Sagicor Group Jamaica Limited (SGJ or the Group) performed well in 2019, producing profits attributable to stockholders of $15.65 billion, equivalent to $4.01 per share, a 10% improvement over the prior year. Stockholders’ equity reached $91.25 billion, a 23% growth for the year, after distributing dividends of $1.44 per share.

In addition to strong generic growth across our major business lines, we expanded our investment in Property and Casualty Insurance with the acquisition of a 60% interest in Advantage General Insurance company Limited (AGI).

Our 2019 operations also include activities for a full year relating to the Sagicor X-Fund Group (“X-Fund”) of which we took effective control and consolidated into SGJ from the 4th quarter of 2018 and TravelCash Jamaica Limited (TravelCash) which was acquired effective December 1, 2018.

Net profit attributable to stockholders for Q4 2019 was $4.79 billion as against $5.41 billion for Q4 2018. The Q4 2018 results included a significant “one-time” gain of $1.52 billion on the consolidation of X-Fund.

In addition, 2019 results include higher losses from Playa Hotel & Resorts (Playa), an associated company.

FINANCIAL PERFORMANCE

Overall, the Group generated good results in an environment of low-interest rates, a somewhat volatile J$/US$ exchange rate, and vibrant equity markets, especially the Jamaica Stock Exchange (JSE).

Consolidated full-year profit attributable to stockholders was $15.65 billion, a 10% increase over the prior year.

Earnings per stock unit were $4.01 compared to $3.65 in 2018.

The annualized return on stockholders’ equity was 19% as against 20% for 2018, and we distributed dividends of $5.62 billion to stockholders during 2019, compared to $4.69 billion in 2018 ($1.44 per share as against $1.20 in 2018).

The market capitalization of SGJ at December 2019 was $304.44 billion, up 96% on December 2018.

Total Group Assets at December 2019 were $456.00 billion up from $394.13 billion as at December 2018. Assets grew organically except for the acquisition of AGI on September 30, 2019, and a $2.91 billion recorded as Right-of- use assets from properties being leased under IFRS 16.

Total assets under management, as at December 2019, including Group Assets, Pension Funds’ assets managed on behalf of clients and Unit Trusts, were $892.04 billion, a 17% increase over the December 2018 amount of $761.07 billion.

Group Consolidated Revenue for the year of $92.67 billion was 31% more than the $70.66 billion for 2018, in part influenced by the X-Fund consolidation from October 2018, the acquisition of TravelCash from December 2018 and the acquisition of AGI on 30 September 2019. In 2018 we recorded large investment credit losses that did not repeat at the same level in 2019.

Net premium income of $46.51 billion, which accounted for 50% of revenue, was 17% up on 2018. A 14% increase when excluding premiums from AGI. Net investment income of $16.85 billion, before capital gains and losses, was 7% better than last year despite interest rates trending down in Jamaica.

The Group earned substantial gains from trading and capital appreciation of $10.94 billion in 2019 (of which $4.50 billion relates to stockholders) compared to $4.19 billion in 2018.

The JSE’s main index grew by 34% during the year. The fee-based income of $13.90 billion grew by 22% mainly from the expansion of our Payments channels and from increased corporate financing deals.

By the end of December 2019, the value of the J$ to the US$ declined by 3.5% with wider fluctuations at points throughout the year. The Group benefited from FX trading gains and picked-up unrealized gains from the revaluation of foreign currency denominated assets, net of liabilities.

Total benefits and expenses of $71.87 billion were 33% more than the $54.07 billion for 2018, due to, a) Higher Actuarial Liabilities emanating mainly from the growth of the inforce Insurance business and lower interest rates. b) Increased policy benefits, including death claims, health claims, annuity payments, surrenders and withdrawals from Segregated policy funds, as portfolios grew. P&C claims for the last quarter of 2019 relating to AGI are also included in Net Benefits costs. c) Consolidated administration expenses, including depreciation and amortization of software, of $22.63 billion was 20% higher than in 2018. Excluding the effect of acquisitions and consolidation of X-Fund, the increase was 12%. Despite this, we maintained the Group efficiency ratio of administrative expenses to total revenue, a key measure of expense management, at 31% as it was in 2018.

Individual Insurance: This segment continued its strong profitability performance contributing $5.37 billion to the Group for the year, a 13% improvement. Net premium income for the Individual Insurance lines of business of $26.47 billion was 11% higher than the comparative 2018, driven by very strong new business in both Jamaica and Cayman, and improved conservation of the inforce block of policies which grew by 7% to almost 600,000 policies. Meaningful capital gains were also earned in this segment during the year. Benefits accrued or paid to policyholders of $12.27 billion were higher than in 2018 as the business expanded. The increase in actuarial liabilities was much higher than last year due to our growth and lower interest rates while releases for mortality experience, expenses and other efficiencies were lower this year. Key performance indicators in this segment continue to trend positively, including market share.

Employee Benefits Segment: revenue of $27.23 billion was 15% ahead of 2018 as a result of good premium income growth across all lines. New business annualized premium income was well over the 2018 levels. Claims cost grew with the business but the ratio of claims to premium income was much higher in 2019. The increase in actuarial liabilities was up on prior year as the business grew and interest rates were lower. However, the segment profit outcome was $4.29 billion, up 5% from 2018.

Commercial Banking: Sagicor Bank contributed net profit of $3.04 billion which was 7% more than in 2018. Revenues of $13.86 billion were 12% more than prior-year, reflecting business expansion, trading gains and improved credit losses. Fee-based income was 10% more than in 2018 as our Payments channels continued to grow. Total assets of $142.48 billion were 16% above the December 2018 amount. Loans and advances, net of provision for loan losses, were $84.66 billion, 23% higher than the December 2018 balance. Customer deposit liabilities of $107.25 billion were up 16% on last year.

Investment Banking: There was significant business growth in this segment, especially in the Corporate Finance area. By year-end, on-balance sheet assets of $94.85 billion were up 12%, revenue of $6.65 billion was more than in 2018 by 44% and profits of $2.89 billion, excluding the share of AGI earnings, grew by 40%. AGI was acquired at the end of September and made a positive contribution to Sagicor’s earnings after all associated acquisition costs. In December 2019, Regulatory approvals were obtained for the establishment of Sagicor Investments Cayman. This new entity will facilitate geographic expansion of our investments and wealth management business in 2020 and beyond.

OUTLOOK

The current economic environment is characterised by low-interest rates, moderate inflation and modest economic growth. The improvement in the Government of Jamaica’s fiscal position has created space for higher levels of capital expenditure, mostly geared towards infrastructure.

The extent of the current threat posed by the novel Coronavirus is still being assessed locally and globally. Future uncertainties also include upcoming elections in Jamaica and the United States as well as the unfolding of BREXIT. Given our economy’s exposure to tourism, while cautiously optimistic about the future, we are taking a conservative view of the potential impact of the Coronavirus and managing our businesses accordingly, especially with regard to the welfare of our team members and our customers.

Christopher Zacca President & CEO Sagicor Group Jamaica Limited. Extracted and edited from SAGICOR GROUP JAMAICA LIMITED
Audited Group Results YEAR ENDED 31 DECEMBER 2019