Home' Trinidad and Tobago Guardian : September 8th 2016 Contents BG16 STOCKS
BUSINESS GUARDIAN www.guardian.co.tt SEPTEMBER 8 • 2016
Lower assets taxes, favourable
actuarial movements and a use-
ful contribution from the X Fund
impacted positively on the half-
year profits of Sagicor Group
Jamaica Ltd (SJ).
This company is 31.55 per cent owned by
Pan-Jamaican Investment Trust Ltd and 49.11
per cent by Sagicor Financial Corporation; in
the latter s case, the ownership is held via two
entities, LOJ Holdings Ltd (32.45 per cent)
and Sagicor Life Inc with 16.66 per cent. The
remaining shares are widely held by individual
and institutional investors.
We will now review SJ s performance for the
half-year ended June 2016.
Changes in financial position
Total assets rose by 7.3 per cent to J$322.4
billion from J$300.4 billion as at December
Financial investments advanced to J$209.6
billion from J$200.2 billion, representing an
increase of 4.7 per cent. However, pledged
funds expanded by a robust 88 per cent to
J$11.6 billion from J$6.2 billion. Via subsidiaries
and its managed funds, SJ also owns
102,969,590 shares (24.84 per cent) in the
company, 138 Student Living, which was
acquired last December.
Net loans and leases grew by 9.2 per cent
to J$47.8 billion from J$43.8 billion.
Its investment in its associated company,
Sagicor X Fund, which was made in September
2015, rose to J$5.18 billion from last December s
In a similar vein, the value of its 50 per cent
owned joint venture life insurance company
in Costa Rica moved from J$759 million to
Cash and cash reserves at Central Banks
advanced to J$17.7 billion from J$13.98 billion.
This increase benefitted from its improved
operating activities, which swung from a neg-
ative J$9.54 billion in fiscal 2015 to a positive
J$2.42 billion in the current half-year. One of
the major changes was a reduction in net
investment purchases from J$23.1 billion to
Total liabilities increased by 6.7 per cent to
J$270.7 billion from J$253.8 billion.
Deposit and security liabilities rose by 7.1
per cent, moving from J$159.6 billion to J$170.9
billion. Sagicor Bank s share of this figure was
Meanwhile, policyholders funds improved
to J$83 billion from J$77.6 billion or by 6.9
per cent. All components registered increases;
insurance contracts moved from J$61.6 billion
to J$66 billion or by 7.1 per cent. Investment
contracts rose by 5.1 per cent to J$13.6 billion
from J$12.97 billion. Other policy liabilities
ended at J$3.41 billion from J$3.06 billion,
representing an improvement of 11.4 per cent.
Other liabilities ended at J$12.1 billion from
J$11.4 billion, exhibiting an increase of 6.3 per
Total equity increased from J$46.57 billion
to J$51.69 billion.
Share capital declined to J$8.89 billion from
last December s J$9.15 billion; this largely
reflected the repurchase and transfer of treasury
Equity reserves climbed from a negative
J$824 million to a positive J$2.99 billion; this
reflected total comprehensive income for the
period of J$3.82 billion. This comprised unre-
alised gains on available-for-sale investments
of J$3.48 billion, which was reduced by gains
of J$348 million recycled to the income state-
ment and then increased by a gain of J$688
million on the revaluation of its foreign oper-
The retained earnings balance improved
from J$38.2 billion to J$39.8 billion. This com-
ponent benefitted from comprehensive income
of J$4.3 billion while dividend to shareholders
of J$2.58 billion and the transfer from treasury
shares of J$179 million restrained the ending
With 3,905,634,916 shares outstanding,
each share had a book value of J$13.23 (Decem-
ber 2015: J$11.92).
Income and profits
Total revenues improved by 8.9 per cent to
J$29 billion from J$26.6 billion.
The net premiums component rose from
J$14.7 billion to J$15.6 billion or by 6.2 per
cent. Net investment income advanced by 10.2
per cent to J$10 billion from 9.1 billion; this
result was helped by J$1.61 billion in realized
capital gains. Lastly, fees and other income
climbed by 18.7 per cent, moving from J$2.82
billion to J$3.34 billion; this increase reflected
Total benefits and expenses increased by
8.5 per cent to J$23.67 billion from J$21.82 bil-
lion. The largest component, net insurance
benefits incurred, rose by 14.8 per cent to
J$10.4 billion from J$9 billion. On the other
hand, changes in insurance and annuity lia-
bilities declined to J$3.26 billion from J$3.52
Administrative expenses rose by 14.2 per
cent to J$7.1 billion from J$6.2 billion. Also,
commission and related expenses increased
by 8.6 per cent to J$2.07 billion from J$1.91
billion. The amortisation of intangible assets
consumed J$283.4 million versus J$148.3 mil-
lion in the 2015 half-year.
Helping to improve the picture, assets and
other taxes fell by 42.3 per cent to J$554.5 mil-
lion from the comparative 2015 figure of J$961.4
The joint venture in Costa Rica moved from
a loss of J$27.1 million in 2015 to record a profit
of J$11 million in the current period. In addition,
the share of profit from its recently-acquired
associate Sagicor X Fund contributed J$329.4
million (2015: NIL). In 2015, there was a neg-
ative goodwill charge of J$24.7 million; this
figure declined to zero in the current half-
These changes resulted in a pre-tax profit
of J$5.67 billion, which represented an improve-
ment of 18.9 per cent over the J$4.77 billion
recorded for the 2015 half-year.
The effective rate of investment and cor-
poration taxes increased to 24.1 per cent (J$1.37
billion) from 21.3 per cent (J$1.01 billion) in
2015. Consequently, the net profit registered
at J$4.31 billion compared with J$3.76 billion
in the comparative 2015 session, reflecting an
improvement of 14.6 per cent.
These results translated into 2016 diluted
EPS of J$1.10 compared with J$0.96 for 2015.
The decline in the asset tax was most ben-
eficial to the insurance operations, as repre-
sented by the individual lines and employee
benefits segments. There were modest vari-
ations in this tax to both its commercial and
investment banking operations.
Under the individual lines segment revenues
roses by 7 per cent but benefits and expenses
climbed by 12.4 per cent. The lower asset taxes
and marginally higher actuarial movements
were insufficient to lift profits for the peri-
od.The employee benefits segment registered
an 11.2 per cent improvement in revenues
accompanied by a 12.3 per cent increase in
benefits and expenses. A 50 per cent reduction
in actuarial movements combined with lower
asset taxes and an improved result from its
joint venture helped boost pre-tax profit by
almost 62 per cent.
Revenues at the investment banking division
rose by 20.6 per cent while benefits and
expenses climbed by 62.7 per cent. This
unfavourable combination was mitigated by
asset taxes that were J$19 million less than
the previous period. In the final analysis, and
helped by depreciation charges, which are not
shown in the table, that were J$5.4 million
lower, the pre-tax result was almost 10 per
The commercial banking segment exhibited
an 11 per cent improvement in revenues; how-
ever, this was accompanied by a 25 per cent
increase in benefits and expenses. In addition,
the asset tax rose by J$7 million. These adverse
movements helped compress current pre-tax
profits by 15.5 per cent.
The contribution from the Sagicor X Fund
is located under the "other and eliminations"
Via Sagicor St Lucia Ltd, SJ holds its Costa
Rican joint venture company, Sagicor Costa
Rica SCR SA. In addition, the St Lucian sub-
sidiary owns three companies in the Cayman
Islands, which offers life and property and
casualty (captive) coverage.
These, mostly Cayman Islands, overseas
operations collectively accounted for J$1.71
billion or about 6 per cent of total revenues.
They also represented almost 9 per cent (J$28.8
billion) of total assets (J$322.4 billion).
Share price and dividends
Last December, SJ s share price closed at
J$19.95 and by January 13, 2016, it closed at
J$23.49. Thereafter, it attained peaks of J$23.98
(on March 4) and J$24.05 on April 18 and con-
tinued trading within a narrow range. However,
by July 29, it slipped to J$22.58 and closed on
September 2 at J$22.01.
The higher price in the earlier part of the
year probably related to the expectation and
eventual payment of a high dividend of J$0.66,
which was 69.2 per cent greater than the
J$0.39 paid in the early part of 2015. A further
dividend is expected to be paid later this year,
probably just prior to the announcement of
a similar action by its parent company, Sagicor
During calendar year 2015, SJ paid dividends
totalling J$0.73. Based on trailing dividends
of J$1.00 (J$0.66 plus J$0.34 paid last Novem-
ber) and the recent price of J$22.01, the current
yield is 4.54 per cent.
Relating the 12 months trailing EPS of J$2.65
to the recent price of J$22.01 we derive a P/E
multiple of 8.31.
Next week, we review the half-year per-
formance of the parent company, Sagicor
Lower asset taxes and the X Fund
help Sagicor Jamaica's Q2 results
improved by 8.9 per
cent to J$29 billion
from J$26.6 billion.
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