Home' Trinidad and Tobago Guardian : April 12th 2018 Contents stocks BG15
Thursday, April 12, 2018
Sagicor Jamaica exhibits resilience
elped by higher
and lower taxes,
the results of
Sagicor Group Jamaica Ltd (SJ) for
2017 improved modestly.
Let us now review SJ’s results to
December 31, 2017.
Total assets rose by 3.3 per cent
to J$352.04 billion from J$340.95
Financial investments declined
to J$142.1 billion from J$149.6 bil-
lion. At the gross level and before
removing pledged assets of J$81.6
billion, short-term deposits fell to
J$4.6 billion from J$6.8 billion.
The bulk of these investments
were held as Government of Ja-
maica securities, which closed at
J$105.5 billion from J$98.7 billion.
Its stock of corporate bonds rose
to J$67.2 billion from J$62.2 bil-
lion while its unit trust holdings
increased to J$20.9 billion from
J$18.6 billion. The largest decline
was recorded under foreign gov-
ernment securities, which con-
tracted to J$13.1 billion from J$27.7
Net loans and leases advanced
to J$61.4 billion from J$56.2 billion.
At the gross level, its largest ex-
posure was to individuals, which
closed at J$23.4 billion from J$21.1
billion. Loans for professional and
other services swelled to J$9.6 bil-
lion from less than J$3.0 billion
while advances to the distribution
trade advanced to J$10.1 billion
from J$8.3 billion.
Lower allocations were re-
corded under construction and
land development ( J$7.3 billion
versus J$10.4 billion), manufac-
turing ( J$2.2 billion versus J$3.9
billion) and overseas residents,
which declined to J$4.7 billion
from almost J$6.0 billion.
Investment in its associated
company, XFUND, increased from
J$6.11 billion to J$7.05 billion. In
May and August 2017, SJ acquired
a total of 76,600,770 additional
shares in the XFUND but, by Oc-
tober that year, it disposed of
76,470,770 of those shares.
These transactions saw it end
2017 with a 29.31 per cent stake.
As we saw last week, higher net
profits helped boost its ownership
value. As at last December, the JSE
indicative value of SJ’s holding in
the XFUND rose from J$8.5 billion
to J$9.8 billion.
Meanwhile, its investment in
the Costa Rican joint venture fell
to J$356.4 million from J$397.8 mil-
lion. This venture showed growth
in assets, premiums, underwriting
profit and other income. However,
the 67 per cent increase in operat-
ing expenses helped convert a net
profit of J$16.5 million for 2016 to
a loss of J$19.4 million.
Other assets swelled to J$18.74
billion from J$14.1 billion. The two
largest contributors were premi-
ums due and unpaid and a legal
claim. The former rose to J$3.6
billion from J$2.4 billion. The lat-
ter increased from J$6.75 billion
to J$8.84 billion; this reflects an
on-going matter with respect to
the acquisition of the former RBC
Royal Bank Jamaica Ltd (now Sagi-
cor Bank Jamaica Ltd).
Cash resources advanced to
J$12.7 billion from J$10.8 billion.
Demand balances with banks in-
creased to J$9.9 billion from J$7.9
billion while cash on hand fell to
J$2.77 billion from J$2.91 billion. Of
the gross sum, J$3.44 billion was
denominated in US dollars.
Total liabilities slipped to J$283.5
billion from J$284.5 billion.
Deposit and security liabilities
fell to J$165.2 billion from J$177.3
billion. The repurchase agree-
ment securities component rose
to J$59.3 billion from J$41 billion.
Similarly, structured products ad-
vanced from J$4.5 billion to J$5.9
billion, all of which have an inter-
est guaranteed feature.
In March 2017, its subsidiary,
Sagicor Bank Jamaica Ltd, issued
two tranches of redeemable pref-
erence shares valued at J$2.05 bil-
The customer deposits and
other accounts component de-
clined to J$81.3 billion from J$105.1
Similarly, amounts due to banks
and other financial institutions fell
to J$16.6 billion from J$27.7 billion.
Here, short-term loans totalling
J$12.4 billion were settled. In ad-
dition, the Morgan Stanley Smith
Barney loan closed at J$6.5 billion
from J$10.9 billion. However, SJ
secured a new J$5.0 billion loan
from Credit Suisse.
Policyholders’ funds expanded
to J$95.5 billion from J$86.4 bil-
The largest increase was shown
under insurance contract liabil-
ities, which advanced to J$77.9
billion from J$68.7 billion. Within
this category, group annuities rose
to J$44.4 billion from J$39.2 billion
while individual insurance grew to
J$28.6 billion from J$24.6 billion.
Other liabilities increased to
J$18.9 billion from J$12.8 billion.
Along with the J$8.84 billion RBC
Royal Bank matter, unapplied
premiums climbed to J$2.1 bil-
lion from J$1.4 billion. Further,
accounts payable and accruals in-
creased to J$1.7 billion from J$0.9
billion and customer settlement
accounts swelled to J$1.7 billion
from J$0.25 billion.
Total shareholders’ equity im-
proved from J$56.4 billion to
J$68.5 billion. Share capital de-
clined to J$8.42 billion from J$8.55
billion, which reflected the higher
value of treasury shares.
Retained earnings improved
from J$43.7 billion to J$52.6 bil-
lion, which largely benefitted from
the current year’s comprehensive
income of J$14.92 billion. The
major deductions were dividends
of J$4.99 billion, treasury shares of
J$567.5 million and other reserve
transfers of J$442.4 million.
Equity reserves advanced to
J$7.52 billion from J$4.2 billion.
The largest contributor was net un-
realised gains on available-for-sale
securities of J$4.2 billion, which
was then reduced by J$1.2 billion
in net gains on disposals, which
were recycled to revenue.
The weighted average number of
shares increased to 3,887,356,000
from 3,883,538,000; conse-
quently, the book value of each
share rallied to J$17.62 from
Total revenue improved by 18 per
cent to J$70.4 billion from J$59.7
Net premiums advanced to
J$41 billion from J$33.5 billion.
The group annuities compo-
nent swelled to J$8.1 billion from
J$3.2 billion while property and
casualty premiums rose to J$395
million from J$313 million. The
largest component, individual in-
surance, expanded to J$21.3 billion
from J$19.2 billion while group in-
surance contributed J$12.1 billion
from J$11.7 billion.
Net investment income in-
creased to J$21.4 billion from
J$19.3 billion. Notably, interest in-
come on available-for-sale securi-
ties fell to J$7.2 billion from J$8.3
billion. However, interest on loans
grew to J$7.1 billion from J$6.5 bil-
lion while interest on loans and re-
ceivables improved to J$5.0 billion
from J$3.9 billion. Consistent with
lower balances, interest expenses
on customers’ deposits and repur-
chase liabilities fell to J$3.5 billion
from J$3.8 billion.
Fees and other income im-
proved to J$8.0 billion from J$6.9
billion. Net credit related fees
swelled to J$1.97 billion from
J$0.34 billion while administration
fees increased to J$3.5 billion from
Foreign exchange earnings
swung from a gain of J$445 million
in 2016 to a loss of J$623 million.
Total benefits and expenses in-
creased to J$56.6 billion from J$46
billion. Net insurance benefits rose
to J$21.91 billion from J$21.05 bil-
lion. Health insurance accounted
for J$7.4 billion versus J$7.6 billion.
In addition, segregated fund
withdrawals increased to J$5.9 bil-
lion from J$5.4 billion while annu-
ity payments rose to J$3.8 billion
from J$3.6 billion.
The net movement in actuarial
liabilities expanded to J$10.7 bil-
lion from J$4.8 billion; this mainly
reflected the issuance of new
group annuities and individual in-
Provision for credit losses swung
from a write-back of J$159 million
to a charge of J$711 million. Ad-
ministration expenses advanced
to J$16.6 billion from J$14.3 billion.
Staff costs climbed from J$7.7 bil-
lion to J$9.1 billion, mainly reflect-
ing annual increments, bonuses
and share based incentives.
In addition, communication
and technology rose to J$1.67 bil-
lion from J$1.44 billion and office
accommodation increased to J$1.2
billion from J$0.98 billion.
The results from its joint ven-
ture shifted from a profit of J$8.2
million to a loss of J$9.7 million.
Meanwhile, the profit from the
sale of part of its holdings in the
XFUND contributed J$290 million.
Also, the share of profit from
the XFUND improved from J$495
million to J$863 million. These
movements saw pre-tax profit reg-
ister at J$14.99 billion from 2016’s
The effective tax rate declined
from 20.8 to 19.5 per cent, which
ensured that the tax cost fell to
J$2.92 billion from J$2.95 billion.
Therefore, the net profit increased
to J$12.07 billion from J$11.26 bil-
lion; that result translated to EPS
of J$3.11 versus J$2.90.
Individual lines saw revenues ex-
pand by 16.7 per cent while pre-
tax profit improved by 31.3 per
This segment benefitted from
strong new business growth and
improved management of its ex-
Employee benefits experienced
a 21 per cent top-line growth, but
profits relapsed by 6.2 per cent.
Commercial banking saw top-
line growth of 19.5 per cent, how-
ever, profit weakened by 6.7 per
cent; this mainly reflected higher
loan loss provisions. Meanwhile,
investment banking benefitted
from higher realised investment
gains along with fees and similar
In 2017, SJ’s share price rose by
J$6.54 or 22.5 per cent. The price
ended at J$29.04 on December
30, 2016 and spiked to J$39.87 on
October 20, 2017, but then settled
at J$35.58 as at year-end 2017. Last
week, the price traded at J$36.26.
Dividends increased from J$1.11
in calendar 2016 to J$1.28 in 2017.
On April 17, 2018, SJ will pay a div-
idend of J$0.66. The J$36.26 price
reflects a P/E multiple of 11.66.
Based on 2017 dividends of J$1.28,
that price exhibits a dividend yield
of 3.53 per cent and a premium of
almost 106 per cent to its book
value of J$17.62.
Next week, we will review the 2017
results of PanJam Investment Ltd.
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