With the country’s strongest capital and liquidity position, TF Holding, the leading private investor in the Faroe Islands — and by far the leading insurance group — reported a record profit for 2009.
It was hardly a surprise when representatives for the fledgling offshore oil and gas sector in the Faroe Islands signed a joint contract with the Faroe Insurance Company — commonly known as Tryggingarfelagið Føroyar, or TF — to reduce risks and liabilities related to exploration operations in Faroese territory.
With an overall market share of around 80 percent, TF offers insurance solutions for large and small businesses as well as consumers.
The group is likewise the largest private investor in the Faroe Islands with shares in a wide range of sectors, from tourism and information technology to aquaculture and industrial manufacturing.
The company took a hit from the global financial crisis in 2008, incurring large unrealized losses from securities. A year later, however, stock gains have turned the tables decisively, aided by increased revenues on the domestic arena, allowing TF Holding to emerge strengthened from the crisis, reporting a record after tax profit of 207 million dkk (28m eur).
Throughout the period, still, TF has remained financially sound with solvency and liquidity strong. At year-end 2009, the equity capital base was 1.5 billion dkk (207m eur) — exceptional for any Faroese enterprise.
“We generally follow a conservative policy when it comes to investments and risks,” said TF Holding chief executive Gunnar í Liða. “Most of our investments are long-term commitments and not financed by credit. This strategy has served us well in the past and also helped us weather the financial storm of 2008.”
TF has invested in various securities — e.g. stocks, bonds, mutual funds — and a few individual companies abroad, including a commercial bank, a retail chain, and an information and communication technology provider. Yet the bulk of the group’s investments are placed in specific Faroese businesses, in line with TF’s stated mission: “To generate economic security and progress in the Faroe Islands.”
With its current organizational structure dating back to 2003, TF was established in 1998 as a mutual insurance company, fully owned by its policyholders via TF Holding. The business is built on decades of experience from the Faroese insurance sector prior to the liberalization of the market in 1997. TF Holding today encompasses five business divisions — Tryggingarfelagið Føroyar, general insurance company; Betri Pensión, pensions and life insurance; TF Ognir, internal real estate; TF ĺløgur, investments; and Faroe Insurance Company Guernsey, captive insurance.
“TF has a unique expertise in consumer, business, and maritime insurance,” Mr. í Liða said. “Our market share is about 80 percent and we’re a natural first choice when it comes to insurance in the Faroe Islands.”
Diverse portfolio: A growing part of TF’s clientele consists of foreign businesses engaging in trade or industry in the Faroes and needing insurance coverage. Said Mr. í Liða: “One example is the international companies that are taking part in offshore exploration activities here. Working with such clients as insurance partners is very important for TF because it deepens our knowledge of various aspects of the oil and gas industry and provides us with the opportunity to develop our expertise further. Overall, the Faroese business scene has clearly become more internationalized in recent years and, as a result, we’ve seen an increase in international insurance business. For foreigners who do business in the Faroes we’re happy to give advice on insurance matters and to offer first-class insurance coverage.”
As to investment opportunities, TF likes to keep an open mind with regard to company size and sector according to Mr. í Liða.
“Our portfolio is diverse and includes e.g. tourism, IT, fish farming, and manufacturing. Foreigners looking for investment partners in the Faroes should know that we’re open for business. We’re in fact always on the look-out for new opportunities — that is, good long-term opportunities. We usually assess opportunities by the potential for financial return on investment as well as the wealth generating potential in relation to the socio-economic dimension. Remember, our mission is to help generate economic security and progress in the Faroe Islands.
“The sticking point is not so much whether we’re dealing with a startup looking for venture capital or an established organization looking for joint venture investors to take part in new business development. In fact, if we find the ideas we’re presented with to be innovative and interesting, we’ll be likely to take a closer look.”
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