Suriname’s Assuria on Gulf Insurance buy: No downsizing

Assuria NV, the largest Suriname-based insurance company with an asset-base of over US$200 million, is expected to fully acquire Gulf Insurance Ltd pending regulatory approval by the Central Bank of T&T and the Central Bank of Suriname. 

Directors Mario Merhai and Armand Achaibersing spoke to the Business Guardian last Tuesday at Gulf Insurance, Port-of-Spain headquarters, to find out more about the acquisition.

With a strategic plan to grow the business, Merhai said there are no plans to cut staff, costs or even to downsize in any way.

“The company has been doing very well. There are areas where it can achieve more in terms of growth of clients and, obviously, new products features and more distribution channels. That’s where we see opportunities.”

Positioning itself as the undiscovered gem of the Caribbean, Assuria’s new plans would mean incentives to its customers to insure with Gulf Insurance Ltd.

Once the regulatory bodies give their approval, the first task would be to meet with the management team to determine the strategic direction going forward.

“The first thing would be to sit down with management, assist the sales force to see how we can develop the local market to a better extent,” he said.

Commenting on the acquisition, he said: “With the acquisition of Gulf (Insurance Ltd), our wings will be far more spread than currently is the case.”

Given that Assuria NV has made a success of insurance in Suriname, does this mean the company would be imposing its procedures and practice on Gulf Insurance Ltd?

According to Merhai, the existing model stays.

“The idea is to use the existing culture in the company and add to that and try to fit in the Trinidad (and Tobago) market as good as possible. We don’t want to change the culture of the company or the culture of doing business of the company to the extent that we want to fit into what we use in Suriname. 

“I think we understand that if you go into a territory and you do an acquisition in that territory, you try to blend into what is the custom there.”

The T&T insurance market is one with opportunity and one that is developing, Merhai said. He is impressed with the regulations governing the insurance sector in T&T because they meet international standards. 

Keeping promises

As for the new Insurance Act which requires insurance companies to be better capitalised, Merhai said: “Financial institutions have to be well capitalised so that they can give the promise they have made when they sell their products to the market.”

“You are signing a promise if something happens in the insurance industry, that you will be there and offer financial comfort, to be able to do that you need to be well-capitalised. You need to have enough capital in your company, you need to be a strong company. I think the underlying idea of all these legislation is that we want to have strong companies.”

Asked whether the increased capital required by the legislation means insurance companies would increase their premiums, he said: “Not necessarily. In Europe and the United States where the regulatory framework has been tightened, it has not led to an increase of premiums. The shareholders have had to come up with extra money to strengthen their companies.”

The act, he believes, is “moving towards a more risk-based framework. As I understand it, it is based on a North American practice and it’s why everybody is moving towards it in the world.”

Corporate governance should be a way of life in any company and, for Assuria, it is top priority. Managing director, John Gonzales, said Assuria brings many pluses to Gulf Insurance, including actuarial experience. 

Asked what prompted the board of directors of Gulf Insurance to offer itself for acquisition, Gonzales said: “There were some challenges facing the former executive. I was asked to leave my retirement to help out the company, which I gladly did.”

Asked to identify the challenges, without going into the details, he said it involved regulatory matters which have been rectified. Gonzales said with the acquisition, Gulf Insurance is now in a stronger position and will ensure adherence to all the regulations and requirements of the new Insurance Act. 

T&T and St Maarten are the strongest markets in which Gulf Insurance operates. Describing the St Maarten market, he said: “It is well-regulated. T&T in itself has been a bit behind. A lot of the countries in the region has legislation. It (St Maarten market) has become more broker-oriented like T&T. Most of the islands were agency-run producers/businesses now. St Maarten is moving more towards brokers who want to make the market more competitive.” 

With the property aspect of its business in St Maarten performing exceptionally well, expansion is an option. 

Asked if he anticipates more companies to consolidate due to the requirement of the act to greater capital, he said, once the business is managed properly, there shouldn’t be any companies consolidating due to the new laws.

About Assuria

• Sells motor, life, health and general insurance
• 2001 Assuria bought the shares of the largest commercial bank in Suriname
• Operates mainly in Suriname and Guyana

About Gulf Insurance Ltd
• longstanding property and liability insurer
• branches in Anguilla, British Virgin Islands, Dominica, Turks and Caicos, Cayman islands, Grenada, St Kitts, St Lucia, St Maarten and the US Virgin Islands