Life insurer Hansard Global has halved its dividend, as it pivots to Latin America while continuing to contest litigation against Hansard Europe.
The group announced profits after tax of £6.8m ($8.9m, €7.6m) in the financial year to June 2018, down 12% from £7.7m in 2017.
Underlying profit fell from £9.8 to £8.6m. The firm says the adjustment to underlying profit is primarily due to the costs of defending litigation against Hansard Europe, which closed to new business in June 2013.
Exposure to outstanding writs has risen to €20.1m (£17.9m, $23.6m) up €3.7m (£3.3m, $4.4m) from the half-year which the firm attributes to a class action in Italy.
Italian group legal action
The group says it continues to manage carefully its litigation exposures relating to the legacy operations of Hansard Europe and believes it has “strong defences against the claims being made”.
The primary driver of the increase in exposure has been in relation to a new group action in Italy focused on a range of funds which it says have been illiquid for a number of years.
During the year, the group successfully defended nine cases with net exposures of approximately €8.2m (£7.3m), including its largest single case in Belgium. It says this affirms confidence in Hansard’s legal arguments.
Six of these cases have subsequently been appealed.
The firm adds: “While we assess the risk of loss from these cases now to be lower, we have retained their exposures in full within the contingent liabilities total in the annual report and accounts.”
Re-assessing its distribution strategy
The firm listed several significant changes in strategy in its results statement, including assessing its distribution strategy in light of the incoming Isle of Man Regulatory Roadmap and establishing a new group insurance company in the Bahamas.
It is also moving forward with a licence application in Japan, while assessing the ongoing need for certain branches and satellite operations.
Group chief executive Gordon Marr said: “The group’s profit performance in 2018 reflects a year of consolidation of the sales growth achieved in the past two years and investment in the future of the business. During the period, we have repositioned the group to ensure it fits with future global regulatory change and development.
“We have established a new group insurance company in the Bahamas and are making good progress with our application to operate in Japan. These initiatives position us well to take advantage of global growth opportunities going forward.”
Dividend cut in half
Hansard says that new business levels were £146.6m on a present value of new business premiums (PVNBP) basis for this year, and similar to 2017.
The firm says this reflects “many positive achievements in each of our regions with the exception of the Far East where we are re-positioning towards locally licensed business”.
The board has proposed a final dividend of 2.65p down from 2017’s 5.3p per share, which it says is in line with previous guidance. This dividend, if approved by the shareholders at the AGM on 7 November 2018, represents a total dividend of 4.45p down from 2017’s 8.9p per share.
