TIDMSFI
RNS Number : 8577I
Sagicor Financial Corporation Ltd
13 August 2019
Sagicor Financial Corporation Limited
Financial results for the six months ended June 30, 2019
Chairman's Statement
The Sagicor Group maintained a solid performance for the first
six months to June 30, 2019. Group net income closed the period at
US $58.4 million against a prior year result of US $39.4 million.
Net income attributable to shareholders from continuing operations
was US $26.2 million compared to the prior year result of US $21.5
million. Net income to shareholders from continuing operations in
2018 included the impact of a provision on the Government of
Barbados Debt and was partially offset by certain one-time positive
earnings releases.
Total revenue for the Group amounted to US $992.8 million,
against a prior year amount of US $633.3 million, an increase of US
$359.5 million or 57%. Revenue growth was driven primarily by the
USA business segment which generated premium growth, amplified by
our strategic decision to cease reinsuring its premiums to third
parties. Revenues continue to grow year over year in the Sagicor
Jamaica and Sagicor Life business segments as well.
Benefits including change in actuarial liabilities for future
benefits were US $639.7 million, compared to US $298.4 million for
the previous year and was consistent with the growth in premium
income. Expenses including credit impairment losses were US $268.3
million, compared to US $286.9 million for the same period in the
prior year, a decrease of 6%. Expenses in the prior year included
credit impairment losses of US $57.8 million, largely related to
the impairment of the Government of Barbados debt. Current year
expenses included the impact of higher commissions related to sales
growth in the USA segment.
Group comprehensive income was US $102.0 million, compared to a
loss of US $17.0 million for the prior year. Shareholder
comprehensive income from continuing operations was US $57.5
million, compared to a loss of US $13.0 million for the prior year.
The Group continues to benefit from significant net gains on
investments measured at Fair Value through Other Comprehensive
Income. Losses incurred on the retranslation of foreign currency
operations reduced this year when compared to the previous
year.
In the statement of financial position as at June 30, 2019,
assets amounted to US $7.9 billion, and liabilities amounted to US
$6.6 billion. Group equity was US $1,224.7 million, compared to US
$1,135.5 million at December 31, 2018. Shareholders' equity was US
$658.6 million, compared to US $600.9 million at December 31, 2018.
The Group's debt was US $473.9 million with a debt to capital ratio
of 27.9%, compared to 30.2% at December 31, 2018.
On June 4, our shareholders overwhelmingly approved the
previously announced transaction with Alignvest Acquisition II
Corporation ("AQY"), with 99.5% of shares voting in favour of the
transaction. Our shareholders showed further support by electing to
receive an aggregate of approximately US $20 million in cash
consideration out of the maximum available US $205 million we
offered to them. As a result, the vast majority of Sagicor's
shareholders will continue to retain their investment in Sagicor
post the transaction.
Following completion of the Transaction, which is expected to
close in the fourth quarter of 2019 subject to customary regulatory
approvals, it is expected that Sagicor will retain over US $420
million of net cash from the transaction, leaving our company
exceptionally well capitalized for future growth.
On behalf of the Board of Sagicor, I wish to thank our
Shareholders and Customers for their continued support.
Stephen McNamara
Chairman
August 9, 2019
FINANCIAL HIGHLIGHTS Six months ended JUNE 30
(in US Currency except percentages) 2019 2018
------------------------------------------- -------------- -----------
Total revenue $992.8m $633.3m
Overall Group net income $58.4m $39.4m
Overall shareholders' net income $26.7m $24.9m
Net income allocated to non-controlling
interests $31.0m $22.8m
------------------------------------------- -------------- -----------
Total equity $1,224.7m $889.0m
------------------------------------------- -------------- -----------
Book Value per share $2.15 $1.95
------------------------------------------- -------------- -----------
Ratio of Debt to Capital 27.9% 31.7%
------------------------------------------- -------------- -----------
Earnings per common share from continuing
operations 8.5c 7.0c
Annualised return to common shareholders'
equity 8.5% 7.2%
------------------------------------------- -------------- -----------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Amounts expressed in June 30 June 30 December
US $000 31
2019 2018 2018
(unaudited) (unaudited) (audited)
--------------------------- ------------- ------------- -----------
ASSETS
Financial investments 5,870,127 5,037,795 5,347,663
Other investments and
assets 1,991,584 1,891,654 1,960,522
Assets of discontinued
operation - 13,467 17,239
Total assets 7,861,711 6,942,916 7,325,424
-------------
LIABILITIES
Policy liabilities 4,106,477 3,566,394 3,662,438
Other liabilities 2,530,557 2,487,515 2,527,525
Total liabilities 6,637,034 6,053,909 6,189,963
------------- -------------
EQUITY
Shareholders' equity 658,605 596,748 600,869
Participating accounts 3,605 (11,230) 4,078
Non-controlling interests 562,467 303,489 530,514
Total equity 1,224,677 889,007 1,135,461
-------------
Total liabilities and
equity 7,861,711 6,942,916 7,325,424
---------------------------- ------------- -------------
These financial statements have been approved for issue
by the Board of Directors on August 9, 2019.
CONSOLIDATED STATEMENT OF INCOME
Amounts expressed in US ---- Six months to ---- Three months to
$000 ---- ----
----- June 30 ----- ----- June 30 -----
2019 2018 2019 2018
(unaudited) (unaudited) (unaudited) (unaudited)
------------------------------------- ------------- ------------- -------------
REVENUE
Net premium revenue 677,770 410,030 312,711 222,728
Net investment and other
income 315,053 223,249 156,593 119,271
Total revenue 992,823 633,279 469,304 341,999
-------------
BENEFITS AND EXPENSES
Benefits 639,700 298,416 291,865 166,324
Expenses 268,320 286,918 137,356 169,301
Total benefits and expenses 908,020 585,334 429,221 335,625
-------------
OTHER
(Loss) / gain arising on business
combinations, acquisitions
and divestitures (347) 5,280 (347) -
INCOME BEFORE TAXES 84,456 53,225 39,736 6,374
Income taxes (26,574) (17,195) (14,204) (8,814)
NET INCOME / (LOSS) FROM CONTINUING
OPERATIONS 57,882 36,030 25,532 (2,440)
Net income from discontinued
operation 517 3,357 - 2,965
NET INCOME FOR THE PERIOD 58,399 39,387 25,532 525
-------------
NET INCOME / (LOSS) ATTRIBUTABLE
TO:
Common Shareholders
From continuing operations 26,194 21,543 11,095 2,046
From discontinued operation 517 3,357 - 2,965
26,711 24,900 11,095 5,011
Participating policyholders 705 (8,310) 457 (16,497)
Non-controlling interests 30,983 22,797 13,980 12,011
58,399 39,387 25,532 525
-------------
Basic earnings per common
share:
From continuing operations 8.5 cents 7.0 cents 3.6 cents 0.7 cents
From discontinued operation 0.2 cents 1.1 cents 0.0 cents 1.0 cents
8.7 cents 8.1 cents 3.6 cents 1.7 cents
-------------
Fully diluted earnings per
common share:
From continuing operations 8.4 cents 6.9 cents 3.5 cents 0.7 cents
From discontinued operation 0.2 cents 1.1 cents 0.0 cents 0.9 cents
8.6 cents 8.0 cents 3.5 cents 1.6 cents
------------------------------------- -------------
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Amounts expressed ---- Six months to ---- Three months
in US $000 ---- to ----
----- June 30 ----- ----- June 30 -----
2019 2018 2019 2018
(unaudited) (unaudited) (unaudited) (unaudited)
----------------------------------------- ------------- ------------- -------------
NET INCOME FOR
THE PERIOD 58,399 39,387 25,532 525
------------- ------------- -------------
Items net of tax that may be
reclassified subsequently to
income:
Financial assets measured at
fair value through other comprehensive
income (FVOCI):
Gains / (Losses) on revaluation 76,149 (65,113) 10,214 (36,722)
Losses / (Gains) transferred
to income 42,197 (1,749) 41,768 1,888
Net change in
actuarial liabilities (64,106) 29,874 (29,956) 16,711
Retranslation of foreign
currency operations (7,653) (17,782) (12,113) (14,741)
Other items - - - 1
46,587 (54,770) 9,913 (32,863)
Items net of tax that will not
be reclassified subsequently
to income:
Unrealised (losses) / gains arising
on revaluation of owner occupied
property (2,964) 832 59 832
Net gains on equity securities
designated at fair value through
through other comprehensive income 18 27 1 13
Losses on defined benefit plans - (2,500) - (2,500)
OTHER COMPREHENSIVE INCOME /
(LOSS) FROM CONTINUING OPERATIONS 43,641 (56,411) 9,973 (34,518)
TOTAL COMPREHENSIVE INCOME /
(LOSS) FOR THE PERIOD 102,040 (17,024) 35,505 (33,993)
------------- ------------- -------------
TOTAL COMPREHENSIVE INCOME /
(LOSS) ATTRIBUTABLE TO:
Common Shareholders
From continuing
operations 57,453 (12,976) 19,205 (18,357)
From discontinued
operation 517 3,357 - 2,965
57,970 (9,619) 19,205 (15,392)
Participating
policyholders 1,325 (9,061) 681 (17,221)
Non-controlling
interests 42,745 1,656 15,619 (1,380)
102,040 (17,024) 35,505 (33,993)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Amounts expressed in US $000 Share Share Retained Participating Non-controlling
(unaudited) Capital Premium Reserves Earnings Accounts Interest Total
------------------------------ -------- -------- --------- --------- -------------- ---------------- ----------
Six months to June 30, 2019:
Balance, beginning of period 3,061 300,665 (76,995) 374,138 4,078 530,514 1,135,461
Total comprehensive income
from continuing
operations - - 31,259 26,194 1,325 42,745 101,523
Total comprehensive income
from discontinued
operation - - - 517 - - 517
Transactions with holders of
equity instruments:
Movements in treasury
shares 1 (30) - - - - (29)
Changes in reserve for
equity compensation
benefits - - 6,296 - - - 6,296
Dividends declared - - - (7,658) - (12,036) (19,694)
Transfers and other movements - - 683 474 (1,798) 1,244 603
------------------------------
Balance, end of period 3,062 300,635 (38,757) 393,665 3,605 562,467 1,224,677
------------------------------ -------- -------- --------- --------- -------------- ----------------
Six months to June 30, 2018:
Balance, beginning of period 3,059 300,470 (47,482) 367,327 865 308,089 932,328
Prior period adjustment - - 94 1,124 - 3,677 4,895
January 1, 2018
adjustment-change on
initial application of
IFRS 9 - - (217) (10,442) (2,930) (2,352) (15,941)
Balance as restated 3,059 300,470 (47,605) 358,009 (2,065) 309,414 921,282
Total comprehensive income
from continuing
operations - - (32,019) 19,043 (9,061) 1,656 (20,381)
Total comprehensive income
from discontinued
operation - - - 3,357 - - 3,357
Transactions with holders of
equity instruments:
Movements in treasury
shares - 16 - - - - 16
Changes in reserve for
equity compensation
benefits - - (1,686) - - - (1,686)
Dividends declared - - - (7,648) - (10,449) (18,097)
Transfers and other movements - - (204) 1,956 (104) 2,868 4,516
-------- -------- --------- --------- -------------- ----------------
Balance, end of period 3,059 300,486 (81,514) 374,717 (11,230) 303,489 889,007
------------------------------ -------- -------- --------- --------- -------------- ----------------
CONSOLIDATED STATEMENT OF CASH FLOWS
Amounts expressed in US $000 ---- Six months to ----
----- June 30 -----
2019 2018
Restated
(unaudited) (unaudited)
------------
CASH FLOWS
Operating activities:
Cash from income, interest and taxation 321,026 78,282
Net increase in investments and operating
assets (323,927) (253,129)
Net change in operating liabilities 43,384 225,265
40,483 50,418
Investing activities (4,761) (6,930)
Financing activities (33,271) (17,007)
Effects of exchange rate changes (2,730) (5,800)
Net change in cash and cash equivalents -
continuing operations (279) 20,681
Net change in cash and cash equivalents 17,756 -
- discontinued operation
Cash and cash equivalents, beginning
of period 321,561 338,349
Cash and cash equivalents, end of period 339,038 359,030
-----------------------------------------------
STATEMENT OF INCOME BY SEGMENT
Amounts expressed in
US $000 Six months to June 30, 2019
(unaudited) Sagicor Sagicor Sagicor Head Inter-segment Total
Life Jamaica Life Office eliminations
USA and other
--------- -------- ----------- -------------- ---------
Total revenue 246,532 353,663 372,499 51,016 (30,887) 992,823
Total benefits and
expenses 219,282 280,780 356,179 46,627 5,152 908,020
Loss arising on business
combinations, acquisitions
and divestitures (347) - - - - (347)
INCOME BEFORE TAXES 26,903 72,883 16,320 4,389 (36,039) 84,456
Income taxes (5,205) (16,829) (3,427) (1,119) 6 (26,574)
NET INCOME / (LOSS)
FROM CONTINUING OPERATIONS 21,698 56,054 12,893 3,270 (36,033) 57,882
Net income / (loss)
attributable to shareholders
from continuing operations 20,993 24,737 12,893 (13,335) (19,094) 26,194
--------- -------- ----------- -------------- ---------
Total Comprehensive
income / (loss) attributable
to shareholders from
continuing operations 27,547 36,580 25,210 (12,920) (18,964) 57,453
--------- -------- ----------- -------------- ---------
Six months to June 30, 2018
-------------------------------
Sagicor Sagicor Sagicor Head Inter-segment Total
Life Jamaica Life Office eliminations
USA and other
------------------------------- --------- -------- ----------- -------------- ---------
NET INCOME / (LOSS)
FROM CONTINUING OPERATIONS 24,729 45,242 (413) 20,835 (54,363) 36,030
--------- -------- ----------- -------------- ---------
Net income / (loss)
attributable to shareholders
from continuing operations 33,039 22,217 (413) 4,262 (37,562) 21,543
--------- -------- ----------- -------------- ---------
Total Comprehensive
income / (loss) attributable
to shareholders from
continuing operations 30,557 1,511 (9,552) 3,476 (38,968) (12,976)
--------- -------- ----------- -------------- ---------
STATEMENT OF FINANCIAL POSITION BY SEGMENT
Amounts expressed
in US $000 June 30, 2019
----------------------------------------------------------------------------
(unaudited) Sagicor Sagicor Sagicor Head Office Inter-segment Total
Life Jamaica Life USA and other eliminations
---------- ---------- ------------ -------------- ----------
Total assets 2,032,515 3,265,859 2,688,952 406,415 (532,030) 7,861,711
Total liabilities 1,521,999 2,390,479 2,416,664 839,922 (532,030) 6,637,034
Net assets 510,516 875,380 272,288 (433,507) - 1,224,677
June 30, 2018
----------------------------------------------------------------------------
Sagicor Sagicor Sagicor Head Office Inter-segment Total
Life Jamaica Life USA and other eliminations
---------- ---------- ------------ -------------- ----------
Net assets 524,404 548,699 231,560 (415,656) - 889,007
-------------------- ---------- ---------- ------------ -------------- ----------
PRODUCTS AND SERVICES
Total external revenues relating to the Group's products and services
are summarised as follows:
Amounts expressed in US $000 ---- Six months to ----
----- June 30 -----
2019 2018
(unaudited) (unaudited)
-------------
Life, health and annuity insurance contracts
issued to individuals 677,936 369,847
Life, health and annuity insurance and
pension administration contracts issued
to groups 147,810 139,563
Property and casualty insurance 26,622 23,495
Banking, investment management and other
financial services 90,743 85,329
Other revenues 49,712 15,045
992,823 633,279
----------------------------------------------
NOTES TO THE FINANCIAL STATEMENTS
1. BASIS OF PREPARATION
These condensed interim financial statements have been prepared in accordance
with the accounting policies set out in note 2 of the December 31, 2018
audited financial statements, except for the adoption of IFRS 16 - Leases'.
This standard became effective from January 1, 2019. IFRS 16 removes
the distinction between operating and finance leases and requires recognition
of an asset (the right to use the leased item) and a financial liability
to pay rentals, for virtually all lease contracts.
In accordance with the transition provisions in IFRS 16, the standard
has been implemented using the modified retrospective method with no
restatement of comparative information. In applying IFRS 16 for the first
time, the group has used the practical expedients permitted by the standard.
-----------------------------------------------------------------------------------------------
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