May 10, 2021
Sagicor Group Jamaica Limited (SJ) for the three months ended March 31, 2021, reported an increase in total revenues by 38% to $23.12 billion from $16.80 billion in 2020. Total revenue is broken down as follows:
- Net premium revenue fell by 3% to close at $12.52 billion compared to $12.85 billion documented 2020.
- Net investment income increased to $4.64 billion from $4.47 billion in 2020.
- Realized and unrealized capital gain closed at $1.20 billion versus 2020’s loss of $5.06 billion.
- Credit losses on loans and investments securities amounted to $59.42 million, when compared to 2020’s $720.76 million.
- Fees and other revenue increased 5% to $4.10 billion (2020: $3.90 billion). SJ noted that this was due to, “strong realized foreign currency trading gains and unrealized gains from the revaluation of foreign currency denominated assets, net of liabilities.”
- Hotel revenue of $721.02 million was booked for the period relative to $1.35 billion for the prior year.
Benefits and expenses totaled $19.07 billion for the quarter, a year over year increase of 48% from $12.90 billion. The movement in benefits and expenses was mainly driven by:
- Administration expenses for the period amounted to $5.55 billion compared to $5.38 billion in the prior year, a 3% increase.
- A 12% decrease in net insurance benefits incurred to $7.90 billion (2020: $8.95 billion).
- Commission and related expenses rose by 6% to close at $1.82 billion up from the $1.72 billion posted in 2020.
- Depreciation and amortization amounted to $660.54 million (2020: $726.41 million), a 9% decrease.
- Asset tax moved up by 12% to close at $812.64 million in 2020 from $723.94 million in 2020.
- SJ also booked hotel expenses which went down by 33% to close at $618.95 million relative to $923.96 million booked the prior year.
- Net movement in actuarial liabilities amounted to $1.71 billion relative -$5.52 billion booked in 2020’s first quarter.
SJ booked no impairment of investment in associate for the quarter (2020: $460.95 million) neither impairment of goodwill (2020: $703.50 million) for the period under review.
Share of profit from joint venture amounted to $222.50 million relative to a profit of $65.64 million the prior year. There was no share of profit/loss from associates booked for the period under review versus a profit of $474.05 million booked for the comparable period last year.
Profit before taxation amounted to $4.04 billion, a 74% increase when compared to the $2.33 billion booked in 2020.
After taxes of $1.13 billion (2020: $1.18 billion), net profit amounted to $2.90 billion (2020: $1.14 billion), an increase of 154%.
Profit attributable to shareholders amounted to $2.90 billion relative to $1.88 billion booked in 2020. As a result, EPS for the quarter amounted to $0.74 (2020: $0.48), while the twelve-month trailing EPS totaled $3.79. The number of shares used in our calculations amounted to 3,905,634,918 units. SJ’s stock price closed on May 10, 2021, at $49.11 with a corresponding P/E of 12.96 times.
Management noted that, “In January 2021, Sagicor Group Jamaica disposed of its holdings in its Associate (PLAYA), netting proceeds of $13.60 billion from the transaction. The move by Sagicor is consistent with its strategy to invest in less risky investments. It comes at a time when hotel earnings worldwide have been depressed, caused by travel restrictions resulting from the onset of the pandemic with no clear timeline for recovery. The proceeds will be primarily invested in a broader range of real estate assets with good growth prospects in the medium term.”
For the Individual Insurance segment, Management highlighted that, “the Individual Life segment posted net profits of $1.16 billion, 9% lower than 2020. Net premium income of $7.28 billion was 5% higher than the comparative 2020 period. This was driven by exceptional new policy sales in Jamaica and Cayman, being 17% ahead of last year, resulting in a 5% growth of the portfolio year-to-date to over 630,000 policies. Benefits paid to policyholders decreased by $907.27 million, mainly due to larger withdrawals from Segregated policy funds in 2020. The increase in actuarial liabilities was much higher than prior year mainly due to the higher than expected new business sales and releases in 2021 being significantly lower than in 2020.”
In the Commercial Banking segment, SJ noted, “The results were positively influenced by much lower ECL on loans; recall that the 2020 results were deeply impacted by higher ECL as a result of the impact of COVID-19 on Tourism, Entertainment and Energy sector loans. The Bank was also able to make significant recoveries on outstanding loans during the current period. Fee based income of $1.02 billion was 4% less than prior year; Loans and Credit Cards business are currently performing below expectations, however we expect continued improvement in market conditions as the year progresses and the economy recovers.”
Management also stated that, “The Investment Banking segment showed strong profitability during the period, contributing $651.67 billion (excluding the share of AGIC earnings) to the Group, a 22% improvement over prior year. Profitability was bolstered by improvements in net investment income, trading gains on securities and foreign exchange gains. Despite total revenue of $1.75 billion being 17% above 2020, fee income was down compared to last year as corporate clients have been slow to resume participation in the capital markets. In addition, asset management fees have suffered as the value of assets under management has not rebounded to preCOVID levels.”
Balance Sheet at a glance:
Total assets increased by 6% or $25.25 billion to close at $483.71 billion as at March 31, 2021, from $458.46 billion the year prior. The main contributors to the increase in total assets were ‘Financial investments’ and ‘Pledged assets’ which closed at $220.41 billion (2020: $174.15 billion), and $91.86 billion (2020: $78.31 billion), respectively.
Equity attributable to stockholders of the company as at March 31, 2021, stood at $105.92 billion (2020: $87.09 billion) resulting in book value per share of $27.12 (2020: $22.30).
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