Global economic strain bites into Sagicor profits
Sagicor Financial Corporation is reporting a slight increase in profits, but its bottom line has been tested by eventsS in Jamaica and Europe.
The company, which has its roots in Barbados and is now an established player regionally and internationally, reported this in its financial results for the nine-month period ended September 30, 2013.
Chairman Stephen McNamara said the group’s net income from continuing operations was US$39.3 million in that time, a “slight improvement” over the US$38.6 million earned in the same time last year”.
“Net income from continuing operations attributable to shareholders was US$23.8 million, a 31 per cent increase over the previous year’s result of US$18.2 million and includes a capital loss of US$11.8 million, (US$5.7 million to shareholders) incurred as a participant in the Government of Jamaica National Debt Exchange Programme in January this year,” the official explained.
“Earnings per common share from continuing operations were US7.6 cents, and represented an annualized return on common shareholders’ equity of 6.1 per cent.”
The chairman said continuing operations in the Caribbean and United States “performed well, with revenue amounting to US$790.6 million, an improvement of US$50.1 million over the corresponding period in 2012”.
“Net premium revenue closed the period at US$506.1 million, an increase when compared with the US$468.1 million, recorded for the same period in the previous year. Net investment income and other income improved from US$272.4 million to US$284.5 million and includes the . . . capital loss,” he added.
McNamara also reported that “total benefits and expenses (including agents and broker’s commissions) increased by US$51.8 million to close at US$738.5 million for the period compared with US$686.7 million for the prior period”, growth he said “was consistent with the growth in premium revenue”.
However, he also noted that Sagicor’s performance in the nine month period reviewed was still negatively impacted by events in Europe.
“As previously indicated, the Sagicor Group entered into an agreement with AmTrust Financial Services Inc. on July 26, 2013, for the sale of Sagicor Europe Limited (SEL) and its subsidiaries, which includes Sagicor at Lloyd’s Limited. This arrangement will result in Sagicor retaining an interest in the ultimate results of the 2011, 2012
and 2013 underwriting years of account after the syndicate has been formally sold,” he said.
“The impact of this transaction and the performance of SEL are included in these results to September 30, 2013. This transaction is expected to close in the fourth quarter of 2013 upon regulatory approval.
“The discontinued operation recorded a net loss of US$41.2 million for the nine-month period, and includes an impairment estimate of all future losses of US$10.8 million, which was essentially unchanged from the second quarter. This impairment provision is based on current estimates, and is subject to revision if there is a change in the syndicate’s performance relating to the above noted underwriting years. The provision is also subject to future currency exchange movements,” he explained.
At the end of September this year Sagicor’s assets were US$5.8 billion and its liabilities totalled
US$5.1 billion, while group equity was US$730.2 million. With debt totalling US$249.4 million the company had a 34.2 per cent debt to equity ratio.
The chairman was pleased that although the global economy was still fragile while showing signs of modest improvement and most Caribbean economies remained “under pressure, with no noticeable improvement in economic activity”, Sagicor still produced encouraging results. (SC)