Home' Trinidad and Tobago Guardian : March 30th 2014 Contents A40
Sunday Guardian www.guardian.co.tt March 30, 2014
SAGICOR FINANCIAL CORPORATION
FOR THE YEAR ENDED DECEMBER 31, 2013
I am pleased to report to you on the 2013 performance of the Sagicor Group. The Group's
financial statements in 2013, like 2012, have been presented with continuing operations
being separated from the discontinued Sagicor Europe operations.
The Sagicor Group's continuing operations, comprising our businesses in the Caribbean and
in the USA, continued to perform well. Net income from continuing operations of US $79.6
million was realised for the year ended December 31, 2013, (US $75.3 million for 2012); after
accounting for capital losses of US $22.0 million incurred through the Group's participation
in the Government of Jamaica National Debt Exchange (NDX), and impairment provisions
on Government of Grenada bonds.
Net income from continuing operations attributable to shareholders was US $39.1 million.
Before accounting for the shareholders' portion of the above mentioned capital loss (US
$9.3 million), net income from continuing operations attributable to shareholders was US
$48.4 million compared to US $53.1 million for the prior year 2012. Earnings per common
share from continuing operations was US 12.5 and represented an annualised return on
common shareholders' equity of 7.7%. Recall that in 2012, there was a one-off gain of US
$20.9 million relating to the recapture of a reinsurance contract. When this one-off gain is
excluded from 2012 net income, net income attributable to shareholders for the current year
shows a 21% improvement in shareholder results.
Continuing operations generated total revenue of US $1,039.5 million compared to the 2012
amount of US $1,064.3 million. The reduction in total revenue is as a result of a decision to
reinsure 90% (US $271.4 million) in new annuity business written in 2013 in the USA. Other
revenue in 2012 benefited from a gain of US $32.0 million before tax (US $20.9 million after
tax), on the recapture of a previously reinsured block of policies.
Net investment income and other income were lower than previous year, at US $279.4
million compared to US $295.0 million for 2012. Net investment income for the current
year was also impacted negatively by capital losses of US $22.0 million (US $9.3 million to
shareholders) incurred on the Jamaica and Grenada government debt.
Total benefits incurred from continuing operations totalled US $592.8 million, a reduction
from the comparative amount of US $639.4 million in 2012. This reduction is the result of a
reinsurance programme introduced in the USA segment, where a significant percentage of
the business is now being reinsured.
Expenses (including agents' and brokers' commissions) closed the year at US $348.1 million
compared to US $325.1 million for the prior year. This increase in expenses is consistent
with the growth in premium revenue.
On July 29, 2013, the Company entered into an agreement to sell Sagicor Europe (SEL)
and its subsidiaries to AmTrust Financial Services, Inc. (AmTrust), subject to regulatory
approvals. Final regulatory approvals were obtained on December 23, 2013, on which date
the sale was completed. The operations of the Sagicor Europe operating segment are
presented as discontinued operations in these financial statements. The terms of the sale
required Sagicor to retain an interest in the run-off of the 2011, 2012 and 2013 underwriting
years of account after the syndicate has been formally sold and is subject to a limit. The
impact of this transaction and the performance of SEL for the financial years 2012 and 2013
are as follows:
Operating loss for the year
Write-off of carrying value of the investment 21.1 10.2
Expenses incurred on disposal
Charged to shareholders' equity for the year
The results of Sagicor Europe were also impacted by previous year's currency translation
loss of US $17.6 million, which was recycled from reserves, and had no impact on the net
assets of the Company.
Overall Group Net Income for the year 2013, including discontinued operations, was US $4.1
million, compared to US $33.3 million for 2012. Net Income attributable to shareholders,
including discontinued operations, was a loss of US $36.4 million in 2013 compared to a
profit of US $11.1 million in 2012.
Other comprehensive loss from continuing operations was US $73.9 million compared to
US $23.9 million in 2012, and includes retranslation losses of foreign currency operations
of US $36.4 million, losses on defined benefit plans of US $9.5 million and net movements
related to investment assets of US $31.8 million.
In the consolidated statement of financial position at December 31, 2013, assets amounted
to US $5.3 billion and liabilities totalled US $4.6 billion. Sagicor's Group equity totalled
US $725.2 million. The Group's debt, which is included in other liabilities, increased to US
$290.2 million from US $241.6 million in 2012. On December 18, 2013, the company issued
18-month US $43.4 million in notes which are repayable in 2015. This, together with the
reduction in total equity, increased the debt to equity ratio to 40.0% (2012 - 30.1%).
The Sagicor Group's experience during our ownership of Sagicor at Lloyds was particularly
challenging. Weak operating results from this segment over the years and a protracted sales
process combined to impact shareholders' equity negatively. On the positive side, despite
a challenging economic environment, the Caribbean and USA operations continue to grow
and to produce positive results for shareholders.
On January 29, 2014, Sagicor Group Jamaica Limited signed a Sale and Purchase Agreement
to acquire all of the issued shares of RBC Royal Bank (Jamaica) Limited and RBTT Securities
Jamaica Limited (collectively "RBC Jamaica") from Royal Bank of Canada. The acquisition is
subject to regulatory approvals. At December 2013, RBC Jamaica had total assets of US $509
The Board has declared dividends of US 3.25 cents per preference share and US 2.0 cents
per common share, payable on May 15.
On January 15, 2014, Director Joyce Dear retired from the Board of Sagicor Financial
Corporation, having attained the mandatory age of retirement. On behalf of the Board, I
wish to thank Joyce for her many years of valuable contributions, and I wish her well in her
retirement. Mr Richard Young was appointed to serve the unexpired term until the AGM, at
which time he becomes eligible for election.
On behalf of the Board of Sagicor, I wish to thank our Shareholders, Policyholders, Clients,
Staff, Advisors and Business Partners for their continued support.
March 29, 2014.
Year ended December 31
(in US currency except percentages)
Group net income from continuing operations
Group net loss from discontinued operations
( $75.5)m ( $42.0)m
Overall Group net income
Shareholders' net income from continuing operations
Shareholders' net loss from discontinued operations
( $75.5)m ( $42.0)m
Overall Shareholders' net (loss)/income
Net income allocated to non-controlling interest
Ratio of Debt to Equity
Earnings per common share from continuing operations
Annualised return of continuing operations on common shareholders' equity
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