Businessuite # 2 Caribbean Ranked Public Company for 2015

Stock Exchange: Barbados

Company: Sagicor Financial Corporation

2016 Rank:
2015 Rank: #2
2014 Rank: #2

Non-Executive Chairman: Stephen McNamara
Group President and Chief Executive Officer: Dodridge Miller

Address: Sagicor Corporate Centre
Wildey, St. Michael
Barbados
Phone: (246) 467-7500
Fax: (246) 436-8829
Email: info@sagicor.com
Website: www.sagicor.com
Annual Reports and Performance

Company Profile:
Sagicor is a dynamic, indigenous Group which has been redefining financial services in the Caribbean. Following a carefully crafted business strategy, the company transformed from a local single-line life insurance company to a financial services group with a solid regional base, before expanding into the international financial services market.

After the company demutualised in 2002, Sagicor Financial Corporation was formed as a publicly-listed holding company. Sagicor, the company name, means “wise judgment”, and reflects the nature of the financial advice and services we offer. Sagicor now operates in 23 countries in the Caribbean, the USA, the UK and Latin America.

For 175 years, Sagicor’s business has been based on long-term relationships with its employees, communities and customers, who entrust us with their future financial well-being. Our name and identity draw on the strength, stability and financial prudence that are our heritage, and this identity also defines the flexibility that wise financial thinking can bring to our customers throughout their lives. Local expertise and partnerships with world-class asset managers, reinsurers, and sound risk management, ensure that Sagicor is truly able to improve peoples’ lives through “wise judgment”, and will continue to meet their financial needs now and in the future. Sagicor’s core business strategies will continue to provide a wide range of financial products and services, while we continue to be committed to our vision, “To be a great company, committed to improving the lives of people in the communities in which we operate.”

The following edited extract was taken from the company’s 2014 Annual Report to shareholders.

The Group’s financial statements in 2014, consistent with 2013 and 2012, have been presented with continuing operations being separated from the discontinued Sagicor Europe run-off operations.

The Sagicor Group had a solid year’s performance, recording net income for the year of US $73.9 million, compared to US $4.1 million for 2013. The continuing operations, comprising our businesses in the Caribbean and in the USA, continued to perform well, recording net income of
US $100.3 million for 2014, compared to US $79.6 million for 2013, an increase of US $20.7 million.

Net income from continuing operations attributable to shareholders was US $53.7 million, compared to the prior year result of US $39.1 million, an improvement of US $14.6 million. Earnings per common share from continuing operations were US 17.3 cents, and represented an annualized return on common shareholders’ equity of 11.2%.

Total revenue closed the year at US $1,045.2 million, compared to the prior year amount of US $1,039.5 million. Net premium revenue stood at US $625.6 million, compared to US $657.0 million for the prior year.

When compared to 2013, the lower premium income resulted from lower new annuity business written in our USA segment, together with the impact of the deterioration of the Jamaica dollar to the US dollar on translated premiums in US dollars in 2014. Net investment income closed the period at US $307.2 million, and was an improvement over the prior year amount, which stood at US $279.4 million. Fees and other revenue amounted to US $83.3 million, compared to US $103.1 million in 2013, and were impacted by the lower reinsurance commissions earned as a result of lower new annuity business written in the USA segment.

On June 27, 2014, the Group completed the acquisition of RBC Royal Bank’s Jamaica banking operations, and rebranded the business as Sagicor Bank. After determining the fair value of acquired assets and liabilities of the business, the Group recorded negative goodwill on acquisition of US $29.1 million. At the same time, the Jamaica segment incurred US $10.5 million in integration, restructuring and re-branding costs associated with the acquisition. These non-recurring costs have been included in Administrative Expenses.

Total benefits incurred from continuing operations totaled US $542.2 million, and is a reduction from the comparative amount in 2013 of US $592.8 million. This reduction is the result of the lower annuity business written in the USA segment, together with the impact of the deterioration of the Jamaica dollar to the US dollar on the Jamaica segment.

Expenses (including agents’ and brokers’ commissions) closed the year at US $385.9 million, compared to US $348.1 million for the prior year. The increase of US $37.8 million included restructuring and rebranding costs, along with operating expenses now incurred within the banking division, following the acquisition of RBC Royal Bank’s Jamaica banking operations.

Total comprehensive income was significantly improved when compared to the prior year. Other comprehensive income showed a positive result of US $6.7 million, compared to a loss of US $54.6 million for 2013. Included in comprehensive income were net gains on financial assets of US $15.6 million and net gains on defined benefit plans of US $13.2 million. A decline in the Jamaica dollar against the US dollar contributed to currency retranslation losses of US $22.0 million. The Jamaica dollar depreciated against the US dollar by 7.8% during 2014, compared to 14% during 2013. With the continued improvement in the Jamaican economy, we expect the currency to stabilise against the US dollar and further depreciation to be lower than previous years.

The discontinued operation represents our UK business, which was sold on December 23, 2013. The terms of the sale required the Sagicor Group to retain an interest in the 2011, 2012 and 2013 underwriting years of account. Although actuarial reserves are established to cover best estimates of this liability, exposure to any fluctuations in experience continues until 2018. During 2014, the discontinued business experienced a net loss of US $26.4 million, resulting from adverse movements in our claims provisioning for 2013 and prior years. As part of the 2014 review of the discontinued business, we have decided to explore the purchase of reinsurance to cover this residual exposure. This would effectively transfer any retained risk to the reinsurer, and would effectively close this discontinued operation at the end of 2014. Subsequent to year-end, management completed the negotiation of the reinsurance, at a cost of US $12.2 million. The cost of this reinsurance will be accounted for during the 2015 financial year.

In the statement of financial position as at December 31, 2014, assets amounted to US $6.2 billion, an increase of US $0.9 billion over the amount of US $5.3 billion at December 2013. Similarly, liabilities closed at US $5.4 billion, compared to US $4.6 billion, an increase of US $0.8 billion. The increase in assets and liabilities largely reflects the acquisition of RBC Royal Bank’s Jamaica banking operations. Sagicor’s Group equity totaled US $773.5 million (2013, US$725.2 million).

The Group’s debt, which is included in other liabilities, totaled US $298.9 million (2013, US $290.2 million). The resulting debt to equity ratio was 38.7% compared to 40.0% for the prior year. 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.BM

STEPHEN MCNAMARA was appointed Non-Executive Chairman on January 1, 2010, having formerly served as Vice-Chairman since June 2007. He has been an independent Director since December 2002, and is a citizen of St Lucia and Ireland. He is a British trained Attorney-at-law, and is the Senior Partner of McNamara & Company, Attorneys-at-Law of St Lucia.
Mr. McNamara was elected to the Board of Sagicor Life Inc. in 1997. He is Chairman of the Group’s main operating subsidiary, Sagicor Life Inc., Sagicor USA, and Sagicor Finance Inc. He serves as a Director of Sagicor Group Jamaica Limited and a number of other subsidiaries within the Group.