Sagicor Financial Company Limited (SFC) generated a historic US$584.23 million (J$89.73 billion) in consolidated net profit during 2023 which was driven by the contribution of Ivari to its fourth-quarter performance.

Ivari, a Canadian life insurer which has been dubbed Sagicor Canada, delivered US$795.90 million in net investment income and US$23.83 million in net insurance results for the fourth quarter (Q4), with net profit coming in at US$122.14 million. While this contribution is commendable, SFC’s audited notes revealed that had Ivari been acquired from the start of 2023, it would have contributed US$609.08 million in insurance revenue and net profit of US$121.68 million.

SFC acquired Proj Fox Acquisition Inc, the company that holds Ivari, on October 3 and recorded a US$448.27-million gain on acquisition. This gain arose from SFC’s purchase price of US$271.2 million being below the net asset value of US$717.58 million.

“2023 was a monumental year for Sagicor. Our team worked tirelessly to complete the conversion to IFRS 17, bring Ivari into our corporate structure, and regain our investment grade status while driving forward on other initiatives that will drive value in the years to come. I would like to express my gratitude and congratulations to all of our Sagicor team members for a fabulous year,” stated Andre Mousseau, SFC president and chief executive officer, in the news release.

2023 was a transition year for SFC and insurance companies globally as they transitioned from IFRS 4 to IFRS 17 for the accounting of their insurance businesses. As a result, SFC had to restate its 2022 financials to conform to the new standard.

Under the new accounting standard, SFC’s reported insurance revenue for 2023 increased by 40 per cent to US$862.52 million, but the net insurance result was down 16 per cent to US$71.21 million because of higher insurance service expenses. SFC’s net investment income totalled US$1.55 billion compared to a restated net investment expense of US$276.03 million due to fair value gains recorded in the year.

This improved performance from its investment segment pushed SFC’s net insurance and investment result up 362 per cent to US$605.14 million for 2023. Also, SFC recorded a net profit attributable to shareholders of US$532.06 million with earnings per share of US$3.74. If the gain on acquisition is removed, SFC’s consolidated net profit would be US$135.90 million with US$83.8 million attributable to shareholders.

SFC’s fourth quarter had net profit attributable to shareholders of US$485.30 million with the Canadian and Jamaican segments contributing US$122.10 million and US$17.30 million, respectively to the financial performance. Sagicor Life in the Eastern Caribbean and Sagicor Life USA had net losses of US$30.70 million and US$23.0 million, respectively.

SFC’s total assets doubled from US$10.62 billion to US$22.38 billion as a result of the Ivari acquisition which has resulted in 49 per cent of assets being in Canada. Its financial investments now total US$16.34 billion with cash at US$486.64 million. Total liabilities also increased by 113 per cent to US$21.06 billion with insurance contract liabilities making up US$15.73 billion. Total equity grew 81 per cent to US$1.33 billion with US$970.93 million being attributable to shareholders., SFC’s debt to capital ratio was 26.6 per cent, total LICAT ratio of 136 per cent and a book value was US$6.88 or CA$9.10.

SFC expects to complete the transfer of its Curaçao branch to Assuria Levensverzekering (Cur) N.V. by the end of June for assets which exceed US$3.04 million.

SFC’s 2024 guidance is for core net income to shareholders to be US$90-US$105 million and for 2025 to be 10 per cent above this targeted figure. SFC also expects return on equity of 13 per cent in the medium term with a dividend payout ratio of 30 to 40 per cent.

Its core Jamaican business saw its net insurance and investment result rise 31 per cent to J$26.45 billion with consolidated net income coming in at J$14.57 billion. Net profit attributable to shareholders was J$14.37 billion with earnings per share of J$3.67.

Sagicor Bank Jamaica Limited’s reserve fund became equivalent to its share capital at the end of 2023 which means that more profits can be upstreamed to its parent company. Advantage General Insurance Company also paid a J$319.80 million dividend with J$127.92 million going to other shareholders who control 40 per cent of the business.

While SFC gained investment grade credit ratings by S&P Global Ratings and Fitch Ratings, Sagicor Group Jamaica Limited’s credit rating by Caricris (Caribbean Information & Credit Rating Services Limited) was upgraded to CariA+ and CariA on the regional scale while reaffirming its jmAAA and jmAA+ rating on the Jamaican national scale.

SFC will host its earning call today at 10am Jamaican time with analysts and investors online. SFC has set June 13 as the date for its shareholder meeting with shareholders on record as of April 24 to receive the meeting notice.

Sagicor Financial Company traded at CA$7.34 on Monday which is a 52-week high and the highest price SFC has traded in four years. This leaves SFC up 22 per cent in 2024 with a market capitalization of CA$1.03 billion. SFC currently trails the CA$9.75 price at the start of 2020 and is below the CA$11.50 exercise price for its warrants which are set to expire on December 5 on the Toronto Stock Exchange.

SFC repurchased 1,040,559 shares in Q4 for approximately US$4.4 million. This resulted in the total share count decreasing to 141,065,216 shares and pushing its largest shareholder JMMB Group Limited’s stake to 23.54 per cent based on its 33,213,764 ordinary shares.

SFC announced a seven per cent increase in its quarterly dividend from US$0.05625 to US$0.06 which will be paid on April 30 to shareholders on record as of April 10. This payment totals US$8.46 million with JMMB Group to receive US$1.99 million.

Sagicor Group Jamaica declared a dividend of J$0.96 to be paid on May 8 to shareholders on record as of April 15. This payment totals J$3.75 billion with SFC to receive J$1.84 billion and Pan Jamaica Group Limited to receive J$1.13 billion. Pan Jamaica Group also owns about 1.25 million shares in SFC.

“We are also pleased to announce an increase in our dividend to US$0.06 per quarter. We will continue to balance our meaningful growth opportunities with return of capital to our shareholders through this increasing dividend stream, as well as share buy-backs through our normal course issuer bid program. Our new targeted dividend payout guidance will give us a framework to examine possible further dividend increases in the future,” Mousseau closed.