The economic circumstances of the markets
in which the Sagicor Group operated during
2016, showed little improvement over that of
2015. The US economy grew at a pace much
lower than expected, while the situation in the
Caribbean was very mixed.

The performance of the Jamaican economy continued to show
signs of improvement, while the economy
of Trinidad & Tobago slipped deeper into
recession. The economies of Barbados, and
those of the Eastern Caribbean, enjoyed the
early signs of a return to growth. However, the
high debt to GDP ratios continue to constrain
the growth, and expose these economies to the
negative impact of external shocks.

As a result, the environment, for the most part, reflected
these economic realities, with businesses
experiencing slow revenue growth, and having
to rely heavily on strategies which emphasised
conservation and operating efficiencies.

Within this context, it is my pleasure to report
to you on the 2016 financial performance of
the Sagicor Group, which experienced a solid
performance, with net income for the year
closing at US $109.3 million, compared to
US $76.8 million in the prior year.

Net income attributable to shareholders
was US$61.7 million, compared to
US $34.7 million in the prior year, an increase
of US $27.0 million. Earnings per common
share was US 20.0¢, and represented an
annualised return on common shareholders’
equity of 12.6%, compared to 7.0% for the
prior year.

Total revenue increased by 2.7% to US
$1,134.1 million, compared to the prior year
amount of US $1,104.2 million, an increase
of US $29.9 million. Net premium revenue
closed at US $664.0 million, marginally
under 2015’s net premium revenue of
US $673.9 million, and was impacted by
lower annuity business written in our USA
segment, together with the impact of the
depreciation of the Jamaica Dollar to the US
dollar on translated premiums.

Net investment income closed the period at US $353.4 million,
up from US $322.2 million in the prior year,
driven mainly by increased realised gains
on our international investment portfolios,
and exceeded the prior year amount by
US $31.2 million, or 9.7%.

Fees and other revenue amounted to US $116.8 million,
compared to US $109.1 million in 2015, an
improvement of US $7.7 million, or 7.1%.

Total benefits closed at US $560.4 million, and
marginally exceeded the prior year amount of
US $552.9 million.

Expenses (including agents’ and
brokers’ commissions) closed the year at
US $424.2 million, and were below the prior
year amount of US $427.7 million. Expenses
reflected the lower commissions and related
expenses, consistent with the lower premium
revenue.

Premium and asset taxes were also
lower when compared to the prior year, and
resulted from a reduction in premium and
asset taxes in the Jamaica segment.
Total comprehensive income closed the year
at US $96.7 million, compared to a loss
of US $0.6 million for the prior year. The
main contributor to the improvement in
comprehensive income was an underlying
improvement in net gains on financial
assets of US $142.3 million. Included
in comprehensive income were net
gains for the year on financial assets of
US $39.2 million, resulting from mark-to market
gains on financial assets associated
with our international portfolios.

The Group experienced net declines of US $103.2 million
for the 2015 financial year. Retranslation losses
amounted to US $28.5 million, compared
to US $15.7 million reported in 2015, and
resulted from declines in the Jamaica dollar
of US $21.0 million and the Trinidad dollar,
US $7.5 million, when compared to the United
States dollar.

In the statement of financial position as
at December 31, 2016, assets amounted
to US $6.5 billion, compared to
US $6.4 billion in the prior year. Liabilities
closed at US $5.7 billion, the same
level as in 2015. Sagicor’s Group equity
totalled US $795.4 million, an increase of
US $56.2 million, or 7.6% over the 2015
financial year.

The Group’s debt was US $395.2 million. The
debt to capital ratio was 33.2%, down from
39.2% for the prior year, and was impacted
by the fact that the Company redeemed all its
outstanding convertible redeemable preference
shares amounting to US $120.0 million
during the year.

The Board declared dividends of US 2.5
cents per common share, payable on May 15,
2017, which is consistent with the dividends
paid on November 15, 2016, and represents
a 25% improvement on the dividend paid on
May 17, 2016.

On June 8, 2016, Shareholders approved
the redomiciliation of Sagicor Financial
Corporation to Bermuda. This was achieved
on July 20, 2016, when the Company was
continued under Bermuda Law as Sagicor
Financial Corporation Limited. This is
the first phase of a three-part process to
immunise the Sagicor Group from noninvestment
grade domiciles, and to protect
the credit rating of the Group.

The second phase is the incorporation of a reinsurance
company in Bermuda, while the third is the
re-organisation of the corporate structure
to re-organise the main operating entities
as direct subsidiaries of Sagicor Financial
Corporation Limited.

On December 23, 2016, S&P Global Ratings
re-affirmed the credit rating of Sagicor
Finance (2015) Limited at “BB-“ with stable
outlook. Sagicor Finance (2015) Limited is the
Sagicor subsidiary through which the Sagicor
international corporate bond was issued.

During 2017, the company will continue
its focus on its corporate re-organisation,
business conservation, and process
improvement to positively impact our financial
performance and overall financial condition.

We recognise the challenges still facing our
Caribbean Region, and we will continue to
work with other private sector institutions
and governments to play our part in the
revitalisation of the economies, for the longterm
benefit of our customers, shareholders
and the communities in which we operate.

On behalf of the Board of Sagicor, I wish to
thank our Shareholders and Customers for
their continued support.

Extracted from Stephen McNamara Chairman Sagicor Financial Corporation Limited Annual Report 2016