared to $21.5 million in the prior year. Additional fair value losses were recognized through the revaluation reserve on investment securities classified as available for sale totaling $7.8 million.
“The mark-to-market adjustments reflected in the income statement and revaluation reserve have affected the investment securities balance at June 30, 2020 which totals $434.8 million, a decrease from $445.8 million at December 31, 2019. Total assets at June 30, 2020 were $778.2 million, with invested assets remaining the largest component of total assets, comprising 78.1 percent of total assets.
“The company ensures that as part of its long-term strategy, that it maintains a strong capital base to withstand these interim periods of price volatility.”
CHBL Chairman Terence Hilts said in the statement that local commercial activity has been stifled in the first half of the year due to COVID-19.
The statement revealed that the company’s gross premium revenues were down $4.2 million as new business and renewal premiums were hit by the pandemic.
“Net premium revenues through June 30, 2020 totaled $53.5 million compared to $58.5 million for the same period in 2019,” the statement noted.
However, CHBL explained that the mark-to-market revaluation adjustments that are affecting net investment income is the primary driver of the company’s reduction in total revenues, which was down almost $30 million year-on-year, from $90.9 million to $63.5 million.
CHBL added, though, that the decrease in revenues was offset by reduced claims from policyholders benefits. Claims year-over-year fell from $44.2 million in 2019 to $39.1 million in the same six-month period this year.
“Additionally, offsetting the impact of the negative investment returns is a reduction of provisions for future policyholder benefits totaling $7 million, compared to an increase in actuarial reserves in the prior year totaling $12.1 million,” the statement pointed out.
According to the statement, the company’s shareholders ratified a payment of a $0.16 dividend per share, totaling $3.9 million, to the Class “A” ordinary shareholders, given the company’s performance in 2019.
“Prior to any consideration of dividend distributions, we carefully assess the company’s capital position,” said Hilts.
“We remain focused on ensuring that the company’s capital base remains sufficiently strong to meet future obligations to its policyholders and shareholders.”