Home' Trinidad and Tobago Guardian : August 15th 2015 Contents A34
Guardian www.guardian.co.tt Saturday, August 15, 2015
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Amounts expressed in US $000
June 30 December 31
(unaudited) (unaudited) (audited)
Other investments and assets
6,298,581 5,871,686 6,180,420
3,218,842 3,012,596 3,120,602
Liabilities of discontinued operation
5,534,869 5,143,223 5,406,878
Total liabilities and equity
6,298,581 5,871,686 6,180,420
These financial statements have been approved for issue by the Board of Directors on August 13, 2015.
SAGICOR FINANCIAL CORPORATION
FOR THE SIX MONTHS ENDED JUNE 30, 2015
The Sagicor Group recorded net income from continuing operations of US$37.5 million for the
first six months ended June 30, 2015, compared to the prior year result of US$33.2 million, an
increase of 13%. The continuing operations comprises our businesses in the Caribbean and in
Net income from continuing operations attributable to shareholders was US$21.8 million,
compared to the prior year result of US$19.3 million, an increase of 13%. Earnings per common
share from continuing operations, was US 7.0 cents compared to the prior year result of
US 6.2 cents, an increase of 13% and an annualised return on common shareholders' equity
Total revenue increased to US$548.5 million, compared to US$501.7 million for the
corresponding period in 2014, an increase of 9%. Total benefits increased to US$297.2 million,
compared to US$285.2 million for the previous year, an increase of 4%. Total expenses increased
to US$201.9 million, compared to US$173.3 million for the previous year, an increase of 17%.
The increase in expenses included US$8.4 million in asset taxes for a full year, rather than the six
month period so as to comply with reporting standards. The increase in expenses also included
six months of expenses incurred with the operation and integration of the RBC Royal Bank's
Jamaica banking operations which was acquired on June 27, 2014. With the exclusion of these
two expenses, both of which relate to our Jamaica segment, our expenses, year-on-year, would be
Total comprehensive income from continuing operations attributable to shareholders for the
period was US$8.2 million compared to US$31.4 million for the same period in the prior year.
The main contributors to the variance were changes in financial assets, as well as retranslation
movements in our Jamaica segment.
The discontinued operation represents our UK business which was sold on December 23, 2013.
The terms of the sale required the Sagicor Group to retain an interest in the 2011, 2012 and
2013 underwriting years of account, subject to a limit. The company reported in its first quarter
results that management had negotiated reinsurance to cover the residual exposure at a cost
of US$12.7 million. However, the underlying agreements were not executed and the group has
therefore recorded its exposure in these financial statements under the original sale agreement.
For the six months ended June 30, 2015, the discontinued business experienced a loss of
US$15.1 million, resulting from adverse movements in claims reserves. The loss is an additional
cost of US$2.4 million for the three months to June 30, 2015, over and above the US$12.7 million
provided in the first three months to March 31, 2015. The maximum residual contingent
exposure under the sale agreement is approximately US$10.2 million.
The total assets of the Group reached US$6.3 billion. Shareholders' equity reached
US$763.7 million compared to US$728.5 million, an increase of 5%. The Group's debt, which is
included in other liabilities, was US$305.0 million. The resulting debt to capital ratio reduced from
28.8% to 28.5% over the period.
During the third quarter, Sagicor refinanced its total debt with the issuance of US$320 million seven
year senior notes repayable in 2022. The notes carry a fixed rate of interest of 8.875% payable semi-
annually and can be repurchased after four years. The notes were issued to refinance the existing
senior notes, convertible preference shares and loan which mature in May 2016.
Sagicor intends, subject to shareholders' approval, to re-domicile the parent company, Sagicor
Financial Corporation, to an investment grade jurisdiction. The operating companies will remain
unaffected. The purpose of the re-domiciliation is to achieve an uplift in the rating of the parent
and the recently issued bond. Sagicor is currently rated BB- by S&P, capped at the maximum two
notches above its current domicile. The bond is currently rated B. On a stand-alone basis, that is,
without being tied to the rating of its current domicile, Sagicor is rated BB+, and correspondingly
the bond would be rated BB-, two notches below the parent, to reflect the subordination of the
bondholders to the policyholders. A rating uplift would be expected to lower the future cost of
financing for the group.
The economic circumstances of many of the countries in which we operate remain challenging.
However, your Board and management continue to carefully navigate through these conditions to
deliver value to our customers and competitive returns to our investors.
On behalf of the Board of Sagicor, I wish to thank our shareholders and customers for their
August 13, 2015.
Six months ended June 30
(in US currency except percentages)
Group net income from continuing operations
Group net loss from discontinued operations
Overall Group net income
Shareholders' net income from continuing
Shareholders' net (loss) from discontinued
Overall Shareholders' net income/(loss)
Net income allocated to non-controlling interests $17.1m
Debt to capital
Earnings per common share from continuing
Annualised return of continuing operations on
common shareholders' equity
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