FML to tighten screws on premiums collection

Published: 06 June 2014

First Mutual Holdings will tighten the screws on premiums collection and enhance service provision as part of concerted efforts to maintain growth.

Chief executive Mr Douglas Hoto said after the group's annual general meeting on Tuesday that maximising collections and debt control would be key to achieving growth.

He said that technically, the business was growing as reflected in the top line, but this should be complemented with diligent premiums collection.

"In terms of the top line, the business is growing (as such) minimising debts is important. Secondly, service provision is also important," he said.

Mr Hoto said the group needed to ensure that claims are paid in time to maintain confidence in the operations of the firm during the difficult times.

In a trading update at the annual general meeting, Mr Hoto said gross premium income was up 14 percent to $38,2 million for the four months to April against $33,5 million in the same period last year while retrocession were 31 percent up on 2013 at minus $2 801.

Net premium increased by 20 percent to $35,4 million while net premium earned jumped 22 percent to $35,5 million, which saw total income for the four months to April 2014 surging 20 percent to $37,8 million.

Claims declined 30 percent to $21 million as commission also nosedived, sliding 15 percent to $2,4 million while policyholders went down by 10 percent to $2,1 million.

Expenses fell 17 percent to $36,8 million.
Mr Hoto said that technical profit tumbled 75 percent at $1,1 million.

Total assets for the four months interim period inched up 6 percent to $216,5 million on the back of a 38 percent jump in trade receivable to $11,3 million.

Cash and cash equivalents grew 24 percent to $22,7 million.

Liabilities increased by 6 percent to $216,5 million after trade payables rose by 26 percent to $7,7 million while unearned premium reserve was up 20 percent at $5 million.

Mr Hoto said that the group was also taking measures to avoid risk in the bearish equities, by shifting all its investments into the money market.
FML has about $23 million investment in the money market, where investment is certainly safe although returns have not been too pleasing.

While general returns stand at between 8 percent and 12 percent, Mr Hoto said the group's investments attracted about 10 percent interest annually.

In light of tight liquidity, the company has structured payment terms for its property business to ensure consistent inflows of revenue into the business.

Further, Mr Hoto said the properties unit, Pearl, had sub-divided its properties in the central business district to cater for small-to-medium enterprises.
This comes as demand for rental space has declined markedly.

"To minimise that, we plan to modify some of our central business district offices to accommodate small-to-medium enterprises," Mr Hoto said.

Pearl Properties has, however, been fortunate after securing high profile clients that saw occupancy at one of its properties rising from 75-79 percent.
- The Herald

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