Sagicor Financial Corporation

Financial results for the three months ended March 31, 2010

Chairman's statement

The Sagicor Group of Companies recorded net income of US $12.5 million for the three months ended March 31, 2010. For the same period in 2009, the Group recorded net income of US $17.8 million.  Net income attributable to shareholders was US $6.0 million, compared with US $10.5 million in 2009. Earnings per share for the three months totaled US $2.1 cents and the annualized return on shareholders' equity was 4.4%.

The results for the period were adversely affected by insurance losses of US $7.5 million, arising from the February 27 Chilean Earthquake. These losses were incurred by our UK operations, Sagicor at Lloyd's, which writes a significant amount of insurance business outside the UK.  The Chilean Earthquake, in insurance terminology, is considered to be a catastrophic event. At Sagicor at Lloyd's, catastrophic events are built into the annual plans, and therefore catastrophic insurance losses are not unexpected.  However, without these losses, the pre-tax results otherwise show an improvement of 14.8% over the first quarter of 2009.

Revenue totaled US $292.5 million, which represents an increase of US $42.6 million from last year. Premium revenue increased by 18.7% over 2009 and amounted to US $197.3 million. Most of this growth came from the Sagicor at Lloyd's operations. Our US and UK operations accounted for 46.0% of premium revenue for the quarter, up from 36.5% last year. Investment and other income totaled US $95.3 million, recording an increase over the corresponding 2009 amount of 13.7%.

Total benefits recorded were US $177.2 million for the period, an increase of US $42.8 million over the total for the corresponding period in 2009. In addition to the claims arising from the aforementioned earthquake, benefits rose in line with the increased business inforce. In addition, expenses recorded a modest increase of 4.4% over 2009 to reach US $98.1 million for the period.

Total comprehensive income for the period consists of net income plus other gains and losses (including reclassification adjustments) that are not recognized in the income statement. For Sagicor, total comprehensive income for the period was strong, recording a positive result of US $35.2 million as compared with a loss of US $14.2 million for the corresponding three months in 2009. Since March 2009, the Group has recorded positive changes in its investment fair value equity reserves. The Jamaica dollar has also maintained its value to the US dollar since March 2009. These foregoing factors have contributed to the strengthening of the overall Group equity position over the past year, which now surpasses US $700 million. Shareholders' equity now totals US $550.6 million, and with 290.9 million issued shares, the book value per share is US $1.89 (Barbados $3.78, Trinidad $12.03, UK 125p). This is considerably in excess of the equivalent quoted prices for Sagicor shares of US $1.48 to US $1.59 (Barbados $2.95, Trinidad $10.10, UK 105p) at March 31, 2010 on the stock exchanges on which the shares are listed.

The global financial and economic environment continues to present many challenges. While there are some early signs of improvement, there is still considerable uncertainty as to the sustainability of the global economic recovery. For us at Sagicor, we continue to see improvements in the fair value of our asset portfolio, and to enjoy growth in most of our business segments. The Board of Directors and Management are encouraged by the growth recorded by our new operations in the UK and US and continue to support their development. Our Caribbean operations continue to perform creditably in a challenging economic environment.

 

 

Stephen McNamara

 

Chairman

 

May 26, 2010

 

 

FINANCIAL HIGHLIGHTS	March 31, 2010	March 31, 2009
Group net income	US $12.5m	US $17.8m
Total Group comprehensive income	US $35.2m	US $(14.2)m
Net income attributable to shareholders	US $6.0m	US $10.5m
Total comprehensive income attributable to shareholders	US $19.3m	US $(10.3)m
Annualised income return on shareholders' equity	4.4%	9.7%
Annualised comprehensive income return on shareholders' equity	14.4%	(9.2)%
Shareholders' equity	US $550.6m	US $431.1m
Revenue	US $292.5m	US $250.0m

 

 

1 June 2010

 

 

Enquiries:

 

Sagicor Financial Corporation	+1 (246) 467 7500
Dodridge Miller, President and CEO
Melba Smith, Vice President Corporate Communications
College Hill	+44 (0) 20 7457 2020
Roddy Watt
Tony Friend

 

 

 

Consolidated statement of financial position

 

Amounts expressed in US $000	March 31	December 31
	2010	2009
	(unaudited)	(audited)
ASSETS
Financial investments	3,419,043	3,274,442
Other investments and assets	1,254,666	1,185,530
Total assets	4,673,709	4,459,972
LIABILITIES
Policy liabilities	2,488,974	2,418,697
Other liabilities	1,477,272	1,359,847
Total liabilities	3,966,246	3,778,544
EQUITY
Shareholders' equity	550,595	536,941
Participating accounts	6,800	6,984
Minority interest	150,068	137,503
Total equity	707,463	681,428
Total liabilities and equity	4,673,709	4,459,972

 

These financial statements have been approved for issue by the Board of Directors on May 26, 2010.

 

 

Consolidated statement of income

 

Amounts expressed in US $000		Three months ended
		March 31
		2010	2009
		(unaudited)	(unaudited)
REVENUE
Net premium revenue		197,267	166,184
Net investment and other income		95,271	83,771
Total revenue		292,538	249,955
BENEFITS AND EXPENSES
Benefits		177,199	134,415
Expenses		98,149	94,041
Total benefits and expenses		275,348	228,456
INCOME BEFORE TAXES		17,190	21,499
Income taxes		(4,664)	(3,734)
NET INCOME FOR THE PERIOD		12,526	17,765
NET INCOME ATTRIBUTABLE TO:
Shareholders		5,960	10,538
Participating policyholders		(413)	(821)
Minority interest		6,979	8,048
		12,526	17,765
Net income attributed to shareholders - EPS
Basic earnings per common share		2.1 cents	3.8 cents
Fully diluted earnings per common share		2.1 cents	3.8 cents

 

 

Consolidated statement of comprehensive income

 

	Three months ended
	March 31
	(unaudited)	(unaudited)
NET INCOME FOR THE PERIOD	12,526	17,765
OTHER COMPREHENSIVE INCOME:
Changes in fair value reserves:
Available for sale financial assets	28,678	(12,837)
Cash flow hedges	191	244
	28,869	(12,593)
Retranslation of foreign currency operations	(6,211)	(19,361)
OTHER COMPREHENSIVE INCOME FOR THE PERIOD	22,658	(31,954)
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD	35,184	(14,189)
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO:
Shareholders	19,260	(10,261)
Participating policyholders	(120)	(945)
Minority interest	16,044	(2,983)
	35,184	(14,189)

 

 

Consolidated statement of changes in equity

 

Amounts expressed in US $000
	Three months ended March 31, 2010
	(unaudited)
	Share		Retained	Participating	Minority
	Capital	Reserves	Earnings	Accounts	Interest	Total
Balance, beginning of period	278,248	(38,239)	296,926	6,985	137,502	681,422
Total comprehensive income	-	13,299	5,961	(120)	16,044	35,184
Dividends declared	-	-	(5,818)	-	(3,603)	(9,421)
Other movements	-	665	(447)	(65)	125	278
Balance, end of period	278,248	(24,275)	296,622	6,800	150,068	707,463
	Three months ended March 31, 2009
	(unaudited)
	Share		Retained	Participating	Minority
	Capital	Reserves	Earnings	Accounts	Interest	Total
Balance, beginning of period	258,153	(85,272)	274,870	12,499	121,397	581,647
Total comprehensive income	-	(20,799)	10,538	(945)	(2,983)	(14,189)
Issue of shares		-	-	-	220	220
Dividends declared	-	-	(5,553)	-	(5,273)	(10,826)
Other movements	-	(877)	46	(66)	(15)	(912)
Balance, end of period	258,153	(106,948)	279,901	11,488	113,346	555,940

 

 

Consolidated statement of cash flows

 

Amounts expressed in US $000	Three months ended
	March 31
	2010	2009
	(unaudited)	(unaudited)
CASH FLOWS
Operating activities	11,352	62,276
Investing activities	-2,440	-2,855
Financing activities	130	-9,830
Effects of exchange rate changes	-10,729	-5,997
Net change in cash and cash equivalents	-1,687	43,594
Cash and cash equivalents, beginning of period	324,983	226,852
Cash and cash equivalents, end of period	323,296	270,446

 

 

Note 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, 2009 audited financial statements.