Home' Trinidad and Tobago Guardian : April 19th 2015 Contents Even as it attended to its tra-
ditional businesses, Sagicor
Financial Corporation s
(SFC) Jamaican subsidiary
increased its banking foot-
print and the stage was set
for the company to com-
pletely exit the European
Shareholders were encouraged by the strong
improvement in EPS, which marked a welcome
change from previous years results.
Let us see how this multi-faceted group per-
formed for the year ended December 31, 2014.
Changes in financial position
The huge increases in both assets and liabilities
were driven by the Jamaican subsidiary s acqui-
sition of RBC Royal Bank s Jamaican operations
Total assets climbed by 16.7 per cent to US$6.18
billion from US$5.3 billion previously.
Financial investments rose from US$4.19
billion in 2013 to last year s US$4.66 billion, an
11.2 per cent increase. The major change was
observed under available-for-sale securities,
which rose to US$2.43 billion from the previous
level of US$2.17 billion. Also, loans and receivables
advanced to US$1.89 billion from US$1.67 billion
at the end of the previous year.
Cash resources climbed almost 78 per cent
to US$402.5 million from US$226.4 million as
at year-end 2013. This higher figure includes
US$178.8 million from the RBC Jamaica acqui-
Reinsurance assets moved from US$336.4
million to last year s US$527.2 million. The major
component represented the reinsurer s portion
of non-participating individual life insurance
and annuity contracts (2014: US$448 million;
2013: US$260 million).
Total liabilities advanced by 18.2 per cent to
US$5.41 billion from the previous year s US$4.57
The principal component, policy liabilities,
increased from US$2.89 billion to US$3.12 billion,
or by 8.1 per cent. Within this component, actu-
arial liabilities moved to US$2.56 billion from
the earlier balance of US$2.32 billion.
The value of deposit and security liabilities
climbed from 2013 s US$1.11 billion to last year s
US$1.62 billion. This increase reflects the inte-
gration of the acquired RBC portfolio of liabil-
The most significant change was observed
with customer deposits, which soared to
US$570.6 million from the 2013 base of US$217.2
million. Also showing a strong increase was
securities sold for re-purchase; this component
rose by 26.8 per cent to US$664.8 million from
the 2013 figure of US$524.3 million.
Accounts payable and accrued liabilities came
in at US$197.4 million, an increase of US$66.2
million (33.5 per cent) over the US$131.2 million
as at year-end 2013.
Included in this figure is the sum of US$34.2
million, which relates to a pre-acquisition matter
with the former RBC Royal Bank of Jamaica. A
corresponding receivable from FINSAC, of equal
value, is recorded under miscellaneous receiv-
Total equity rose to US$773.5 million from
US$725.2 million in 2013. Non-controlling inter-
ests moved to $241.5 million (2013: US$218.8
million) while participating accounts posted a
balance of US$364k (2013: US$5.66k loss).
Shareholders equity advanced to US$531.7
million from US$512.1 million. The major move-
ment occurred with the retained earnings com-
ponent, which moved up to US$244.5 million
from the previous level of US$221.5 million.
Here, total comprehensive income of US$61.6
million increased the brought forward balance,
while comprehensive loss from discontinued
operations of US$26.4 million and dividends of
US$19.8 million lowered the figure.
With outstanding shares of 303,917,020, the
book value of each share closed at US$1.75
(TT$11.11) from 2013 s US$1.68 (TT$10.67).
Revenues and profits
In line with a deliberate strategy, more par-
ticularly in the USA market, net premiums
declined to US$625.6 million from 2013 s US$657
million. Annuity premiums declined to US$309.3
million from US$445.1 million. All other types
of premiums registered modest increases.
On the other hand, investment income rose
by 10 per cent to US$307.2 million (2013:
US$279.4 million). Here, the biggest increase
was recorded under interest income, which gen-
erated US$264.4 million in 2014; this was 6.2
per cent higher than the US$248.8 million earned
in In addition, net investment gains rose to
US$47.7 million from the previous year s US$36.5
million, showing a strong improvement of 30.7
Fees and other revenue declined to US$83.3
million from the previous year s US$103.1 million.
The most significant contraction was noted
under commission income from insurance and
reinsurance contracts. This category fell from
US$40.4 million to US$28.7 million.
The acquisition of RBC Royal Bank Jamaica
generated a one-time profit of US$29.1 million.
This occurred because the net assets acquired
of US$113.4 million exceeded the purchase con-
sideration of US$84.4 million.
These changes saw total income for 2014
come in at US$1.045 billion from the previous
level of US$1.039 billion.
Total benefits fell to US$542.2 million from
US$592.8 million. However, interest expense
increased to US$63.7 million from US$57.6 mil-
In contrast, net policy benefits and changes
in actuarial liabilities fell to US$478.5 million
from US$535.2 million. With the exception of
health claims, all categories of benefits increased.
However, the changes in actuarial liabilities fell
by US$112.3 million to US$226 million.
Total expenses rose to US$386 million from
2013 s US$348.1 million. Included in this figure
is US$10.5 million, which related to a one-time
integration, restructuring and re-branding costs
directly linked to the acquisition of RBC Royal
These changes allowed SFC to record pre-tax
income of US$117 million versus US$98.6 million
for 2013. After income taxes, the 2014 figure
was US$100.3 million (2013: US$79.6 million).
The loss from discontinued operation of
US$26.4 million pulled down the current year s
figure to US$73.9 million (2013: US$4.1 million).
After allowing for participating policyholders
share of US$6.2 million and minority interests
of US$40.4 million, the remaining US$27.4 mil-
lion related to shareholders (2013: US$36.4 million
The 2014 result translated into EPS of US8.4
cents (TT$0.53). This compares very favourably
with the negative EPS of US12.6 cents (TT$0.80)
Sagicor Life registered improvements in rev-
enues accompanied by stable benefits, expenses
and taxes. The Jamaican operation recorded
higher revenues and lower benefits. Despite the
one-off expenses related to the RBC Royal Bank
acquisition, income to shareholders improved.
For the period since its acquisition, the Sagicor
Bank incurred a loss of US$5.1 million.
The American operations registered lower net
revenues but delivered a 50 per cent improvement
in net profit to shareholders.
Share price and dividends
SFC s share price opened 2014 at TT$7.25.
From that point it ascended slowly to close on
February 7, 2014 at TT$7.99. From this level it
slowly descended, closing at TT$5.95 on Decem-
ber 31, 2014.
The release of its 2014 results at the end of
March 2015 stimulated renewed interest in this
stock and the price closed last Wednesday at
TT$6.25. Even at that relatively better price,
many recent investors continue to experience a
significant "paper loss".
At the recent price of TT$6.25 and a full year s
dividend of TT$0.25 (US$0.04), this share gives
investors a current yield of 4 per cent. Also, this
price, when related to its EPS of TT$0.53, we
derive a P/E multiple of 11.8.
One short-term question on investors mind
is: will this year s price appreciation be sufficient
to erase all the declines from since February
Let us see what happens as the year evolves.
Developments in early
2015 and beyond
Just before the release of its 2014 results, SFC
signed an agreement with its reinsurers to remove
any and all possible future losses from its dis-
continued European operations. This final set-
tlement cost US$12.2 million and will negatively
impact on its first quarter results.
Almost immediately, this initiative paves the
way for management to concentrate on stream-
lining its existing businesses and become more
alert to new opportunities that may currently
require its attention.
On October 10, 2014 Sagicor Life (EC) Inc
(SLECI) was registered in St Lucia. Very likely,
the assets and liabilities of the former British
American policyholders in the Eastern Caribbean,
which SFC purchased in March 2013, will be
transferred to this entity. At a later date, it is
expected that SLECI will be listed on the East
Caribbean Stock Exchange, with SFC retaining
Following the recent Central Bank announce-
ments, there is renewed anticipation that the
Clico traditional portfolio may be closer to being
sold to an international or regional insurer, such
as Sagicor. Of course, there are still some smaller
companies that SFC might be considering for
The Jamaican-based Sagicor Bank will take
some time to "get its bearings" and generate
meaningful profits. When that hurdle is over,
SFC might want to set its sights on new banking
acquisitions. Some targets that come to mind
include East Caribbean Financial Holdings Ltd
or even the Trinidad operations of RBC Royal
Bank. Somewhat further down the road, if it is
comfortable and able to assume additional debt,
it might even consider targeting the much larger
First Caribbean International Bank?
Even before these acquisitions may be devel-
oped, there is the pending question of changing
its country of domicile to help improve its inter-
national credit rating. Several different locations,
including T&T, are currently under study and
a final recommendation would be put to the
shareholders for their decision or ratification,
very likely in 2016.
Note: In the last Sunday BG, the article on
GHL inadvertently made references to Pointe
Salines. The correct name of the development is
Pointe Simon in Martinique. The error is regretted.
APRIL 19 • 2015 www.guardian.co.tt SUNDAY BUSINESS GUARDIAN
STOCKS | 11SBG
Despite European losses...
Strong 2014 results
for Sagicor Financial
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