SJ reports 4% decline in nine months total revenues

Date: November 14, 2018

Sagicor Group Jamaica (SJ), for the nine months ended September 30, 2018 reported a 3% decrease total revenues to $51.48 billion from $53.14 billion in 2017, while for the third quarter total revenues were down 16% to total $19.46 billion compared to $23.13 billion in 2017. Total revenue for the nine months was broken down as follows:• Net premium revenue decreased by 10% to a total of $28.75 billion compared to $31.82 billion last year.
• Net investment income dipped to $13.62 billion from $15.09 billion in 2017, a 10% decline.
• Fees and other revenue increased 46% to $9.10 billion from $6.24 billion in 2017.

The company stated, “Group consolidated policy benefits, including death claims, health claims, annuity payments, surrenders and fund withdrawals, totalled $18.98 billion for the nine months, net of reinsurance recoveries, compared to $16.41 billion last year. Group consolidated administration expenses, including depreciation and amortization of software, of $13.58 billion, were 2% higher than in 2017 which had some non-recurring costs.”

Benefits and expenses totalled $39.87 billion for the period, a decline of 7% from $42.73 billion, while for the third quarter benefits and expenses were down 27% to close at $14.24 billion relative to $19.47 billion in 2017. Of this:
o Commission and related expenses grew by 8% to $3.83 billion from $3.54 billion.
o Administration expenses increased by 2% to $13.22 billion (2017: $12.93 billion.
o Changes in insurance and annuity liabilities moved from $8.74 billion in 2017 to $2.70 billion for the nine months ended September 30, 2018.
o Net insurance benefits incurred amounted to $18.98 billion versus $16.41 billion that was recorded last year.
o Other taxes and levies totalled $637.92 million, a 3% increase relative to $616.87 million.
o Amortization of intangible assets rose 4% from $521.08 million to $501.17 million.

Share of profit from joint venture amounted to $42.60 million relative to $24.01 million a year earlier. Share of loss from associate for the period totalled $170.53 million compared to a profit of $749.12 million last year. SJ indicated that, “The Group’s 2018 results were however negatively impacted by declining interest rates in Jamaica, recognition of capital losses on certain bonds and losses generated by our Associated company, Sagicor Real Estate XFund. As such, Profit before Taxation amounted to $11.48 billion, a 1% reduction when compared to the $11.58 billion booked in 2017.”

Investment and corporation taxes of $2.65 billion was reported for the period (2017: $2.10 billion), as such net profit for the nine months totalled $8.82 billion (2017: $9.08 billion), a 3% drop. Profit for the quarter amounted to $3.54 billion relative to $3.43 billion in 2017, up 3% year over year.

Earnings per share for the quarter amounted to $0.91 (2016: $0. 0.88), while EPS for the period totalled $2.26 relative $2.33 in 2017. The twelve month trailing EPS amounted to $3.02. The total number of shares used in the calculations amounted to 3,905,634,918 units. SJ’s stock last traded on November 14, 2018 at $39.44.

In addition, SJ highlighted, “The Jamaican economy is doing well with many performance variables at their best in many years. We continue to monitor the downward trajectory of domestic interest rates and their inverse correlation to US interest rates, which are on the rise. The significant volatility in the J$/US$ exchange rate has offered a challenge in managing our investment positions. Sagicor worked closely with the Government of Barbados and other bodies as that country embarked on its IMF backed economic recovery program. We are heartened about the Jamaican macro-economic environment and the state-of-affairs in a number of countries which influence our business. This argues well for the Group’s prospects.”

Balance Sheet at a glance:

Total Assets increased by 3% or $9.86 billion to close at $373.12 billion as at September 30, 2018 from $363.26 billion the year prior. The movement was attributed to a $61.24 billion increase in ‘Pledged assets’ which closed at $66.43 billion (2017: $5.19 billion). However, this was offset by the decline in ‘Financial investments’ by $61.61 billion, ending the period at $174.23 billion ( 2017: $235.84 billion).

Equity attributable to stockholders of the company as at September 30, 2018 stood at $73.39 billion (2017: $64.55 billion) resulting in book value per share of $18.79 (2017: $16.53).

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