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IronRock regrets delays in IPO target | Companies

After a profit of $ 48 million at the end of 2020 but a half-year loss of nearly $ 18 million in June 2021, general insurer IronRock is dampening expectations after falling financially in the fifth year of its launch.

IronRock Insurance Company went public as a start-up for equity in early 2016 and has been slowly expanding its business since then, but is still in the bottom quartile of the 11 publicly traded general insurance companies.

The company originally assumed it would amass more than $ 2 billion in assets in 2020 and generate net income of around $ 237 million. But it stayed below those values ​​with $ 1.4 billion in assets and $ 48 million in profit.

Managing Director Evan Thwaites says the missed targets were primarily related to issues related to the average rate at which insurance is being sold in the market.

“Our IPO was based on evidence that insurance tariffs would be maintained. It got very weak shortly after we entered the market, and the average price of insurance products actually fell in our second year of operation and is well below our IPO numbers, ”said Thwaites.

Revenue was impacted by lower than expected investment returns.

Leading insurance companies say that depending on when premiums are received and claims factoring, insurance companies generally invest the premiums paid by policyholders to generate more revenue. This means that insurance revenues are sensitive to any change in interest rates.

“At the time of our IPO, I think the interest rates on Treasury bills were around 4 to 5 percent. those rates have now dropped to 1-2 percent, “Thwaites told shareholders at the company’s annual general meeting on Tuesday to explain the lower-than-expected revenue.

“Unless investment returns change and the current premium pricing conditions persist, let’s talk another two years until 2023, for example, before we hit the $ 2 billion investment mark,” Thwaites told shareholders.

The Bank of Jamaica has just hiked its base rate, or benchmark rate, which could eventually lead to a spike in yields on debt securities.

In the future, IronRock would like to use technology for a competitive advantage. The latest offer was the launch of an insurance product with telematics in April 2021 called PAYD or “Pay as you drive”. The directive aims to promote road safety by promoting good driving habits, which we hope will lead to fewer deaths and injuries.

Thwaites does not provide any information due to competition concerns, but said IronRock is “very pleased” with the product’s performance.

“Our customers have indicated that it is a very useful product and to date none of the customers who have used this product have had an accident. It’s an excellent result for us, ”he said.

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