Home' Trinidad and Tobago Guardian : April 13th 2017 Contents BG14 | FINANCE
BUSINESS GUARDIAN guardian.co.tt APRIL 13 • 2017
Investment gains help Sagicor Jamaica
he largest and most profitable
member of the Sagicor Group
of companies is Sagicor Group
Jamaica Ltd (SJ). Despite
commanding fewer assets, it
generated almost 50 per cent
more profit than locally- based GHL. We will
now review SJ’s results to December 31, 2016.
Changes in financial position
Total assets rose by 13.5 per cent to J$340.95
billion (TT$17.95 billion) from J$300.39 billion.
Financial investments increased by 8.1 per
cent to J$216.6 billion from J$200.3 billion.
The largest component, available-for-sale
investments, closed at J$137.3 billion from
Here, the two biggest movements were
shown under Government of Jamaica securities
and foreign government securities; the former
fell to J$51.2 billion from J$67.1 billion while
the latter more than doubled to J$23 billion
from J$11.9 billion.
The other major component, corporate
bonds, advanced to J$55.7 billion from J$45.6
Financial assets through profit or loss in-
creased from J$21.2 billion to J$24.5 billion.
Similarly, loans and receivables rose to J$55.5
billion from J$49 billion; within this grouping,
Government of Jamaica securities account-
ed for 79.4 per cent or J$44.1 billion. Finally,
short-term deposits climbed to J$6.8 billion
from J$2.9 billion.
Net loans and leases climbed by 28.4 per
cent to J$56.2 billion from J$43.8 billion. At
the gross level, its largest exposure was to in-
dividuals, which value grew to J$21.1 billion
from J$16.7 billion. Meanwhile, loans for con-
struction and land development advanced by
more than 59 per cent to J$10.4 billion from
Other net assets increased from J$12.1 billion
to J$14.1 billion. The largest gross component
was a legal claim of J$6.75 billion. This item
is receivable from Finsac Ltd and is a legacy
issue prior to 2001 and concerns what is now
known as Sagicor Bank Jamaica Ltd.
Although judgement was awarded in its fa-
vour in March 2014, an appeal was still pending
as at December 2016.
Additional items of other net assets were
premiums due and unpaid of J$2.38 billion
(2015: J$1.84 billion) and prepayments of J$1.15
billion (2015: J$1.0 billion).
The 29.3 per cent stake in its associated
company, Sagicor Real Estate X Fund Ltd, in-
creased to J$6.1 billion from J$4.9 billion. This
increase resulted from the net profit of J$495
million along with comprehensive income of
J$843.6 million, then reduced by dividends
paid of J$92 million.
Loans to the distribution sector closed at
J$8.3 billion from J$7.8 billion. Notably, loans to
the manufacturing and tourism sectors regis-
tered robust improvements, while its exposure
to professional services was cut in half. Finally,
loans to overseas residents and others jumped
to almost J$6 billion from J$2.7 billion.
Cash resources, which are all due within
three months, rose from J$7.53 billion to J$10.79
billion. Of the current balance, J$8.33 billion
(77.2 per cent) is denominated in US dollars
while J$1.42 billion is held in Jamaican curren-
cy; the remainder of J$1.04 billion is retained
in a variety of other currencies.
Total liabilities advanced by 12.1 per cent to
J$284.5 billion from J$253.8 billion.
Deposits and security liabilities rose from
J$159.6 billion to J$177.3 billion, reflecting an
increase of 11.1 per cent. The customer de-
posits and other accounts component climbed
from J$67.5 billion to J$104.2 billion. The only
declining component was securities sold un-
der repurchase agreements, which fell to J$41
billion from J$62.3 billion.
Policyholders’ funds increased from J$77.6
billion to J$86.4 billion. The insurance con-
tracts component closed at J$68.7 billion from
Both group annuities and individual insur-
ance recorded strong increases; the former rose
to J$39.2 billion from J$35.8 billion while the
latter advanced to J$24.6 billion from J$21.1
billion. The group insurance component in-
creased from J$4.7 billion to J$4.9 billion.
The investment contracts element expand-
ed from J$12.97 billion to J$14.13 billion. This
mainly comprised of J$10.6 billion (2015:
J$9.44 billion), which represented amounts
Finally, the other policy liabilities compo-
nent closed at J$3.55 billion from J$3.06 billion;
here, the primary component was insurance
benefits payable of J$2.56 billion (2015: J$2.11
Other liabilities advanced from J$11.4 bil-
lion to J$12.8 billion. Included in this sum was
J$6.75 billion, which was the legal claim from
Finsac, which was earlier referenced. The other
large component was unapplied premiums of
J$1.36 billion (2015: J$1.04 billion).
Retirement benefits obligations climbed
from J$4.47 billion to J$6.17 billion. The
post-retirement (medical and life insurance)
obligations component increased to J$3.7 bil-
lion from J$3.1 billion.
Also, the pension plan element swelled from
J$1.34 billion to J$2.44 billion; this represents
the shortfall between the fair value of pension
plans’ assets (J$17.61 billion) and the present
value of its future obligations (J$20.05 billion).
Total equity improved from J$46.6 billion
to J$56.4 billion.
Retained earnings increased to J$43.7 billion
from J$38.2 billion. Total comprehensive in-
come of J$10.34 billion added to the brought
Thereafter, dividends of J$4.34 billion, the
repurchase of treasury shares of J$232.4 million
and net transfers to other reserve accounts of
J$362 million lowered the final balance.
Equity reserves advanced from a negative
J$824 million to a positive J$4.2 billion. This
component benefitted from total comprehen-
sive income of J$4.68 billion (mostly, unreal-
ised gains on available-for- sale investments)
and net transfer from retained earnings of
The final balance reflected a small adjust-
ment of J$12 million, which related to ESOP
Share capital declined to J$8.55 billion from
J$9.15 billion. This contraction represented the
larger number of treasury shares held by the
group, which rose to 24,212,021 from 1,118,578
as at year-end 2015.
Using the weighted average number of
shares outstanding (2016: 3,881,423,000;
2015: 3,904,516,000), each share had a book
value of J$14.53 versus J$11.93 for 2015.
Revenues and profit
Total revenue grew by 8.6 per cent to J$59.7
billion (TT$3.14 billion) from J$55 billion.
The net premiums component increased by
only 3.1 per cent to J$33.5 billion from J$32.5
billion. At the gross level, individual insuranc-
es rose by 7.7 per cent to J$19.2 billion from
Group insurances edged up by 1.9 per cent to
J$11.7 billion from J$11.4 billion while regular
annuities advanced by 6.8 per cent from J$1.94
billion to J$2.07 billion.
Notably, bulk annuities and property and
casualty premiums declined; the former fell to
J$1.15 billion from J$1.9 billion while the latter
ended at J$313.5 million from J$353 million.
Net investment income climbed by 18.7 per
cent to J$19.35 billion from J$16.3 billion. In-
terest income on available-for-sale securities
registered at J$8.32 billion (2015: J$8.0 billion)
while interest on loans contributed J$6.5 billion
(2015: J$5.4 billion) and interest on loans and
receivables accounted for J$3.9 billion (2015:
Realised gains swelled from J$708 million to
J$3.57 billion while unrealised gains contracted
from J$2.58 billion to J$1.74 billion. The largest
component of interest expense was interest on
customers’ deposits and repurchase liabilities,
which rose from J$3.43 billion to J$3.84 billion.
Fee and other income increased by 10.4 per
cent to J$6.86 billion from J$6.21 billion. Ad-
ministration fees advanced from J$2.03 bil-
lion to J$2.36 billion while bank service fees
were little changed at J$1.92 billion. Foreign
exchange gains spurted to J$445 million from
Net insurance claims and benefits climbed by
10.3 per cent to J$21.05 billion from J$19.09 bil-
lion. Health claims accounted for J$7.61 billion
(2015: J$6.99 billion) while segregated fund
withdrawals were J$5.36 billion (2015: J$4.58
billion.) Annuity payments rose to J$3.64 bil-
lion versus J$3.35 billion while death and dis-
ability payments increased from J$2.6 billion
to J$2.9 billion.
The net movement in actuarial liabilities was
little changed at J$4.78 billion for both periods.
The total of other expenses was J$20.15 bil-
lion, which was only 2.9 per cent higher than
the 2015 figure of J$19.58 billion.
Helping this result was the decline in other
taxes and levies, which closed at J$562.6 mil-
lion from J$966.9 million; this drop benefitted
from the reduction of the asset tax.
In addition, provision for credit losses ex-
perienced a positive swing of J$330.7 million;
the allocation of J$171.6 million in 2015 swung
to a write-back of J$159 million in 2016.
The share of profit from its joint venture
in Costa Rica recovered from a loss of J$33.1
million in 2015 to a profit of J$8.26 million.
In 2015, there was negative goodwill relating
to the purchase of the operations of the for-
mer RBC Bank in Jamaica; no such charge was
shown for 2016.
The share of profit from its associate (X
Fund) improved to J$495 million from J$94
million; this reflected that entity’s greater
profitability and SJ’s larger ownership.
These changes resulted in pre-tax profit
of J$14.2 billion (2015: J$11.6 billion). At the
after-tax level, profit expanded by 15 per cent
to J$11.26 billion (TT$593 million) from J$9.8
These results translated to EPS of J$2.90
versus J$2.51 for 2015.
The individual lines segment benefitted from
J$163.6 million in lower asset taxes and a J$1.4
billion reduction in the change in actuarial li-
abilities; however, these were insufficient to
offset the J$3.58 billion increase in benefits
Similarly, the employee benefits segment
enjoyed a J$77 million reduction in the asset tax
and J$1.08 billion less in the change in actuarial
liabilities; in this case, benefits and expenses
advanced by only J$1.1 billion while external
revenues increased by 6.3 per cent.
Both banking segments enjoyed healthy in-
creases in revenues and profits; here, expenses
were better contained, loan demand expanded
and investments improved.
Share price and dividends
SJ’s share price closed at J$19.95 on Decem-
ber 31, 2015, from which base it continued to
rise steadily during the year before closing
at J$29.04 last December. In 2017, the price
spiked to J$37.23 on February 21, but recently
traded at J$31.50.
During 2016, dividends of J$0.66 and J$0.45
were paid in April and November, respectively.
At the recent price of J$31.50, the dividend
of J$1.11 provides a yield of 3.52 per cent. That
price also denotes a P/E multiple of 10.9 and
a price to book value of 2.17.
SJ will pay a dividend of J$0.70 on May 5,
Next week, we will review the parent company,
Sagicor Financial Corporation Ltd 2016 results.
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