21:11:20 EDT Fri 30 Sep 2022
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Sagicor Financial Company Ltd
Symbol SFC
Shares Issued 142,666,230
Close 2022-08-12 C$ 6.19
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Sagicor Financial earns $35.3-million (U.S.) in Q2

2022-08-12 19:29 ET - News Release

Mr. Dodridge Miller reports

SAGICOR FINANCIAL COMPANY LTD. REPORTS SECOND QUARTER 2022 RESULTS

Sagicor Financial Company Ltd. has released its results for the second quarter ended June 30, 2022. All figures are in U.S. dollars unless otherwise stated.

Highlights:

  • Total revenue of $672.3-million for Q2 increased 30 per cent year over year;
  • Net insurance premiums of $612.8-million for Q2 increased 68 per cent year over year;
  • Net income to shareholders of $35.3-million in Q2 increased 280 per cent year over year;
  • Earnings per share of 24.7 U.S. cents or 31.2 Canadian cents in Q2;
  • Return on shareholders' equity (1) of 13.1 per cent (annualized) in Q2;
  • Book value per share (1) of $7.51 (U.S.) or $9.63 (Canadian) in Q2;
  • Dividend of 5.625 U.S. cents per common share to be paid during the third quarter of 2022 (22.5 U.S. cents annualized dividend).

(1) Represents a non-IFRS (international financial reporting standards) measure.

Dodridge Miller, group president and chief executive officer, said:

"The Sagicor group delivered another solid quarter of growth. The group continues to successfully execute on its growth initiatives to deliver strong results while navigating substantial market volatility and inflationary pressures in the markets we operate in. Asset price volatility has created a favourable environment for us to grow premiums and invest at higher yields, which particularly benefited Sagicor Life USA. Notwithstanding a challenging economic environment in the Caribbean, we delivered net premium revenue growth across all of our business lines at Sagicor Life, as well as in our life, health, and property and casualty business lines at Sagicor Jamaica."

Overall quarterly highlights -- Sagicor group:

  • Net income to shareholders of $35.3-million for the quarter grew 280 per cent over $9.3-million in Q2 2021. Profitability during the quarter continued to be driven by robust sales of annuities and asset spreads in the Sagicor Life USA segment. Sagicor Life posted a strong performance across all its business lines. Sagicor Jamaica increased profits year over year, supported by higher interest income amidst a rebounding Jamaican economy.
  • Total capital (1) of $2,241-million was down compared with the prior quarter, primarily due to the mark-to-market losses incurred through other comprehensive income on the group's bond portfolio from a rise in interest rates. The company's MCCSR (minimum continuing capital and surplus requirements) ratio (1) for its insurance businesses was 211 per cent and the company's debt to capital ratio (1) was 30.5 per cent.

Dividends

On Aug. 11, 2022, the board of directors of Sagicor Financial approved and declared a quarterly dividend of 5.625 U.S. cents per common share. This quarterly dividend will be paid on Sept. 14, 2022, to shareholders of record at the close of business on Aug. 24, 2022. This is the 11th dividend payment Sagicor Financial will pay to its shareholders since becoming a publicly listed company on the Toronto Stock Exchange.

Business segment performance

Sagicor Financial has three main reporting operating segments: Sagicor Life (includes southern Caribbean), Sagicor Jamaica (of which the company owns 49.1 per cent and which is consolidated by the company) and Sagicor Life USA.

Business segment -- quarterly highlights

Sagicor Life:

  • Total revenue, including premiums, of $130.1-million was up 6 per cent year over year and net premium revenue of $98.3-million increased 10 per cent year over year, with growth observed across all business lines. Net investment income remained relatively flat year over year, with the impact of increased interest income being partially reduced by realized and unrealized losses on financial assets carried at fair value through profit and loss.
  • Net income to shareholders of $11.8-million increased by 74 per cent, as compared with Q2 2021, when Sagicor Life was negatively impacted by the COVID-19 pandemic.

Sagicor Jamaica:

  • Total revenue, including premiums, of $160.1-million decreased 9 per cent year over year, mainly due to mark-to-market losses on financial assets carried at fair value through profit and loss. Net premium revenue of $88.0-million increased 1 per cent year over year as the segment observed modest improvements in the life, health, and property and casualty insurance businesses. Interest income increased by 11 per cent year over year during the quarter. The segment also benefited from increased fee income from its banking business as economic activity in Jamaica continued to improve.
  • Sagicor Financial's share of Sagicor Jamaica's net income to shareholders increased 9 per cent to $7.6-million, compared with the same quarter in the prior year.

Sagicor Life USA:

  • Total revenue, including premiums, increased by 97 per cent year over year to $407.6-million, fuelled by growth in premium revenue. Net premium revenue was $417.2-million, an increase of 133 per cent year over year, as the segment significantly increased sales of annuities as part of its stated strategy to grow and scale the business. Interest income grew 66 per cent year over year due to the continued strong growth of the investment portfolio as a result of the additional assets from strong sales.
  • Net income to shareholders of $72.2-million increased by 351 per cent, compared with $16.0-million for the same quarter in the prior year, reflecting the present value of anticipated profits from the significant volume of new annuities sold at favourable investment spreads.

Head office, other and adjustments:

  • Net loss to shareholders of $56.3-million includes the $19.3-million mark-to-market loss on the company's shareholding in Playa Hotels and Resorts, and a $15.4-million loss on revaluation of the call option on the 5.3 per cent senior notes due 2028.

Outlook for 2022

The group's financial results in Q2 2022 reflect an unusual macroeconomic environment. Asset price volatility driven by geopolitical instability, inflationary pressures and rising interest rates created mark-to-market losses on Sagicor Financial's balance sheet. On the other hand, that asset price volatility enabled Sagicor Financial to invest new policyholder funds at robust investment spreads, generating significant net income particularly in the company's United States segment. In the second half of 2022, the effects of global inflation may hamper economic growth in the company's core markets and may counteract an improving forward outlook for tourism. The company anticipates resuming specific guidance with respect to earnings targets when the timing of economic recovery becomes more certain.

Normal course issuer bid

Sagicor Financial repurchased 779,972 shares in Q2 2022 for a total cost of approximately $4.1-million (U.S.). Since the start of the program in June, 2020, the company has repurchased 7,995,093 shares in the open market for cancellation for an aggregate purchase price of approximately $38.6-million (U.S.). The number of issued and outstanding common shares at June 30, 2022, was 142,666,230.

Management's discussion and analysis and consolidated financial statements (unaudited)

This news release, which was approved by the company's board of directors and audit committee, should be read in conjunction with the company's unaudited consolidated financial statements and accompanying MD&A. The unaudited financial statements and MD&A are available on the company's website and will soon be filed on SEDAR.

Conference call

Sagicor Financial will host a conference call for analysts and investors to review its earnings results on Wednesday, Aug. 17, 2022, at 1 p.m. Eastern Daylight Time in Toronto (1 p.m. Atlantic Standard Time in Barbados and Trinidad and Tobago) (12 p.m. Eastern Standard Time in Jamaica). To listen to the call via live audio webcast, visit the company's website under the tab investor relations. The conference call is also available by dialling 1-416-764-8688 or 1-888-390-0546 (North American toll-free), 0-800-652-2435 (United Kingdom), 1-866-290-2216 (Barbados), or 1-800-207-8221 (Trinidad), passcode 01904218. A replay will also be available until Sept. 17, 2022, by dialling 1-416-764-8677 or 1-888-390-0541 (North American toll-free), passcode 904218 followed by the pound key. A transcript of the call will also be made available on the company's website.

About Sagicor Financial Company Ltd.

Sagicor Financial is a leading financial services provider in the Caribbean, with over 180 years of history, and has a growing presence as a provider of life insurance products in the United States. Sagicor Financial offers a wide range of products and services, including life, health and general insurance, banking, pensions, annuities, and real estate.

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