SAGICOR FINANCIAL COMPANY LTD. Strong revenue growth and net income
Highlights
- Total net revenue of
$431.5 million in Q1 increased 26% year over year - Net insurance premiums of
$276.1 million in Q1 decreased 13% year over year - Net income to shareholders of
$31.5 million in Q1 - Earnings per share of
US$0.215 in Q1 - Return on shareholders' equity (annualised) of 11.6%
- Total comprehensive loss to shareholders was
$1.6 million in Q1 - Strong financial position with total capital available of
$2,079.5 million and MCCSR of 246% - Book value per share of
US$7.52 orC$9.46 - Dividend of
US$0.05625 per common share to be paid during the second quarter (US$0.225 annualized dividend)
"We are pleased with the performance of our company this quarter. We delivered meaningful revenue growth and strong net income to shareholders. Our results were positively impacted by strategic investments that supported the growth across all our main operating segments."
"The results from our first quarter reflect continued normalization of our operations in our markets. While the global pandemic continues to affect lives around the world, and in particular several source countries of visitors to the
Consolidated Highlights
| |||
Profitability (US$ millions) | Q1 2021 | Q1 2020 | Change |
Total net revenue | 431.5 | 343.2 | 26% |
Net income (loss) to shareholders | 31.5 | (29.3) | 208% |
Annualized return on shareholders' equity (%) | 11.6% | (10.5%) | 22.1 pts |
Financial strength (US$ millions) | Q1 2021 | Q1 2020 | Change |
Shareholders' equity | 1,101 | 1,050 | 5% |
Book value per share (US$ per share) | 7.52 | 7.07 | 6% |
MCCSR ratio (%) | 246% | 227% | 19 pts |
Debt to capital ratio (%) | 22.0% | 24.0% | (2.0 pts) |
Total capital | 2,080 | 2,124 | (2%) |
- Total net revenue including premiums of
$431.5 million increased 26% in the quarter compared to the same period in the prior year while net insurance premium revenue of$276.1 million decreased by 13% Y/Y. Revenues were supported by significantly higher net investment income, compared to Q1 2020 which suffered from unusual negative net investment income driven by capital markets volatility due to the onset of the COVID-19 pandemic. - Net income to shareholders of
$31.5 million in the quarter was a significant improvement over the net loss of$29.3 million recorded in Q1 2020. The main contributing factor to the financial performance during the three-month period was strong net investment income, including net gains from SFC's direct investment inPlaya Hotels and Resorts ("Playa") which contributed$26 million of net income to shareholders. As of Q1 2021, Playa is accounted for as an investment held at fair value through profit and loss and is no longer accounted for as an associate. - Total comprehensive loss to shareholders was
$1.6 million with$33.1 million of other comprehensive loss to shareholders. The other comprehensive loss was primarily due to the marking to market of prices of bonds held at fair value through other comprehensive income as rising interest rates in theUSA caused the value of our bonds backing capital to fall. In addition, we experienced retranslation losses due to the devaluation of the Jamaican dollar. - Total capital of
$2,080 million decreased 2% compared to the prior quarter due to deterioration in asset values. The Company's voluntarily adopted MCCSR ratio for its insurance businesses remained strong at 246% and the Company's debt to capital ratio was 22.0%, representing an improvement of 2.0 percentage points Y/Y.
Dividends
The Board of Directors of
Business Segment Performance
Sagicor considers its business within three main operating segments:
Performance (US$ millions) | Q1 | Q1 | Change |
Total net revenue | |||
130 | 113 | 15% | |
Sagicor Jamaica | 166 | 132 | 25% |
111 | 91 | 22% | |
Head office(1) | 25 | 7 | 264% |
Benefits and expenses | |||
(121) | (110) | (10%) | |
Sagicor Jamaica | (137) | (104) | (32%) |
(109) | (109) | (1%) | |
Head office(1) | (25) | (33) | 24% |
Net income/(loss) to shareholders | |||
8 | 2 | 337% | |
Sagicor Jamaica | 10 | 9 | 9% |
1 | (14) | 108% | |
Head office(1) | 12 | (26) | 147% |
(1) Head office, other, and adjustments |
Note: Values may not add due to rounding |
Business Segment - Quarterly Highlights
- Total net revenue including premiums of
$130.1 million increased 15% Y/Y. Net premium revenue of$94.9 million increased 1% Y/Y as the segment benefitted from 7% growth in its new business sales to individuals. Net investment income of$25.6 million was$8.2 million above the$17.5 million reported in the same quarter last year. - Net income to shareholders of
$8.3 million increased by 337% or$6.4 million Y/Y.
Sagicor Jamaica
- Total net revenue including premiums of
$165.5 million increased 25% Y/Y. Net premium revenue decreased 10% Y/Y to$85.1 million primarily due to the devaluation of the Jamaican dollar. Investment gains totaled$3.2 million and were higher than the mark-to-market losses of$45.9 million reported in the same period in the prior year. - Net income to shareholders, after consideration of Sagicor's 49.1% ownership, increased by 9% Y/Y to
$9.9 million , relative to a profit of$9.1 million in the same quarter in the prior year.
- Total net revenue including premiums increased 22% Y/Y to
$110.8 million . Net premium revenue closed the period at$86.8 million , down 28% Y/Y, as the segment had lower sales of annuities, partially offset by a 126% increase in life premiums during the quarter. - Net income to shareholders of
$1.1 million relative to a loss of$14.3 million in the same quarter in the prior year.
Bond Refinance – Subsequent to the Quarter
On
Outlook for 2021
The Group's outlook for 2021 continues to be affected by the uncertain resolution to the pandemic that was declared in
Normal Course Issuer Bid
As announced in September, Sagicor received approval for an amended share buyback program that allows it to repurchase up to 8,000,000 of its common shares under a normal course issuer bid. Sagicor repurchased 266,600 shares in Q1 2021 for a total cost of
Management's Discussion and Analysis and Consolidated Financial Statements (unaudited)
This press release, which was approved by the Company's Board of Directors and Audit Committee, should be read in conjunction with the Company's unaudited financial statements and accompanying management's discussion and analysis ("MD&A"). The unaudited financial statements and MD&A are available on the Company's website at www.sagicor.com and will soon be filed on the System for Electronic Document Analysis and Retrieval ("SEDAR") at www.sedar.com.
Conference Call
About
As a result of the transaction with
Non-IFRS Measures
The Company reports certain non-IFRS measures that are used to evaluate the performance of its businesses and the performance of their respective segments. As non-IFRS measures generally do not have a standardized meaning, they may not be comparable to similar measures presented by other issuers. Securities regulators require such measures to be clearly defined and reconciled with their most comparable IFRS measure.
The Company references non-IFRS measures and insurance industry metrics in this document and elsewhere. Non-IFRS measures are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these are provided as additional information to complement those IFRS measures by providing further understanding of the results of the operations of the Company from management's perspective. Accordingly, these measures should not be considered in isolation, nor as a substitute for analysis of the Company's financial information reported under IFRS. Non-IFRS measures used to analyze the performance of the Company's businesses include but are not limited to: return on shareholders' equity, book value per share, MCCSR, debt to capital ratio, debt to equity ratio, and dividend pay-out ratio. Please see the "Non-IFRS Financial Information" section of the Management's Discussion and Analysis for a reconciliation of these non-IFRS measures.
Cautionary Statements
Certain information contained in this news release may be forward-looking statements within the meaning of Canadian securities laws. Forward-looking statements are often, but not always identified by the use of words such as "expect", "anticipate", "believe", "foresee", "could", "estimate", "goal", "intend", "plan", "seek", "will", "may", "would" and "should" and similar expressions or words suggesting future outcomes. This news release includes forward-looking information and statements pertaining to the impact of the COVID-19 pandemic. These forward-looking statements reflect material factors and expectations and assumptions of Sagicor. Sagicor's estimates, beliefs and assumptions are inherently subject to uncertainties and contingencies regarding future events and as such, are subject to change. Risks and uncertainties not presently known to Sagicor or that it presently believes are not material could cause actual results or events to differ materially from those expressed in its forward-looking statements. Additional information on these and other factors that could affect events and results are included in other documents and reports that will be filed by Sagicor with applicable securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com). Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect Sagicor's expectations only as of the date of this document. Sagicor disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by law.
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