Last October, Ian Chinapoo began a new journey.
After four years as CFO of Massy Holdings, Chinapoo took on the role of CEO of Guardian Holdings Ltd.
Before his stint at Massy, Chinapoo had served as the executive director of the Unit Trust Corporation.
While his new role remains within the financial services sector, the insurance sector has proven a new challenge.
“I’ve always pursued areas of employment that not only further career development, but also seek to connect to society,” said Chinapoo of his new role, adding:”When you connect to people and you can make a difference, it gives you a different level of passion and inspiration and that is what has moved me personally. Coming to insurance is, I think, at the pinnacle of that, because seeing people at their worst and being able to help them. Our purpose is of course to be world-class but to create that financial freedom in good times and bad.”
The COVID-19 pandemic however has proven to be an extremely challenging period for the insurance sector, as Chinapoo noted that many people are still struggling following the global event and the Guardian team has had to find ways to provide this assistance despite the challenges.
“We’ve been through, the world has been through, one of the worst times in its history, and with the pandemic and you know, looking at an organisation that was able to help so many people and getting ready for whatever happens next is something that I would love to bring all of me and all of this organisation to achieving,” he said.
The insurance industry did see some recovery last year as more people returned to work with the easing of restrictions around the world.
“Two things I have noticed one is that people are much more aware of mortality. Everybody has had a family member, or friend, touched by this pandemic. So what we’re obviously seeing is that there are people who are much more aware and taking greater care of themselves or are thinking about their families in terms of, for example, life insurance,” said Chinapoo.
He said in the insurance industry it is understood the pandemic has put some people under financial pressure. That led to an increase in insurance policies lapsing–people with insurance policies who were not able to keep paying their premiums on time.
“So that’s where we would have had programmes where you could have done instalment payments, you could have got a deferral of time to pay and reinstate your policy and what we’re seeing now a year and a half, two years coming out to the pandemic is that people are coming back and bringing those last policies back into force. So you know, it was a tough time.”
But the return of a sense of normalcy has brought forward new challenges. In the GHL’s financial report for its first quarter, (the period from January 1 to March 31, 2023) the company reported a profit of $61 million, a decline of $68 million or 53 per cent when compared to the profit of $129 million recorded for the same period last year.
Despite the drop in profits, Chinapoo said these were good expenses, which would augur well for the company in the long term.
“In the insurance industry, there are times when you incur expenses today, but you’ll generate revenues tomorrow. And also, some of our expenses are what I call good expenses. So, for example, the increase in claims in our Jamaica franchise was over JA$400 million Jamaican that’s roughly about TT$20 million. We want to pay these claims. That’s why we’re here. So while in the near term, that will be a higher expense, in the long term it means people will see the value of the product that we offer,” said Chinapoo.
GHL is 61.77 per cent owned by NCB Financial Group (NCBFG), a company that was incorporated in Jamaica in April 2016. Some 52.72 per cent of NCBFG is owned AIC (Barbados), a company that is controlled by Jamaican billionaire Michael Lee-Chin.
Chinapoo said the surge in interest rates would benefit the company in the long term.
“We have a situation that we’ve long anticipated which is a rise in interest rates, which in the long run will benefit us because we do manage significant investment portfolios. But you know, those interest rate increases will benefit us over time. However, we do have policies that have an interest rate or investment component. When interest rates rise, we have to put aside in our reserves, a higher portion of our funds to support those higher investment or linked policies. And that’s what we did to the tune of $67 million there as well.
“So when you look at the lower profit in the first quarter, because of high expenses, despite growing revenues, you see that we anticipate that that will yield benefits for us in the long term and an insurance company thinks long term. So that’s the nature of how the accounting works in our industry,” said Chinapoo.
GHL’s share price dropped 14.20 per cent last week, closing trading on Friday at $21.15.
However, while his outlook for Guardian was positive, he hoped that Trinidad and Tobago would also make the right adjustments in the midst of a volatile economic climate which has driven up those interest rates and placed additional inflationary pressure on the public.
He said, “Clearly not just the challenges of a low-interest rate environment, limited access to foreign currency, challenges in the global economy and volatility of commodity prices. Because we are a commodity based economy, higher inflation, which I think is one of the biggest challenges, because, every time we go to the grocery, the same item is now more. All of these factors impact how people get things on their table for their families, how people are able to get to work and the cost of doing that. We see these challenges every day.”
He said Trinidad and Tobago would have to show some innovation to address these growing concerns, but he felt there were signs that those adjustments have started.
“We need to find ways as an economy to attract more foreign direct investment, not necessarily only in the commodity sectors. And when you look at our degree of domestic spending versus importation, we really need to continue to focus on that and, you know, build our reserves.
“We tend to think of our foreign reserves as being adequate, but you never know when you’re going to be drawing down on that. So you need to always be focused on building up the foreign reserves because we are a small open economy and we are just like an insurance company that needs reserves for the long term. The country needs to focus on that,” he said.
Chinapoo pointed out there was a time that T&T, back in the in the 1980s or late 1970s, where our level of domestic savings was over 20 per cent. We need to get back to that level. Right now, we are much lower than that. So these are the things in economy that I pay attention to. When you think about how we earn our way out of challenges as an economy, it’s our productivity. It’s about finding ways to invest externally so that we create diversified sources of income and continue to invest and maximise our capital investments in our own economy so that we can continue to be one of the engines of the Caribbean macroeconomy.”
He added, “There are signs that there are areas of the economy that are performing well, performing strong. The banking system has been strong. We’ve maintained very low levels of default or we continue to be able to provide capital to businesses. What I think we really need to be focused on is to turn around some of the challenges we have.”
