Business

Sagicor Life Jamaica outperforms rest of the group

BY AL EDWARDS

Friday, April 15, 2011    

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JAMAICA'S largest life insurance entity Sagicor Life Jamaica (SLJ) under the stewardship of CEO and President Richard Byles is turning out to be the jewel in the crown of Sagicor Financial Corporation, outperforming other subsidiaries in a contracting global market that has inmpacted the group.

The Jamaica Debt Exchange (JDX) has ham strung SLJ, nevertheless it managed to put in a creditable performance for the year ended December 2010 despite a challenging environment. Total assets rose to J$143.1 billion from the previous year's J$136.4 billion. The capital of the company improved from J$20 billion to J$25 billion, after paying out 8,312 shareholders a dividend totalling J$1.6 billion. Total revenue dropped to J$25.6 billion from the J$ 27.8 billion posted in the previous year. This revenue figure for year ended 2010 generated a net profit of J$4.87 billion, practically the same figure posted for 2009 (J$4.88 billion). Total equity jumped to J$26.7 billion, J$5 billion more than the J$21.3 billion posted for the prior year.

According to Sagicor Financial Corporation's financial statements going back to 2005, the geographical segment lines reveal that Jamaica in terms of total revenue and income from ordinary activities, has led all other areas from 2005 to 2010. Back in 2004 Trinidad & Tobago eclipsed Jamaica in terms of income from ordinary activities posting a figure of (Barbados dollars) Bds$58.2 million as opposed to Jamaica's Bds$46.6 million.

A cursory look at Sagicor Financial Corporation's financial statements for the year ended December 2010 is rather revealing. It segments into Sagicor Life Inc (housing most of the Caribbean) Sagicor Life Jamaica, Sagicor Europe, Sagicor USA, and Head Office and other. A look at the net income/(loss) for the year line reveals that Jamaica provided the lion share with US$56.28 million. The total for all the segments came to just US$41.63 million, which in effect means that without Jamaica, Sagicor Financial Corporation would have posted a lost.

Broken down more specifically Sagicor Life Inc (including Trinidad& Tobago) posted a net income of US$29 million, Sagicor Europe a loss of US$14 million, Sagicor USA just US$3.14 million, Head Office and other, a loss of US$26.14 million and Adjustments a loss of US$7.5 million.

Swimming outside the Caribbean has proven perilous.

Sagicor took over Life of Jamaica back in 2000 and two former stalwarts of Life of Jamaica, namely Maxine MacLure and Ravi Rambarran, now hold senior positions at Sagicor Financial Corporation.

Maxine MacLure was the former CEO of Sagicor USA and now holds the position of executive vice president Corporate Services for Sagicor Financial Corporation. She is responsible for acquisitions in the US, and Group-wide Compliance and Regulatory Liasion. Ravi Rambarran is regared as one of the best actuaries in the Caribbean. He is president and chief executive officer of Sagicor International, which includes all operations of the Sagicor Financial Corporation in the US, UK and the general business in the Caribbean. Both MacLure and Rambarran are finding it difficult to build head of steam in markets outside the Caribbean and this may account for the over reliance on Sagicor Life Jamaica who is currently the star of the group.

However this is not peculiar to them Many Caribbean companies find it exceedingly difficult to succeed outside the region. Guardian Holdings, GraceKennedy, The Gleaner Company, Lasco have all come undone. That nut is yet to be cracked by the Caribbean's corporate heavyweights.

Capital injection

Last year CEO of Sagicor Financial Corporation Dodridge Miller sought to allay fears that the Group was in financial trouble, after a private placement in which it issued shares to Barbados National Insurance Board in order to raise Bds$39.15 million in fresh cash raised many eyebrows. The deal would see Barbados National Insurance Board's stake in Sagicor rise to 6.8 per cent.

Miller explained that this route was in order to raise capital to fund its expansion into both the UK and US and was more favourable than initiating a rights issue. The following year Sagicor entered into a deal with the World Bank's International Finance Corporation (IFC), which saw it receiving US$100 million from the IFC in return for a four per cent stake in Sagicor. The deal consists of US$20 million in common shares and up to US$80 million in convertible and redeemable preference shares. Again here Miller said that the reason for turning to the IFC was to bolster confidence and expand Sagicor's operations.

"We are hoping it will come to fruition as the investment will help to strengthen our ability to expand our reach within the region. As you know we are present in several regions, some dominant, others not so, so there is a lot of scope to increase our reach and penetration within the region, " said Sagicor Financial Corporation's Chief Operating Officer Richard Kellman. Earlier this month, regional rating agency Caribbean Information and Credit Rating Services Limited (CariCRIS) reaffirmed the rating of jmAAA to the US$75- million debt issue of Sagicor Life Jamaica.

A CariCRIS release read: "The rating of Sagicor Life Jamaica continues to reflect the company's dominant market position in Jamaica, healthy earnings position and good capitalisation levels. The likelihood of support from the Sagicor group in a crisis situation also supports the rating. These rating strengths are tempered by the fact that Sagicor Life Jamaica operates primarily in an economy that is characterised by high indebtedness and limited financial flexibility."

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