Sagicor Lays Out Plan for 2021
Via Jamaica Observer
Despite 20 consecutive years of continued higher net profits being broken due to COVID-19, Christopher Zacca, president and chief executive officer (CEO) of Sagicor Group, has pointed to a stronger 2021 for Sagicor Group Jamaica (SJ) which recorded a 12 per cent decline in its net profit attributable to shareholders of $13.78 billion for its 2020 financial year (FY).
Although the pandemic had a sharper impact on broader aspects of local financial companies, SJ's core business lines in individual and group insurance, commercial banking and investment banking performed above expectations with certain one-off accounting measures reducing its bottom line.
“It was a commendable year by the team. The team was magnificent in the most horrendous year that we could have ever imagined. For the out-turn of profit to be down only 12 per cent as noted in our report given all of the one-time impact, impairments and so on, it was a very, very good out-turn,” Zacca told the Business Observer's on SJ's performance in COVID-19.
SJ's revenue declined by nine per cent to $84.57 billion due to a 54 per cent drop in hotel revenues, 112 per cent rise in credit impairment losses and reduction of assets measured at fair value through profit or loss (FVTPL) compared to a gain in the prior FY. However, the group's premium income rose by 13 per cent to $54.8 billion which came as a result of higher sales from the core Sagicor Life (SLL) business and a full year of consolidating Advantage General Insurance Company (AGIC).
Total expenses grew by two per cent to $34.42 billion with only hotel expenses seeing a reduction due to the decline in tourism activity through its 29.31 per cent owned Sagicor Real Estate X-Fund subsidiary. The largest expense arose from the 14 per cent rise in commissions and sales expenses to $6.92 billion as the individual insurance saw net premiums grow by seven per cent to $28.23 billion with more than 600,000 policies in force. The employee benefits segment saw premium income grow by six per cent to $28.04 billion.
“The sales for individual life stood up strongly in the pandemic with expense control and actuarial out-turns being very positive. Given the pandemic, the insurance business did fantastic and managed their claims ratio while keeping pension clients content. December 2020 was a record month for Sagicor Life's individual division,” Zacca revealed. Though insurance benefits incurred grew by 15 per cent to $34.07 billion, SJ experienced a $4.06 billion actuarial reserves release rather than the $8.95 billion strengthening thanks to the positive emergence of the actual experiences versus assumptions in the mortality of their SLL business which had a $10.19 billion change for the individual insurance segment.
Despite SJ's consolidated net profit declining by 71 per cent to $4.48 billion, Zacca adamantly repeated that “readers should take note of the net profit attributable to shareholders since X-Fund isn't a wholly owned subsidiary and doesn't accurately reflect the earnings to shareholders”.
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