Sagicor reports Fourth Quarter, full year 2019 earnings results and announces common dividend to be paid in the Second Quarter of 2020

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Sagicor reports Fourth Quarter, full year 2019 earnings results and announces common dividend to be paid in the Second Quarter of 2020

(PRESS RELEASE) – Total revenues, including premiums, grew 12% in the quarter to US $472 million and 35% for the full year to US $1.9 billion, driven by growth in life and annuity business in the Caribbean and the US

-Net income from continuing operations attributed to shareholders was US $12 million in the quarter and US $44 million for the full year driven by strong growth across all business segments, offset by US $43 million of cash and non-cash costs relating to the transaction with Alignvest Acquisition II Corporation

-Net income from continuing operations attributed to shareholders, excluding non-recurring transaction costs, was US $55 million in the quarter and US $87 million for the full year

-Earnings per share from continuing operations of US $0.54 for the full year

-Strong financial position with total capital available of US $2.3 billion, an increase of 40% over year end 2018, and an MCCSR of 253%

-Return on equity of 6.8% at year end, 14% excluding non-recurring transaction costs

-Book value of per share of US$7.81

-Quarterly dividend of US$0.05625 per common share to be paid in the second quarter of 2020

Dodridge Miller, Group President and Chief Executive Officer, said:

“We delivered strong results in the fourth quarter and full year driven by solid growth across all business segments. 2019 was a transformative year and the listing on the Toronto Stock Exchange marked yet another milestone in the long history of Sagicor. The additional equity raised from the business combination between Sagicor and Alignvest enhanced our already strong capital position. While it is still early to assess the global impact from COVID-19, we are well-positioned to move forward our organic and growth initiatives, adapting to varying situations just as we have done in the past with other circumstances that were beyond our control.”

This press release contains non-IFRS financial measures. Refer to “Non-IFRS Measures” below for further details.

Dividends

The Board of Directors of Sagicor Financial Company Ltd. (“Sagicor” or the “Company”) approved and declared a quarterly dividend of US $0.05625 per common share payable in the second quarter. This quarterly dividend will be paid on May 29, 2020, to shareholders of record at the close of business on May 5, 2020. This is the second dividend being paid since becoming a publicly listed company on the Toronto Stock Exchange in December 2019. Sagicor will continue to review its dividend policy going forward in light of the economic situation stemming from the COVID-19 pandemic.

Overall Sagicor Group Highlights

-Total revenues including premiums grew 12% in the quarter and 35% for the full year with strong growth across all three business segments. Net insurance premiums, which represents about two thirds of total revenue, grew 18% during the year, mainly driven by growth in the life and annuity businesses of Sagicor Life Inc. and Sagicor USA.

-Net Income from continuing operations attributed to shareholders was US $12 million in the quarter and US $44 million for the full year, mainly impacted by the one-time transaction costs on an accounting basis. Excluding these expenses, net income from continuing operations attributed to shareholders would have been $55 million in the quarter and US $87 million for the full year, reflecting robust performance across each of Sagicor’s major operating segments. The full year figure exceeded previously disclosed guidance of US $77 million by US $10 million.

-Total capital of US $2.3 billion, represented an increase of US $644 million during the year, mainly from the completion of the business combination with Alignvest Acquisition II Corporation, which contributed over US $450 million of new capital. The Company’s MCCSR ratio improved by 19 points to 253%. In addition, the Company’s debt to capital ratio improved by 7.4 points to 22.8% at year end.

Business Segment Performance

Sagicor considers its business within three main operating segments: Sagicor Life Inc. (includes southern Caribbean), Sagicor Jamaica (of which Sagicor Group owns 49% and which is consolidated by the Company), and Sagicor USA.

Business Segment Highlights

Sagicor Life Inc.

Total revenue including premiums grew 45% in the quarter driven by new customer acquisition diversification and cross selling of products to existing customers, with growth in premiums from the life and annuity business. Total revenue grew 57% for the full year benefiting from a meaningful single premium account and credit impairment gains relative to significant losses in 2018 due to the Government of Barbados debt restructuring.

Benefits and expenses grew 46% in the quarter mainly due to higher life and annuity business and associated changes in actuarial assumptions. Benefits and expenses grew 60% for the full year also due to actuarial assumption changes impacting liabilities associated with the significant single premium business.

Net income attributed to shareholders, after accounting for the income allocated to policyholders, increased significantly in the quarter and 54% for the full year to US $60.9 million. In 2018, net income attributed to shareholders was impacted by provisions on the Government of Barbados debt.

Sagicor Jamaica

Total revenue including premiums grew 23% in the quarter driven by growth in its life and annuity insurance business including additional premiums from its recently acquired property and casualty business, fee-based income and banking revenue. Total revenue also grew 25% for the full year benefiting from growth across all its business lines. Effective September 30, 2019, Sagicor Group Jamaica acquired 60% share capital of Advantage General Insurance Company domiciled in Jamaica for US $31.2 million.

Benefits and expenses increased 19% during the quarter due to business growth and lower interest rates. Benefits and expenses increased 26% for the full year, reflecting business growth and associated changes in actuarial assumptions.
Net income attributable to shareholders, after consideration of Sagicor’s 49% ownership, decreased by 13% to US $18 million in the quarter and increased 10% to US $61.4 million for the full year.

Sagicor USA

Total revenue including premiums decreased 28% in the quarter mainly impacted by falling crediting rates on its annuity products as the Federal Reserve lowered key lending rates. On a full year basis, total revenue increased by 33% primarily driven by new business growth, increased premiums and significant gains in investment income.

Benefits and expenses declined by 39% in the quarter due to lower annuity premium written and associated reserves to support the portfolio. Benefits and expenses increased 30% for the full year driven by overall business growth and associated change in actuarial liabilities.

Net income attributable to shareholders, increased by 150% in the quarter mainly driven by higher investment income, changes in actuarial provisions and lower expenses. On a full year basis, net income attributable to shareholders increased by 93% for similar reasons.

Group Recent Developments

On October 7th, 2019, Sagicor announced that Sagicor Life Inc. had entered into agreements to acquire the traditional insurance portfolios, including associated investment assets of US $1.2 billion, of both Colonial Life Insurance Company (Trinidad) Limited (“CLICO”) and British American Insurance Company (Trinidad) Limited (“BAT”). In addition, contracts with respect to CLICO’s pension fund administration, management and investment services operations will be assumed. The completion of these transactions is still subject to certain conditions and regulatory approvals.

On December 5th, 2019, Sagicor and Alignvest announced the completion of the business combination transaction resulting in the name change to Sagicor Financial Company Ltd., which now trades on the Toronto Stock Exchange under the symbols “SFC” and “SFC.WT”. As a result, the Sagicor Group incurred non-recurring cash and non-cash transaction costs of US $43 million. In connection with this transaction, the Sagicor Group also made an offer to purchase for cash any or all of its outstanding US $320 million 8.875% Senior Notes due 2022. On January 27, 2020, US $1,897,000 notes were tendered, purchased or cancelled.

Sagicor’s agreement with Scotiabank Trinidad and Tobago Limited to acquire Scotiabank Insurance Trinidad and Tobago and establish a 20-year distribution agreement for insurance products and solutions in Trinidad and Tobago expires June 30, 2020. Given current circumstances, there can be no assurance that the transaction will be completed.

Outlook for 2020

The Company’s performance for 2020 is uncertain given the evolving situation of the COVID-19 pandemic. The pandemic will materially impact the economies in all the jurisdictions where the Company operates. Sagicor is well-positioned from the substantial capital raised in 2019 which will help support the Company through this economic shock. The Company continues to actively monitor the development and will provide further updates as the impact on each of our markets become clearer.

Sagicor is withdrawing its previously issued targets for 2020 in light of the COVID-19 pandemic and will not set out specific guidance for financial targets for the year until its effects can be assessed.

 

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