Strong insurance sales fuel Sagicor Group’s profits
Stronger insurance sales and improvements across its other lines of business contributed to a 72 per cent improvement in Sagicor Group Jamaica Limited’s (SJ) consolidated net profit which grew from $2.66 billion to $4.58 billion.
The financial conglomerate recorded a six per cent rise in consolidated insurance revenue to $14.80 billion during the third quarter (July to September) as it benefited from product repricing in its short-term insurance business (insurance contracts less than one year) and improved sales in the long-term insurance business (insurance contracts greater than one year). The insurance service result increased by 75 per cent from $1.76 billion to $3.09 billion due to a five per cent dip in the insurance service expense (insurance claims and directly attributable expenses) and marginal increase in its net reinsurance expenses.
According to its parent company Sagicor Financial Company (SFC) Limited, the net premium grew two per cent and 15 per cent for the short and long-term business, respectively. The net premium earned across all product lines improved 10 per cent to US$94.1 million while the new business CSM (contractual service margin) rose six per cent to US$13.2 million on a year over year basis.
This strong insurance performance is spearheaded by SJ’s subsidiaries which include Sagicor Life Jamaica Limited, Advantage General Insurance Company Limited and Sagicor Life of the Cayman Islands Limited.
“We continue to see the benefits of disciplined execution, prudent risk management, and investments that are strengthening our group for the long term. Our team is focused on serving our clients, supporting recovery efforts, and driving sustainable value creation,” stated SJ Chief Executive Officer Christopher Zacca in a press release.
SJ’s net investment income marginally improved to $10.04 billion as it had a third-consecutive quarter of realised capital gains and higher net interest income from its loans and investment securities. Despite other operating expenses increasing nine per cent to $8.08 billion, the improvements for its Costa Rican joint venture and increased fees across the group pushed profit before tax (PBT) up 64 per cent to $6.15 billion. Despite a 44 per cent in income taxes to $1.57 billion, SJ still reported net profit attributable to shareholders of $4.49 billion.
“Long-term business also saw growth in earnings contribution as compared to the first nine months of 2024 and favourable insurance claims experience. Core net investment result and core non-insurance earnings each grew 12 per cent and 6 per cent, respectively, as compared to the same period in 2024 from a growing commercial banking portfolio, favourable trading activities, and higher transaction volume on the card payment portfolio. This was partially offset by higher core expenses on planned wage increases and inflation,” SFC stated in its management discussion and analysis.
For the overall nine months, consolidated insurance revenue grew 12 per cent to $44.24 billion with the insurance service result rising 101 per cent to $9.22 billion. Net investment income increased 39 per cent to $29.19 billion as Sagicor Group had over $8.65 billion in realised and unrealised capital gains at a time that has seen the group have net investment purchases of $42.16 billion. Sagicor Bank Jamaica Limited disbursed an additional $27.46 billion in new loans which improved interest income by $1.52 billion while Sagicor Investments Jamaica Limited had net trading income of $1.13 billion.
SJ’s stock price closed Thursday at $39.26 which leaves it down three per cent year-to-date with a market capitalisation of $153.33 billion. This leaves SJ as the second-largest company on the Jamaica Stock Exchange by market cap behind Scotia Group Jamaica Limited.
Although SJ does not have reliable estimates of financial loss or economic impact at the moment, SFC expects there to be increased P&C (property and casualty) claims net of reinsurance and expected credit losses. SJ has already committed $200 million to recovery efforts through the Sagicor Foundation, with $40 million in direct relief for affected team members and their families.
“Many Jamaicans are now experiencing significant challenges and uncertainty as a result of this powerful storm. Our hearts go out to those most affected, and we stand firm in our service to the country’s growth and resilience. We remain focused on supporting our team members, our clients, and the communities that we serve. We have been on the ground providing support, assessing needs, and doing everything we can to help families and businesses begin the long process of rebuilding,” Zacca said.