Home' Trinidad and Tobago Guardian : August 14th 2013 Contents A44
Guardian www.guardian.co.tt Wednesday, August 14, 2013
SAGICOR FINANCIAL CORPORATION
FOR THE SIX MONTHS ENDED JUNE 30, 2013
The Sagicor Group recorded net income from continuing operations of US $28.4 million
for the first six months of 2013, an improvement of US$4.0 million over the comparative
period in 2012.
Net income from continuing operations attributable to shareholders was US $19.3
million, an increase over the prior year result of $12.3 million. Earnings per common
share from continuing operations was US 6.1 representing an annualised return on
common shareholders equity of 7.3%.
Results from our continuing operations remain encouraging. Our businesses in the
Caribbean and in the USA continued to perform well, with revenue from continuing
operations amounting to US$ 498.7 million an improvement of US$ 21.5 million over
the corresponding period in 2012. Net premium revenue stood at US$ 314.7 million,
an increase over the US $301.9 million recorded for the same period in the prior year.
Net investment income and other income improved from US $175.3 million to US$
184.0 million. This improvement in net investment income and other income is after
accounting for a capital loss of US $11.8 million (US $5.7 million to shareholders)
incurred on Government of Jamaica (GOJ) debt securities when the Group exchanged
over US $600 million in GOJ debt securities for lower market values, lower coupon rates
and extended maturities.
Total benefits and expenses (including agents and brokers commissions) increased by
US $16.2 million to close at US $173.6 million for the period, compared to US $157.4
million for the prior period and is consistent with the growth in premium revenue.
On July 26, 2013, the Sagicor Group entered into an agreement with AmTrust Financial
Services Inc. for the sale of Sagicor Europe Limited (SEL) and its subsidiaries, which
includes Sagicor at Lloyd s Limited. The selling price was approximately US $85 million
(GBP 56 million), which represented a premium of US $23 million (GBP 15 million) over
the net tangible asset value of SEL. Under the terms of the sale agreement Sagicor will
retain interest in the ultimate results of the 2011, 2012 and 2013 underwriting years of
account after the syndicate has been formally sold. The impact of this transaction and the
performance of SEL are included in these results to June 30, 2013.
Accordingly, the discontinued operation recorded a net loss of US $41.7 million for
the six-month period. This comprises an operating loss of US $23.6 million, foreign
exchange and finance costs of US $8.0 million and an impairment estimate of all future
losses of US $10.1 million. The operating loss is as a result of a number of factors. The
uncertainty in the Lloyd s market on the future of Sagicor s syndicate contributed to our
inability to reach premium revenue targets. In addition, within certain lines of business,
there was a worsening of the claims experience, resulting in the Group having to record
some large losses and to strengthen claim reserves for business already written. As of
June 30, Sagicor made an estimate of the financial impact of the ultimate results of the
underwriting years retained (2011, 2012 and 2013), and after taking into account the terms
of the sale, we have included an impairment provision of US $10.1 million for future
losses on this business. This provision is based on current estimates and is subject to
revision if there is a change in the syndicate s performance relating to these underwriting
years. The provision is also subject to future currency exchange movements.
Overall, after including the results from the discontinued operation a net loss of US$ 22.4
million was attributable to shareholders for the current period, compared to US$ 11.8
million net income for the comparative period in 2012.
In the statement of financial position as at June 30, 2013, assets amounted to US $5.7
billion and liabilities totalled US$ 5.0 billion. Sagicor s Group equity totalled US$ 730.6
million. The Group s debt, which is included in other liabilities, totalled US$ 244.9 million.
The resulting debt to equity ratio was 33.5%.
During the first six months of 2013, the global economy continued to demonstrate
modest improvements. Both the US economy and the UK economy recorded modest
growth, while the performance in Europe has been mixed. In the Caribbean, with the
exception of Trinidad & Tobago, the economies continue to be under pressure, with no
noticeable improvement in economic activity during the period. Within this environment,
the Sagicor Group has maintained good performance on its continuing operations. The
sale of Sagicor Europe will allow the Board and Management to continue their focus on
improving the performance of the continuing operations, while restructuring these to
take advantage of opportunities for future profitable growth.
On behalf of the Board of Sagicor, I wish to thank our Shareholders and Customers for
their continued support.
August 9, 2013.
Six months ended June 30
(in US currency except percentages)
Group net income from continuing operations
Shareholders net income from continuing operations
Earnings per common share from continuing operations
Annualised return of continuing operations on common shareholders equity
Overall Group net (loss)/income
Overall Shareholders net (loss)/income
Ratio of Debt to Equity
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