Despite continued top line growth from its core businesses, rising interest rates and market volatility dragged down Sagicor Group Jamaica Limited’s (SJ) revenue for the third quarter.

SJ saw its third-quarter revenue decline by four per cent to $23.87 billion as a result of a $1.70 billion unrealised loss compared to the $1.55 billion unrealised gain experienced in the prior period. Except for hotel revenue related to its former subsidiary Sagicor Real Estate X Fund Limited, every other line-item experienced significant improvements.

Due to a smaller actuarial reserve release, group benefits and expenses increased 28 per cent to $18.93 billion, which resulted in dropping 51 per cent to $4.94 billion. Although it recorded a smaller share of profit from its Costa Rican joint venture, SJ benefited from a $258.19-million gain related to the sale of its 29.31 per cent stake in X Fund. Consolidated net profit was down 49 per cent to $4.18 billion while net profit attributable to shareholders came in at $4.11 billion.

The continued market volatility has drastically impacted Sagicor Investments Jamaica Limited (SIJL), which has seen its regulatory capital to risk weighted assets ratio decline from 17.7 per cent at the start of the year to 12.5 per cent at the end of September.

This is below the Financial Services Commission’s (FSC) early warning level of 14 per cent, but just above the regulatory minimum of 10 per cent. The FSC guidelines state that entities with a ratio below 12 per cent should notify the commission in accordance with regulations.

“SIJL is managing its balance sheet appropriately and prudently in the face of volatile fixed-income markets in a high interest rate environment, and we are deploying a number of strategies aimed at ensuring that the balance sheet remains robust and liquid. SIJL’s liquidity is very strong, and its regulatory capital is above the regulatory requirement,” said SJ president and Chief Executive Officer (CEO) Christopher Zacca in an e-mail to the Jamaica Observer.

SJ’s investment banking segment saw revenue decline 23 per cent to $3.82 billion for the nine months up to September with net profit down 42 per cent to $1.18 billion. Segment assets decreased five per cent to $115.50 billion. SIJL currently has a case against Cornerstone Financial Holdings Limited and some of its directors in the Supreme Court of Barbados. According to its 2021 audited financial statements, if the court were to rule against SIJL’s claim, it would be required to mark down investment in the company by US$4.88 billion.

Despite these events, SIJL closed the New Fortress Energy bond for which US$221.82 million was issued. Sagicor Investments Cayman Limited is also currently in operation and recently closed its first note issuance.

Sagicor Bank Jamaica’s (SBJ) net profit increased 10 per cent to $2.34 billion, boosted by growth in loans and transaction fees. SBJ is currently mailing customers its new Mastercard debit card.

Consolidated revenue for the nine-month period was down three per cent to $70.76 billion with consolidated net profit decreasing 23 per cent to $10.40 billion. Net profit attributable to shareholders was $10.15 billion with earnings per share at $2.60.

Sagicor Group acquired the entire interest of Alliance Financial Services Limited (AFSL) on April 1 after it was unable to operate for four months. While AFSL earned US$770,000 ($117.04 million) in revenue for the second quarter, it incurred a net loss of US$14,000 ($2.13 million). However, it saw a turnaround in the third quarter, during which it recorded US$1.95 million ($298.36 million) and earned a net profit of US$136,000 ($20.81 million).

“In just a few months AFSL has rebuilt its agency network and is on a growth path. We continue to deploy strategies to grow the network and build market share,” Zacca commented on AFSL.

SIJL paid $21.59 billion (US$0.1 million) for the securities dealer book of Alliance Investment Management Limited which was the carrying value of the net assets assumed.

Executive shift

Vice-president of group marketing Alysia Moulton-White will leave Sagicor Group on December 31 as her role will no longer form part of the group’s structure, which now falls under shared services. This comes after Moulton-White joined Sagicor Group in September 2010 as an assistant manager for events and special projects. She was appointed in March 2019 as the executive director of the Sagicor Foundation, which organises the annual Sigma Run and provides assistance to various charitable causes. Some of the projects which she has recently been involved in include the Sage Network and Investor Core.

“I’m grateful to have been able to join a legacy of strong marketing leaders that have created a brand that resonates globally and for that I can say, I am proud! To the leadership of the Sagicor Group Jamaica, it has been an honour. Thank you for allowing me the space and place to create, lead, learn and inspire! Always #SagicorStrong. On to the next adventure,” Moulton-White said in a post on LinkedIn.

In a press release sent on Monday, it said, “As part of our restructuring exercise announced in September 2022, Sagicor Group Jamaica [SGJ] continues to make efforts to streamline its operations to achieve greater efficiencies. Executive Vice President — Shared Services Karl Williams will continue to have executive oversight for marketing at the senior leadership level.”

The reorganisation in September saw Mark Chisholm, Willard Brown and Williams promoted to new roles encompassing insurance, technology and shared services. A new role was also created for former National Commercial Bank Jamaica Limited Senior General Manager Howard Gordon, who was appointed senior vice-president of group technology & Sagicor Life operations. All of these appointments became effective on October 1.

The last time Sagicor Group had a major reorganisation in its group structure was in July 2020 with former executive vice-president and chief executive officer of Sagicor Investments Jamaica Kevin Donaldson, whose role was no longer reflected in the company’s organisation structure effective July 31. A new role of general manager for Sagicor Investments Jamaica was created for Tara Nunes, who took up the role on August 3 before being appointed CEO in 2021. Donaldson had to resign from the boards of the JSE and Sagicor Select Funds Limited due to him no longer being employed to the Sagicor Group.

Moulton-White is the latest executive to leave the Sagicor Group this year after executive vice-president and Chief Investment Officer Sean Newman resigned at the end of September.

Balance sheet

SJ’s total assets are down four per cent year over year to $504.38 billion due to fair value losses and the fact that it no longer consolidates X Fund. Group cash resources stand at $33.47 billion with financial investments at $220.68 billion. Total liabilities and equity attributable to shareholders stood at $396.29 billion and $106.03 billion, respectively.

SJ’s stock price increased 10 per cent on Thursday to $51.20, which leaves it down seven per cent year to date with a market capitalisation of $199.98 billion. There has been an increase in the number of SJ executives selling shares during the year as per JSE disclosures.

“We have strong liquidity and capital, a diverse set of financial business lines, and the best team possible, and as such are well poised to navigate the turbulent environment ahead of us. I am very confident that, as we have year after year, we will perform well for our shareholders,” Zacca closed on the outlook going into 2023.