Home' Trinidad and Tobago Guardian : April 20th 2017 Contents APRIL 20 • 2017 guardian.co.tt BUSINESS GUARDIAN
STOCKS | BG15
SFC seems poised for greater returns
Barbados based, Bermudan dom-
iciled and majority owned by
15,406 Trinidadian investors,
Sagicor Financial Corporation
Ltd (SFC) produced improved
results and increased its divi-
dend to shareholders. Let us now review SFC's
results to December 2016.
Changes in financial position
Total assets rose by 2.1 per cent to US$6.53
billion (TT$44.1 billion) from US$6.4 billion.
Financial investments were little changed,
declining marginally to US$4.81 billion from
The largest portion was available-for-sale
securities, which closed at US$2.37 billion
from US$2.4 billion; here, the debt securities
component declined to US$2.27 billion from
US$2.31 billion while the equities element rose
to US$96.7 million from US$88.4 million.
The loans and receivables component fell
to US$2.07 billion from US$2.08 billion. The
major constituents were debt securities, which
rose to US$985.7 million from US$948.9
million and finance loans and leases, which
advanced from US$436.2 million to US$509
Both policy loans and mortgage loans were
little changed. However, deposits contracted
from US$260.8 million to US$139.3 million.
Reinsurance assets increased to US$777.3
million from US$665.8 million. Within
this category, actuarial liabilities rose from
US$601.6 million to US$713.3 million. The bulk
of this (US$695 million) relates to individual
non-participating life and annuity policies.
Cash resources rose from US$250.5 million to
US$279.1 million. Of this sum, US$135.2 million
was denominated in US dollars while US$43.4
million was denominated in Jamaican dollars
and US$28.5 million was held in TT dollars.
Total liabilities increased by 1.3 per cent to
US$5.74 billion from US$5.66 billion. Total
policy liabilities advanced from US$3.21 bil-
lion to US$3.36 billion.
Consistent with the reinsurance assets, ac-
tuarial liabilities of US$1.9 billion were mostly
concentrated under individual non-partici-
pating life and annuity policies.
The other insurance liabilities component
increased from US$205.9 million to US$207.1
million. This comprised policy benefits payable
of US$107.2 million, dividends on deposits and
other policy balances of US$65.7 million and
provision for unearned premiums of US$34.2
The investment contract liabilities compo-
nent rose from US$368.6 million to US$377.6
million. Of this total, US$246.9 million was
classified as at amortised cost while US$130.7
million was shown at fair value through in-
Notes and loans payable declined to
US$395.2 million from US$475.5 million. The
major decrease reflected the repayment in July
2016 of its 6.5 per cent convertible redeemable
preference shares of US$120 million.
On March 21, 2016, SFC issued US$75 million
fourteen month notes at 5.0 per cent. The next
day, it repaid, before maturity, US$43.4 million
4.6 per cent notes. On December 20, 2016, the
new notes were extended to August 14, 2019 at
an annual interest rate of 4.85 per cent.
Its largest debt remains the 8.875 per cent
US$320 million senior notes, which are due
in 2022. These notes are redeemable, at the
company's option, after August 11, 2018.
Deposit and security liabilities increased
from US$1.6 billion to US$1.62 billion. Fuelled
by the growth of its Jamaican bank, customers'
deposits climbed from US$669.5 million to
On the other hand, securities sold for
re-purchase fell to US$320.6 million from
US$519.6 million. In addition, other funding
instruments declined from US$379.6 million
to US$345.9 million; included in the latter was
US$134.3 million due to the Federal Home Loan
Bank of Dallas.
Total equity improved to US$795.4 million
from US$739.2 million. Excluding non-con-
trolling interests of US$258 million and partic-
ipating accounts of US$1.3 million, sharehold-
ers' equity closed at US$536.1 million (2015:
Retained earnings expanded from US$266.4
million to US$300.9 million. The brought
forward figure benefited from comprehen-
sive income from continuing operations of
US$50.1 million and comprehensive income
from discontinued operations of US$1.4 mil-
lion. The major reduction was US$18.9 million
in dividends to both common and preference
Reserves deteriorated to negative US$64.8
million from negative US$59.7 million. Con-
tributing to this fall were the declines in the
Jamaican and TT dollars to the US dollar; the
former accounted for US$21.0 million while
the latter reflected US$7.5 million.
The company's re-domiciliation to Bermuda
resulted in the creation of a share premium
account to which the net shares in issue were
transferred. The combined value of the share
capital and share premium accounts closed at
US$300 million from US$299.3 million.
The weighted average number of shares
increased from 301,924,000 to 303,572,000;
consequently, the book value of each share was
US$1.77 (TT$11.95) versus US$1.68 (TT$11.34)
as at December 2015.
Revenues and profit
Total revenue grew by 2.7 per cent to
US$1,134 million (TT$7.66 billion) from
Net premiums declined by 1.5 per cent to
US$664 million from US$674 million. Both life
and property and casualty premiums exhibited
growth. Health premiums slipped to US$149.6
million from US$150.3 million. However, the
major decline was shown under annuities,
which fell by 9 per cent to US$138.7 million
from US$152.6 million. This was impacted by
the reduced sales of bulk annuities in Jamaica
and other jurisdictions.
Net investment income expanded by 9.7
per cent to US$353.5 million from US$322.2
million. At the gross level, investment income
grew to US$367.3 million from US$336.5 mil-
lion while investment expenses declined to
US$13.9 million from US$14.3 million. Con-
tribution to the latter's improvement was re-
duced impairment losses, which fell to US$9.6
million from US$10.3 million.
The largest component of investment in-
come was interest income of US$292.9 million.
Interest income from debt securities fell to
US$205 million from US$211.6 million. Coun-
teracting this was interest income on finance
loans and leases, which rose to US$56.2 million
from US$50.4 million.
Another significant contributor, net invest-
ment gains, swung from US$32.4 million to
US$62.1 million. This improvement benefit-
ted from the reversal of the prior year's losses
on investment property (US$1.8 million) and
other financial instruments (US$7 million). In
addition, gains on debt securities soared to
US$37.3 million from US$14.9 million while
gains on equities fell to US$16 million from
Fees and other revenues rose by 7.1 per cent
to US$116.8 million from US$109.1 million.
The largest component was commission on in-
surance and reinsurance contracts of US$29.4
million (2015: US$32.9 million). Boosting the
total was foreign exchange gains, which jumped
from US$2.8 million to US$12.6 million.
In 2015, there was a small negative adjust-
ment of US$1.03 million to the final purchase
price of the former RBC operations in Jamaica.
Total benefits increased to US$560.4 mil-
lion from US$553 million, reflecting a modest
advance of 1.3 per cent.
The interest portion closed at US$61.5
million from US$58.8 million. This main-
ly comprised interest on securities sold for
re-purchase (US$18.5 million), investment
contracts (US$16.8 million) and customer
deposits (US$16.2 million).
The policy benefits and changes in actu-
arial liabilities rose to US$499 million from
The largest net decline was recorded under
life insurance benefits, which fell to US$183
million from US$194.4 million. In contrast, net
health benefits increased to US$115.5 million
from US$111.5 million. In addition, changes
in actuarial liabilities advanced to US$45.3
million from US$26.6 million.
Total expenses declined to US$424.2 mil-
lion from US$427.7 million. The largest fall was
shown under commission and related compen-
sation, which contracted to US$98.6 million
from US$105.1 million.
Premium and asset taxes weakened to
US$10.7 million from US$14.8 million, as
explained last week.
Although year-end debt was lower, fi-
nance costs increased to US$38.3 million from
US$37.2 million. The early settlement of some
debt (US$43.4 million) and the assumption of
new debt (US$75 million) would have incurred
one-off charges and fees.
The largest component, administrative ex-
penses, rose to US$255.3 million from US$251.9
million. Within this grouping, staff costs ac-
counted for US$133.3 million (2015: US$133.6
million); interestingly, although core salaries
declined by US$2 million, staff benefits in-
These changes resulted in pre-tax profits
of US$149.6 million from 2015's US$123.6
The effective tax rate increased to 27.9 per
cent from 20.3 per cent; this was influenced by
higher Jamaican taxes and a new marginal rate
in Trinidad and Tobago. Taxes rose to US$41.7
million from US$25.1 million.
Net income from continuing operations
closed at US$107.9 million from US$98.4
million. Discontinued operations contrib-
uted US$1.4 million to 2016 profits versus a
loss of US$21.7 million in 2015; this resulted in
net income US$109.3 million (2015: US$76.8
After allocating a total of US$47.6 million
to non-controlling interests and participating
policyholders, the net profit to shareholders
registered at US$61.7 million (TT$416.5 mil-
lion) versus US$34.7 million.
These results translated to EPS of US$0.20
(TT$1.35) compared with US$0.11 for 2015.
Although its ownership is limited to 49.11
per cent, the Jamaican operations continued
to provide a meaningful portion of SFC's total
income and profit.
The swing in revenues at both Sagicor USA
and Sagicor Life related to the one-off transac-
tion in 2015, which inflated the Life's revenues
by US$92.6 million and deflated the USA's by
At the American subsidiary, except for other
investment income, all other sources of core
revenues exhibited declines, although profit
rose. This unit continues with a more selective
approach to underwriting.
The three largest sources of revenue were
Jamaica (US$495.5 million or 44 per cent),
Barbados (US$170.3 million) and T&T (US$166
Share price and dividends
On the TTSE, SFC's share price closed at
TT$6.20 on December 31, 2015. It quickly
rose to TT$7.24 on April 22, 2016 and then
ended 2016 at TT$7.73. By February 22, 2017,
it traded at TT$9.41, but was recently quoted
Dividends improved from US$0.04 for 2015
to US$0.05 (TT$0.3375). At the recent price of
TT$9.15, the yield is 3.7 per cent. That price
also reflects a low P/E multiple of 6.8 and rep-
resents a 23.4 per cent discount to its book
value of TT$11.95.
According a recent WISE report, over the
period 2011 to 2016, SFC exhibited a compound
annual growth rate (CAGR) of 148.89 per cent.
In the next article, we will review Pan Jam
Investments Ltd 2016 results.
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