LifeStar Holding plc - Full-Year Results
On 8 May 2020, GlobalCapital plc published its Annual Report and Financial Statements for the year ended 31 December 2019.
Performance Overview
During 2019, GlobalCapital registered a pre-tax profit of €2.1 million compared to €1.2 million in 2018. The increase in profitability was primarily derived from the recognition of an increase in the fair value gains on investment property which amounted to €0.5 million, as well as the net gain on financial investments of €2.1 million compared to a net loss of €2.3 million sustained in 2018. In this respect, the company explained that during the year under review, GlobalCapital Life Insurance Limited (“GCLI”) registered an increase in the interest sensitive single premium and unit-linked businesses whilst experiencing a slight decline in ordinary business, mainly protection. Gross written premium remained virtually unchanged at €12 million whilst benefits and claims incurred net of reinsurance increased by 16.9% to €8.3 million from €7.1 million in 2018.
Meanwhile, GlobalCapital Health Insurance Agency (“GCHIA”) generated a marginal increase in pre-tax profitability as it recorded a profit before tax of €0.3 million compared to the €0.2 million generated in 2018. The slight increase in profitability was attributed to higher revenue generation throughout the year. On the other hand, GlobalCapital Financial Management Limited (“GCFM”) sustained a loss before tax of €0.8 million (2018: €0.9 million loss) primarily due to decreases in revenue of €0.1 million (2018: €0.2 million) following increased competition in the local market, a net additional provision for claims of €0.2 million (2018: €0.1 million) and an increase in administrative expenses necessary to comply with standard license conditions.
The Statement of Financial Position showed a further increase of 11.6% in total assets to €150.2 million, largely reflecting a 13.1% increase in technical provisions to €112.5 million as well as increases in other investments and cash balance. Similarly, total liabilities grew by 12.4% to €134.1 million, primarily on account of higher technical provisions. Overall, the company’s equity base increased by 5.8% to €19.5 million which, in turn, translates into a net asset value per share of €0.652 (31 December 2018: €0.616).
Outlook
In their commentary, the Directors of GlobalCapital explained their intention to continue to operate in line with the Group’s current business plan whilst making reference to the impact of the COVID-19 pandemic. The company noted that the measures taken by Malta to curb COVID-19, including social distancing, has had an impact on the distribution channels of the Group. Moreover, the impact of current economic uncertainties on individuals and businesses is also expected to impact the revenue streams for the financial year ending 31 December 2020. Consequently, it is expected that the Group’s revenue, mainly comprising of gross written premium and commission income for 2020, will be lower than that reported for 2019.
As the Group’s predominant industry is the underwriting of insurance and given the constantly evolving situation brought about by this pandemic, the Board explained that at this stage, it is difficult to assess the financial impact that this may have on the Life Reserve and benefits paid in 2020, including the effects on lapses. However, the Group ensured that any potential deterioration in cash flows with respect to benefits paid in 2020 are expected to be mitigated by the ceded reinsurance programme that the Group has in place.
The Board added that it is also difficult to assess the fair value impact on the Group’s investment properties as the extent of the ripple economic effect COVID-19 may bring about is still uncertain.
However, based on the separate analysis performed by each regulated entity, the Board assured that both the Group and Company should be well capitalized to absorb any foreseeable impact whilst it is envisaged that the regulated companies will continue meeting the solvency requirements.