SAGICOR FINANCIAL COMPANY LTD. (USD, unless otherwise noted)
Highlights
- Total revenue of
$459 million , a decline of 2% in the quarter - Net insurance premiums of
$310 million , a decline of 1% in the quarter - Net income from continuing operations attributed to shareholders was a loss
$0.3 million in the quarter; excluding a$10.6 million after-tax reduction in net income due to a change in reserves related to an internal reinsurance transaction, this would have been net income of$10.3 million , down 7% from$11.1 million in Q2 2019 - Earnings per share from continuing operations was a loss of
$0.02 for quarter - Total comprehensive income to shareholders of
$37.1 million as asset prices recovered losses from Q1 - Strong financial position with total capital available of
$2.1 billion and MCCSR of 264% - Book value per share was
$7.21 (C$9.75 ), an increase of 2% from the first quarter
"While the pandemic continues to impact our new business growth, Sagicor delivered consistent top line revenue, demonstrating our resilience and ability to sustain the business in challenging times due to our diverse sources of income."
"The outlook for the regions in which we operate remains uncertain given the unpredictable nature of the length and severity of the contraction of economic activity, which also continues to impact new business. However, the pandemic has accelerated the implementation of various innovations for meeting and exceeding the needs of our clients despite the challenges presented by COVID-19 and the 'new norm'. Sagicor also continues to pursue new, innovative ways of doing business that create value and the best possible service to its clients."
"We are also generally pleased that the underlying performance of our company demonstrates that our business can navigate such economic challenges. Many of the asset price declines we observed in
Consolidated Highlights | ||||||
Q2 2020 | Q2 2019 | Change | YTD 2020 | YTD 2019 | Change | |
Total Revenue ($ millions) | 459 | 468 | (2%) | 802 | 984 | (19%) |
Net income (loss) attributed to | (0.3) | 11.1 | (103%) | (29.6) | 26.2 | (213%) |
Annualized return on common | (0.1%) | 6.9% | (7.0) pts | (5.2%) | 8.5% | (13.7) pts |
Note: Values may not add due to rounding |
Q2 2020 | Q4 2019 | Change | |
Shareholders' Equity ($ millions) | 1,073 | 1,154 | (7%) |
Book value per common share | 7.21 | 7.81 | (8%) |
MCCSR ratio (%) | 264% | 253% | 11 pts |
Debt to Capital ratio (%) | 23.9% | 22.8% | (1.1) pts |
Total Capital available ($ millions) | 2,146 | 2,266 | (5%) |
Overall Sagicor Group Highlights
- Total revenues including premiums declined 2% in the quarter compared to the same period last year. Net insurance premium revenue of
$310 million decreased by 1%. Revenues were generally impacted by lower new business sales across all segments due to challenges in the operating environment, offset by higher net investment income. Investment income benefited from realized and unrealized gains of$36 million , a partial reversal of the mark-to-market losses reported at the end of the first quarter of 2020. - Net Income from continuing operations attributed to shareholders was a loss of
$0.3 million in the quarter. Excluding a$10.6 million after-tax reduction in net income due to a change in reserves related to an internal reinsurance transaction, net income would have been$10.3 million . Net income in the quarter was impacted by declines in new business sales and increases in expected credit losses, offset by positive net investment income as asset prices retraced most of their losses in Q1. - Total comprehensive income was
$37.1 million reflecting an improvement in asset prices as measured at fair value through other comprehensive income and would have been$47.4 million without the reinsurance transaction. - Total capital of
$2.1 billion remained consistent compared to the prior quarter. The Company's MCCSR ratio for its regulated insurance businesses was 264% and the Company's debt to capital ratio was 23.9%.
Dividends
The Board of Directors of
Business Segment Performance
Sagicor considers its business within three main operating segments:
(US$ millions, unless | Q2 | Q2 | Change | YTD | YTD | Change |
Total Revenues | ||||||
97 | 111 | (13%) | 210 | 246 | (15%) | |
Sagicor Jamaica | 167 | 182 | (8%) | 299 | 346 | (13%) |
180 | 164 | 10% | 271 | 372 | (27%) | |
Corporate and Other | 15 | 11 | 28% | 21 | 20 | 8% |
Benefits and Expenses | ||||||
(93) | (99) | 6% | (203) | (220) | 8% | |
Sagicor Jamaica | (139) | (145) | 4% | (244) | (280) | 13% |
(184) | (156) | (18%) | (293) | (356) | 18% | |
Corporate and Other | (24) | (29) | 17% | (57) | (52) | (10%) |
Net Income/(loss) from | ||||||
2 | 10 | (77%) | 4 | 21 | (81%) | |
Sagicor Jamaica | 9 | 14 | (36%) | 18 | 25 | (26%) |
(3) | 6 | (148%) | (17) | 13 | (233%) | |
Corporate and Other | (8) | (19) | 53% | (35) | (33) | (6%) |
Note: Values may not add due to rounding | ||||||
Business Segment Highlights
- Total revenue including premiums declined 13% in the quarter primarily impacted by lower new business sales due to economic uncertainty from the pandemic and an increase in expected credit losses. Net premium revenues of
$76 million declined 8% over the same quarter last year. - Net income attributed to shareholders, after accounting for the income allocated to policyholders, decreased 77% in the quarter to
$2 million .
Sagicor Jamaica
- Total revenue including premiums declined 8% in the quarter as measured in US dollars. Revenue was mainly impacted by a depreciation in the Jamaican dollar against the US dollar, as our Jamaican subsidiary's functional currency is the Jamaican dollar and must be translated into US dollars for our financial statements. It was also impacted by positive mark-to-market movements in capital markets and premium growth in the annuity and group health insurance businesses, offset by credit impairment losses. Our
Jamaica business also benefited from higher premiums from its investment inAdvantage General Insurance Company Limited . - Net income attributed to shareholders, after consideration of Sagicor's 49% ownership, decreased by 36% to
$9 million in the quarter.
- Total revenue including premiums increased 10% in the quarter. Revenues were positively impacted by higher net investment income resulting from the reversal of some of the unrealized mark-to-market losses experienced in the first quarter.
- During the quarter,
Sagicor USA completed a transfer of insurance risks associated with certain life products and$195 million of financial instruments to support those products. This transaction was undertaken as part of Sagicor's stated strategy to optimize its capital allocations and structure and resulted in meaningful capital being freed up to support other initiatives. The transaction resulted in a one-time strengthening of reserves of$13.0 million resulting in a$10.6 million after-tax reduction in net income. - Net income attributed to shareholders was a loss of
$3 million mainly impacted by the transaction with the Company's captive reinsurer,Sagicor Reinsurance Bermuda Limited (SRBL). Management estimates that absent the implementation of the captive reinsurance agreement, net income attributed to shareholders would have been$7.7 million in the quarter.
Outlook for 2020
The Company's financial performance for the balance of 2020 remains uncertain. We have put in place a series of initiatives to mitigate the effect of the pandemic on our operations and financial results. We are cautiously optimistic that signs of improving conditions will persist through Q3 and Q4 of 2020; however, because the length and severity of the economic contraction in our operating jurisdictions remains unpredictable, the impact of the pandemic on financial results for the balance of the year remains uncertain.
Normal Course Issuer Bid
As previously announced, Sagicor authorized a share buyback program that allows it to repurchase up to 3 million of its common shares under a normal course issuer bid. As at
Management's Discussion and Analysis and Consolidated Financial Statements (Unaudited)
This press release, which was approved by the Company's Board of Directors and Audit Committee, should be read in conjunction with the Company's unaudited financial statements and accompanying management's discussion and analysis ("MD&A"). The unaudited financial statements and MD&A are available on the Company's website at www.sagicor.com and will soon be filed on the System for Electronic Document Analysis and Retrieval ("SEDAR") at www.sedar.com.
Conference call
Non-IFRS Measures
The Company reports certain non-IFRS measures that are used to evaluate the performance of its businesses and the performance of their respective segments. As non-IFRS measures generally do not have a standardized meaning, they may not be comparable to similar measures presented by other issuers. Securities regulators require such measures to be clearly defined and reconciled with their most comparable IFRS measure.
The Company references non-IFRS measures and insurance industry metrics in this document and elsewhere. Non-IFRS measures are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these are provided as additional information to complement those IFRS measures by providing further understanding of the results of the operations of the Company from management's perspective. Accordingly, these measures should not be considered in isolation, nor as a substitute for analysis of the Company's financial information reported under IFRS. Non-IFRS measures used to analyze the performance of the Company's businesses include but are not limited to: return on shareholders' equity, book value per share, MCCSR, debt to capital ratio, debt to equity ratio, dividend pay-out ratio, and coverage ratio. Please see the "Non-IFRS Financial Information" section of the Management's Discussion and Analysis for a reconciliation of these non-IFRS measures.
Cautionary Statements
Certain information contained in this news release may be forward-looking statements within the meaning of Canadian securities laws. Forward-looking statements are often, but not always identified by the use of words such as "expect", "anticipate", "believe", "foresee", "could", "estimate", "goal", "intend", "plan", "seek", "will", "may", "would" and "should" and similar expressions or words suggesting future outcomes. This news release includes forward-looking information and statements pertaining to the impact of the COVID-19 pandemic. These forward-looking statements reflect material factors and expectations and assumptions of Sagicor. Sagicor's estimates, beliefs and assumptions are inherently subject to uncertainties and contingencies regarding future events and as such, are subject to change. Risks and uncertainties not presently known to Sagicor or that it presently believes are not material could cause actual results or events to differ materially from those expressed in its forward-looking statements. Additional information on these and other factors that could affect events and results are included in other documents and reports that will be filed by Sagicor with applicable securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com). Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect Sagicor's expectations only as of the date of this document. Sagicor disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by law.
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