Home' Trinidad and Tobago Guardian : November 23rd 2014 Contents NOVEMBER 23 • 2014 www.guardian.co.tt SUNDAY BUSINESSS GUARDIAN
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For the first time, Sagicor Finan-
cial Corporation s interim
accounts disclose the results of
its major subsidiaries, informa-
tion that was previously shown
only in its annual accounts. On
this occasion, only profit figures for the 2013
individual comparatives were given.
In subsequent reports, this presentation
would make it easier for investors to follow
the progress of its three major geographic seg-
ments as they evolve.
For the three months ended September 2014
net premium revenue declined from 2013 s
US$191.4 million to US$148.4 million. Much
of this was due to the substantial (90 per cent)
reinsuring of its annuity premiums written in
the USA. In addition, single premium annuities
were significantly higher in 2013.
Net investment and other income rose mod-
estly to US$101.4 million from the US$100.5
million in 2013 s third quarter. Consequently,
total revenues for this quarter closed at
US$249.7 million from US$291.9 million in
the same period in 2013.
Total benefits declined to US$134.6 million
from the 2013 level of US$191.6 million; this
result was helped by lower benefits for single
Total expenses rose from US$85.2 million in
2013 s third quarter to US$101.6 million in the
current session. The acquisition of the Jamaican
banking operations of RBC Royal Bank account-
ed for much of this increase; restructuring
charges contributed US$6.0 million while oper-
ating costs further added to current expendi-
Many of the assets and liabilities of the
acquired banking operations in Jamaica have
not yet been adjusted to reflect fair market
values; when this exercise is completed in this
quarter, it will generate goodwill, either positive
After accounting for the total of benefits
and expenses for this quarter of US$236.2 mil-
lion, SFC was able to report pre-tax income
of US$13.5 million. With an effective tax rate
of only 11.75 per cent for the period, the after-
tax profit registered at US$11.9 million.
Positive income of US$0.9 million from its
discontinued operations boosted the net income
for the period to US$12.8 million. Of this total,
US$8.8 million was attributed to common
shareholders; this represents an improvement
of 79.4 per cent over the US$4.9 million earned
for the same period in 2013.
Referring to its three main geographical oper-
ating segments, Sagicor Life s operations in
the Eastern Caribbean and T&T generated the
greatest profit to shareholders; this result moved
from US$29.3 million in 2013 to US$33 million
The Jamaican operations are the largest seg-
ment, both in terms of revenues and net
income. However, since SFC does not totally
own the Jamaican operations, that subsidiary s
contribution to shareholders was less robust.
The net result fell significantly from US$19.2
million in the 2013 period to US$17.4 million
Two factors affected the results attributable
to shareholders from the Jamaican operations.
First, in 2013, SFC owned 51 per cent of the
company which, since the second quarter of
2014, was reduced to 49.11 per cent. In addition,
the value of the Jamaican dollar declined from
J$102.04 to US$1.00 on September 30, 2013
to J$112.15 on September 30, 2014.
The American operations showed lower prof-
its due to changes in how much business that
subsidiary retains for its own account.
On a year-to-date basis, total revenues for
the nine months declined to US$751.4 million
from US$790.6 million a year earlier. Due to
higher one-off costs, particularly in Jamaica,
profit to shareholders from continuing oper-
ations slipped to US$22.4 million from US$23.8
million in the first nine months of 2013.
More significantly, total profit to shareholders
rebounded from a loss of US$17.45 million in
2013 to a robust figure of US$21.8 million in
the current period. The major reason for this
improvement was the significant reduction in
losses from its discontinued UK operations;
this value fell to US$0.6 million from US$41.2
million in the 2013 period.
These results reflect an EPS of US$0.07 in
the current period versus a loss of US$0.06
in the comparative 2013 period.
When Sagicor sold its European operations,
it was required to retain an interest in the 2013
results for a period of five years ending in 2018.
Until that date, those run-off results will create
an undesirable element of variability for its
current (and future) earnings.
Now, it is the company s intention to elim-
inate that uncertainty by exploring the pos-
sibility of purchasing appropriate reinsurance.
If successful, this cost, together with any appli-
cable 2014 adjustments, will be included in its
This initiative, together with its
efforts to streamline its busi-
ness processes across multiple
jurisdictions and the likelihood
of a slower rate of devaluation
of the Jamaican dollar should
contribute to an improved earnings stream in
During the third quarter of 2014 Sagicor
Group Jamaica (SGJ) registered lower revenues,
which came in at J$11.15 billion; in the same
period in 2013, revenues were J$13.73 billion.
The largest swing was recorded under net
premium revenues, which registered at J$6.74
billion. This represented a decline of J$3.73
billion or 35.6 per cent over the J$10.47 billion
recorded for the same period in 2013. In 2013,
SGJ recorded significant bulk annuity premiums
during this quarter.
Even with lower net premiums, insurance
benefits increased by 12.6 per cent to J$4.38
billion; in 2013, this figure was J$3.89 billion.
Fortunately, changes in insurance and annuity
liabilities fell to J$0.81 billion from J$5.15 billion
in the comparative 2013 period.
Administrative expenses climbed by 87 per
cent to end at J$3.42 billion from last year s
J$1.83 billion. The major reason for this change
was the inclusion of additional costs relating
to the purchase of the Jamaican operations of
RBC Royal Bank.
Overall, profit attributable to shareholders
declined to J$1.08 billion from J$1.52 billion a
year earlier. On a per share basis, current EPS
fell to J$0.28 from J$0.40 previously.
At the year-to-date level, total revenues, at
J$34.19 billion, were 9.6 per cent higher than
the J$31.19 billion for the first nine months of
2013. Not surprisingly, following the third quar-
ter contraction, net premium revenue, at J$22.12
billion, was lower than the J$22.35 billion record-
ed for 2013. As noted earlier, in 2013, bulk
annuities of J$4.8 billion boosted net premium
revenues for that year.
Registering notable growth was net invest-
ment income, which clocked in at J$8.79 billion;
this figure represented an increase of 53.7 per
cent over the J$5.72 billion recorded for the
2013 session. Last year, this income stream
was negatively impacted by the national debt
exchange (NDX) programme. Also, the figure
as at September 2014 marginally exceeds the
J$8.78 billion recorded for the twelve months
to December 2013.
On the expenses side and following from
the earlier comment, administrative expenses
rose by 34.9 per cent to J$7.52 billion from the
previous level of J$5.57 billion.
On a positive note, changes in insurance and
actuarial liabilities declined to J$5.71 billion
from J$6.73 billion in the earlier comparative
Both premium and other taxes and net insur-
ance benefits rose. In the latter s case, the
increase was 10.4 per cent, moving from J$11.47
billion in the 2013 period to J$12.67 billion in
the current session. In the case of the former,
the increase was by 110.9 per cent as those
taxes consumed J$937.4 million in the current
period versus J$444.4 million in the 2013 peri-
od.The current period s results were helped as
its Costa Rican joint venture operation, Capital
& Advice, moved from a loss of J$20.9 million
in 2013 to a profit of J$12.8 million.
Overall, the profit attributable to shareholders
rose marginally to J$3.79 billion from J$3.70
billion in the 2013 period. This translated into
a slightly improved EPS of J$0.99 compared
with J$0.98 in 2013.
On November 7, 2014, SGJ paid an interim
dividend of J$0.28, most of which benefitted
its parent company, SFC. Co-incidentally, this
dividend matched the third quarter s EPS.
During the fourth quarter, SGJ will have to
adjust the values of the acquired RBC Royal
Bank assets to market prices; this could result
in either a positive or negative goodwill move-
ment. Almost half this value will then flow
through to its parent, SFC.
Q3 results for
and Sagicor Group
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