TIDMSFI
RNS Number : 5438D
Sagicor Financial Corporation
31 March 2014
Sagicor Financial Corporation
Financial Results for the year ended December 31, 2013
I am pleased to report to you on the 2013 performance of the
Sagicor Group. The Group's financial statements in 2013, like 2012,
have been presented with continuing operations being separated from
the discontinued Sagicor Europe operations.
The Sagicor Group's continuing operations, comprising our
businesses in the Caribbean and in the USA, continued to perform
well. Net income from continuing operations of US $79.6 million was
realised for the year ended December 31, 2013, (US $75.3 million
for 2012); after accounting for capital losses of US $22.0 million
incurred through the Group's participation in the Government of
Jamaica National Debt Exchange (NDX), and impairment provisions on
Government of Grenada bonds.
Net income from continuing operations attributable to
shareholders was US $39.1 million. Before accounting for the
shareholders' portion of the above mentioned capital loss (US $9.3
million), net income from continuing operations attributable to
shareholders was US $48.4 million compared to US $53.1 million for
the prior year 2012. Earnings per common share from continuing
operations was US 12.5c and represented an annualised return on
common shareholders' equity of 7.7%. Recall that in 2012, there was
a one-off gain of US $20.9 million relating to the recapture of a
reinsurance contract. When this one-off gain is excluded from 2012
net income, net income attributable to shareholders for the current
year shows a 21% improvement in shareholder results.
Continuing operations generated total revenue of US $1,039.5
million compared to the 2012 amount of $1,064.3 million. The
reduction in total revenue is as a result of a decision to reinsure
90% (US $271.4 million) in new annuity business written in 2013 in
the USA. Other revenue in 2012 benefited from a gain of US $32.0
million before tax (US $20.9 million after tax), on the recapture
of a previously reinsured block of policies.
Net investment income and other income were lower than previous
year, at US $279.4 million compared to US $295.0 million for 2012.
Net investment income for the current year was also impacted
negatively by capital losses of US $22.0 million (US $9.3 million
to shareholders) incurred on the Jamaica and Grenada government
debt.
Total benefits incurred from continuing operations totalled US
$592.8 million, a reduction from the comparative amount of US
$639.4 million in 2012. This reduction is the result of a
reinsurance programme introduced in the USA segment, where a
significant percentage of the business is now being reinsured.
Expenses (including agents' and brokers' commissions) closed the
year at US $348.1 million compared to US $325.1 million for the
prior year. This increase in expenses is consistent with the growth
in premium revenue.
On July 29, 2013, the Company entered into an agreement to sell
Sagicor Europe (SEL) and its subsidiaries to AmTrust Financial
Services, Inc. (AmTrust), subject to regulatory approvals. Final
regulatory approvals were obtained on December 23, 2013, on which
date the sale was completed. The operations of the Sagicor Europe
operating segment are presented as discontinued operations in these
financial statements. The terms of the sale required Sagicor to
retain an interest in the run-off of the 2011, 2012 and 2013
underwriting years of account after the syndicate has been formally
sold and is subject to a limit. The impact of this transaction and
the performance of SEL for the financial years 2012 and 2013 are as
follows:
2013 2012
----- -----
Operating loss for the year 33.9 31.8
Write-off of carrying value
of the investment 21.1 10.2
Expenses incurred on disposal 2.9
Charged to shareholders' equity
for the year 57.9 42.0
----- -----
The results of Sagicor Europe were also impacted by previous
year's currency translation loss of US $17.6 million, which was
recycled from reserves, and had no impact on the net assets of the
Company.
Overall Group Net Income for the year 2013, including
discontinued operations, was US $4.1 million, compared to US $33.3
million for 2012. Net Income attributable to shareholders,
including discontinued operations, was a loss of US $36.4 million
in 2013 compared to a profit of US $11.1 million in 2012.
Other comprehensive loss from continuing operations was US $73.9
million compared to US $23.9 million in 2012, and includes
retranslation losses of foreign currency operations of US $36.4
million, losses on defined benefit plans of US $9.5 million and net
movements related to investment assets of US $31.8 million.
In the consolidated statement of financial position at December
31, 2013, assets amounted to US $5.3 billion and liabilities
totalled US $4.6 billion. Sagicor's Group equity totalled US $725.2
million. The Group's debt, which is included in other liabilities,
increased to US $290.2 million from US $241.6 million in 2012. On
December 18, 2013, the company issued 18-month US $43.4 million in
notes which are repayable in 2015. This, together with the
reduction in total equity, increased the debt to equity ratio to
40.0% (2012 - 30.1%).
The Sagicor Group's experience during our ownership of Sagicor
at Lloyds was particularly challenging. Weak operating results from
this segment over the years and a protracted sales process combined
to impact shareholders' equity negatively. On the positive side,
despite a challenging economic environment, the Caribbean and USA
operations continue to grow and to produce positive results for
shareholders.
On January 29, 2014, Sagicor Group Jamaica Limited signed a Sale
and Purchase Agreement to acquire all of the issued shares of RBC
Royal Bank (Jamaica) Limited and RBTT Securities Jamaica Limited
(collectively "RBC Jamaica") from Royal Bank of Canada. The
acquisition is subject to regulatory approvals. At December 2013,
RBC Jamaica had total assets of US $509 million.
The Board has declared dividends of US 3.25 cents per preference
share and US 2.0 cents per common share, payable on May 15.
On January 15, 2014, Director Joyce Dear retired from the Board
of Sagicor Financial Corporation, having attained the mandatory age
of retirement. On behalf of the Board, I wish to thank Joyce for
her many years of valuable contributions, and I wish her well in
her retirement. Mr Richard Young was appointed to serve the
unexpired term until the AGM, at which time he becomes eligible for
election.
On behalf of the Board of Sagicor, I wish to thank our
Shareholders, Policyholders, Clients, Staff, Advisors and Business
Partners for their continued support.
Stephen McNamara
Chairman
March 30, 2014.
Enquiries:
Sagicor Financial Corporation +1 (246) 467 7500
Dodridge Miller, President
and CEO
Instinctif Partners +44 (0) 20 7457 2020
Tony Friend
Antonia Gray
FINANCIAL HIGHLIGHTS
(In US currency except percentages)
Year ended December
31
2013 2012
Total revenue $1,039.5m $1,064.3m
Group net income from continuing
operations $79.6m $75.3m
Group net loss from discontinued
operations ( $75.5)m ( $42.0)m
Overall Group net income $4.1m $33.3m
Shareholders' net income from
continuing operations $39.1m $53.1m
Shareholders' net loss from discontinued
operations ( $75.5)m ( $42.0)m
Overall Shareholders' net (loss)/income ($36.4)m $11.1m
Net income allocated to non-controlling
interest $35.5m $34.7m
Total equity $725.2m $803.1m
Ratio of Debt to Equity 40.00% 30.10%
Earnings per common share from
continuing operations 12.5c 17.1c
Annualised return of continuing
operations on common shareholders'
equity 7.70% 9.80%
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As of December 31, 2013
Amounts expressed in US $000
2013 2012 Restated
------------------------------ --------------
ASSETS
Investment property 98,369 115,224
Property, plant and
equipment 151,539 145,818
Associates and joint
ventures 44,202 42,433
Intangible assets 71,893 79,612
Financial investments 4,191,766 4,041,326
Reinsurance assets 336,427 102,686
Income tax assets 29,035 33,073
Miscellaneous assets
and receivables 148,151 99,157
Cash resources 226,370 183,996
Assets of discontinued
operation - 705,732
------------------------------ --------------
Total assets 5,297,752 5,549,057
------------------------------ --------------
LIABILITIES
Actuarial liabilities 2,324,319 2,040,907
Other insurance liabilities 194,434 187,199
Investment contract
liabilities 367,001 346,196
------------------------------ --------------
Total policy liabilities 2,885,754 2,574,302
Notes and loans payable 290,160 241,556
Deposit and security
liabilities 1,106,083 1,092,429
Provisions 75,083 58,621
Income tax liabilities 29,225 33,613
Accounts payable and
accrued liabilities 131,237 114,425
Liabilities of discontinued
operation 55,024 630,977
------------------------------ --------------
Total liabilities 4,572,566 4,745,923
------------------------------ --------------
EQUITY
Share capital 295,450 296,058
Reserves (4,825) 16,411
Retained Earnings 221,472 274,565
------------------------------ --------------
Total shareholders'
equity 512,097 587,034
Participating accounts (5,662) (10,333)
Minority interest in
subsidiaries 218,751 226,433
------------------------------ --------------
Total equity 725,186 803,134
------------------------------ --------------
Total liabilities and
equity 5,297,752 5,549,057
------------------------------ --------------
These financial statements have been approved for issue by the
Board of Directors on March 29, 2014.
CONSOLIDATED STATEMENT OF INCOME
As of December 31, 2013
Amounts expressed in US $000
2013 2012 Restated
---------------- --------------
REVENUE
Premium revenue 1,016,538 757,223
Reinsurance premium expense (359,510) (92,220)
---------------- --------------
Net premium revenue 657,028 665,003
Net investment income 279,350 295,026
Fees and other revenue 103,105 104,253
Total revenue 1,039,483 1,064,282
---------------- --------------
BENEFITS
Policy benefits and change in actuarial
liabilities 797,743 599,758
Policy benefits and change in actuarial
liabilities reinsured (262,564) (28,840)
---------------- --------------
Net policy benefits and change in
actuarial liabilities 535,179 570,918
Interest expense 57,611 68,465
Total benefits 592,790 639,383
---------------- --------------
EXPENSES
Administrative expenses 203,959 190,749
Commissions and related compensation 99,821 88,626
Premium and asset taxes 11,988 11,956
Finance costs 17,143 17,897
Depreciation and amortisation 15,230 15,901
Total expenses 348,141 325,129
---------------- --------------
INCOME BEFORE TAXES 98,552 99,770
Income taxes (18,924) (24,450)
---------------- --------------
NET INCOME FROM CONTINUING OPERATIONS 79,628 75,320
Net loss from discontinued operation (75,508) (42,034)
NET INCOME FOR THE YEAR 4,120 33,286
---------------- --------------
Net income / (loss) is attributable
to:
Common shareholders:
From continuing operations 39,138 53,101
From discontinued operation (75,508) (42,034)
(36,370) 11,067
Participating policyholders 5,005 (12,525)
Minority interests 35,485 34,744
4,120 33,286
---------------- --------------
Basic earnings / (loss) per common
share:
From continuing operations 12.5 cents 17.1 cents
From discontinued operation (25.1) cents (13.9) cents
(12.6) cents 3.2 cents
---------------- --------------
Fully diluted earnings / (loss)
per common share:
From continuing operations 12.2 cents 16.2 cents
From discontinued operation (24.8) cents (13.1 cents)
(12.6) cents 3.1 cents
---------------- --------------
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
As of December 31, 2013
Amounts expressed in US $000
2012
OTHER COMPREHENSIVE INCOME 2013 Restated
--------- --------------
Items net of tax that may be reclassified
subsequently to income:
Available for sale assets:
(Losses) / Gains on revaluation (47,442) 38,023
(Gains) transferred to income (14,769) (13,128)
Net change in actuarial liabilities 30,445 (22,278)
Retranslation of foreign currency operations (36,441) (18,402)
Other items - (19)
(68,207) (15,804)
--------- --------------
Items net of tax that will not be reclassified
subsequently to income:
Gains / (losses) on revaluation of
owner-occupied property 3,813 (156)
(Losses) on defined benefit plans (9,475) (7,967)
(5,662) (8,123)
--------- --------------
OTHER COMPREHENSIVE (LOSS) / INCOME
FROM
CONTINUING OPERATIONS (73,869) (23,927)
Other comprehensive income from discontinued
operation 19,272 144
OTHER COMPREHENSIVE (LOSS) FOR THE
YEAR (54,597) (23,783)
--------- --------------
TOTAL COMPREHENSIVE INCOME 2013 2012 Restated
--------- --------------
Net income 4,120 33,286
Other comprehensive income (54,597) (23,783)
TOTAL COMPREHENSIVE (LOSS) / INCOME
FOR THE YEAR (50,477) 9,503
Total comprehensive (loss) / income
is attributable to:
Common shareholders:
From continuing operations (515) 39,902
From discontinued operation (56,236) (41,890)
--------- --------------
(56,751) (1,988)
Participating policyholders 4,913 (12,286)
Minority interests 1,361 23,777
(50,477) 9,503
--------- --------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
As of December 31, 2013
Amounts expressed in US $000
Share Reserves Retained Total Participating Minority Total
Capital Earnings Shareholder accounts Interests Equity
Equity
---------------- ----------- ----------- ----------- --------------- ---------------- ------------- -----------
2013
Balance,
beginning
of year as
restated 296,058 16,411 274,565 587,034 (10,333) 226,433 803,134
Total
comprehensive
income from
continuing
operations - (36,413) 35,898 (515) 4,913 1,361 5,759
Total
comprehensive
income from
discontinued
operation - 19,272 (75,508) (56,236) - - (56,236)
Transactions
with holders
of equity
instruments:
Movements in
treasury
shares (608) - - (608) - - (608)
Changes in
reserve
for equity
compensation
benefits - 2,123 - 2,123 - 55 2,178
Dividends
declared - - (19,836) (19,836) - (9,182) (29,018)
Transfers and
other
movements - (6,218) 6,353 135 (242) 84 (23)
----------- ----------- ----------- --------------- ---------------- ------------- -----------
Balance, end
of year 295,450 (4,825) 221,472 512,097 (5,662) 218,751 725,186
----------- ----------- ----------- --------------- ---------------- ------------- -----------
2012
Balance,
beginning
of year as
restated 296,048 20,865 281,425 598,338 2,201 188,476 789,015
Total
comprehensive
income from
continuing
operations - (6,713) 46,615 39,902 (12,286) 23,777 51,393
Total
comprehensive
income from
discontinued
operation - 144 (42,034) (41,890) - - (41,890)
Transactions
with holders
of equity
instruments:
Movements in
treasury
shares 10 - - 10 - - 10
Changes in
reserve
for equity
compensation
benefits - 4,494 - 4,494 - (41) 4,453
Changes in
ownership
of
subsidiaries - 1,028 4,862 5,890 - 27,351 33,241
Dividends
declared - - (19,835) (19,835) - (13,264) (33,099)
Transfers and
other
movements - (3,407) 3,532 125 (248) 134 11
----------- ----------- ----------- --------------- ---------------- ------------- -----------
Balance, end
of year 296,058 16,411 274,565 587,034 (10,333) 226,433 803,134
CONSOLIDATED STATEMENT OF CASH FLOWS
As of December 31, 2013
Amounts expressed in US $000
2013 2012 Restated
---------- --------------
OPERATING ACTIVITIES
Income before taxes 98,552 99,770
Adjustments for non-cash items,
interest and dividends (75,741) (46,747)
Interest and dividends received 258,552 256,676
Interest paid (73,683) (81,080)
Income taxes paid (28,063) (20,130)
Net increase in investments
and operating assets (351,404) (193,557)
Net increase in operating liabilities 183,379 13,984
Acquisition of insurance portfolio,
net of cash and cash equivalents 30,699 -
Recapture of reinsurance contract
held - 3,826
Net cash flows - operating activities 42,291 32,742
---------- --------------
INVESTING ACTIVITIES
Property, plants and equipment,
net (18,284) (19,843)
Associates and joint ventures,
net 1,082 (5,275)
Intangible assets, net (1,015) (2,025)
Acquisition of subsidiary, net
of cash and cash equivalents - (9,461)
Sale of subsidiaries net of
disposal costs 86,697 -
Net cash flows - investing activities 68,480 (36,604)
---------- --------------
FINANCING ACTIVITIES
Movement in treasury shares (622) (249)
Shares issued to minority interests (18) (38)
Change in ownership of subsidiaries - 35,416
Other notes and loans payable,
net 42,432 2,055
Dividends paid to common shareholders (11,849) (11,846)
Dividends paid to preference
shareholders (7,810) (7,790)
Dividends paid to minority interests (9,007) (12,130)
Net cash flows - financing activities 13,126 5,418
---------- --------------
Effects of exchange rate changes 21 (643)
---------- --------------
NET CHANGE IN CASH AND CASH
EQUIVALENTS - CONTINUING OPERATIONS 123,918 913
Net change in cash and cash
equivalents - discontinued operation (78,882) (52,008)
Cash and cash equivalents, beginning
of year 213,564 264,659
CASH AND CASH EQUIVALENTS, END
OF YEAR 258,600 213,564
---------- --------------
NOTE TO THE FINANCIAL STATEMENTS
These summary financial statements have been extracted from the
company's audited financial statements for the year ended December
31, 2013.
REPORT OF THE INDEPENDENT AUDITOR ON THE SUMMARY CONSOLIDATED
FINANCIAL STATEMENTS
To the Shareholders of
Sagicor Financial Corporation
The accompanying summary consolidated financial statements,
which comprise the summary consolidated statement of financial
position as of December 31, 2013, the summary consolidated
statements of income, comprehensive income, changes in equity and
cash flows for the year then ended and related notes are derived
from the audited consolidated financial statements of Sagicor
Financial Corporation for the year ended December 31, 2013. We
expressed an unqualified audit opinion on those consolidated
financial statements in our report dated March 30, 2014.
The summary consolidated financial statements do not contain all
the disclosures required by International Financial Reporting
Standards. Reading the summary consolidated financial statements,
therefore, is not a substitute for reading the audited consolidated
financial statements of Sagicor Financial Corporation.
Management's Responsibility for the Summary Financial
Statements
Management is responsible for the preparation of the summary of
the audited consolidated financial statements.
Auditor's Responsibility
Our responsibility is to express an opinion on the summary
consolidated financial statements based on our procedures, which
were conducted in accordance with International Standard on
Auditing (ISA) 810, "Engagements to Report on Summary Financial
Statements".
Opinion
In our opinion, the summary consolidated financial statements
derived from the audited consolidated financial statements of
Sagicor Financial Corporation for the year ended December 31, 2013,
are consistent, in all material respects, with those consolidated
financial statements.
PricewaterhouseCoopers SRL Bridgetown, Barbados
March 30, 2014
This information is provided by RNS
The company news service from the London Stock Exchange
END
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