Sagicor Life Jamaica reported a 28 per cent decline in second quarter net profits to $1.1 billion over the three months to June 30, 2010, though the results would have been more favourable with the exclusion of two unusual transactions recorded last year.

The reported falloff in profitibality was against the background of a 25 per cent dip in total revenues to $6.1 billion over the June 2010 quarter. Net premium revenue fell by 19 per cent to $4.3 billion while fees, commissions and other revenues declined by 75 per cent to $160 million, with the latter attributable to unrealised foreign exchange losses due to the strengthening of the Jamaican dollar against its US counterpart. Net investment income remained flat at $1.6 billion on the heels of the Jamaica Debt Exchange programme which resulted in lower interest rates.

The fallout in revenues was offset by a 25 per cent drop in benefits and expenses , catalysed by a 71 per cent decline in change in actuarial liabilities. Net insurance benefits incurred was flat at $2 billion while administration expenses increased by 20 per cent to $1.4 billion.

However, the sale of the Group’s interest in Cayman and a single premium contract inflated revenues over the corresponding period last year, according to the firm. Sagicor Life Jamaica sold the Group’s interest in Sagicor General Insurance (Cayman) Limited to Bahamas First Holdings last year, with the sale completed and recorded during June 2009.

Excluding the sale, the firm’s net profit decline would have been 25 per cent, three percentage points less than reported.

Also, according to the firm, a single premium contract in the June 2009 quarter inflated that period’s results as well.

Sagicor Life Jamaica financial controller Ivan Carter yesterday told the Business Observer that the contract was for $1.7 billion.

“One of our clients purchased annuities for its staff and paid us the contributions neccessary in one lump sum. It was a huge amount, so that lump sump distorted the income for the period,” noted Carter.