Wed | Aug 22, 2018

Sagicor Group assets nudge $259b on RBC acquisition

Published:Friday | August 22, 2014 | 12:00 AM

Financial conglo-merate Sagicor Group Jamaica Limited reported net profit of $2.76 billion at half-year ending June, an improve-ment of 24 per cent over last year.

Group revenue of $23 billion was up 32 per cent.

Sagicor, in its half-year report to shareholders, said the acquisition of RBC Jamaica contributed most of the 31 per cent growth in the group's balance sheet since December 2013, with assets reaching $258.9 billion.

The group finalised the acquisition of RBC Jamaica and merged the business with Sagicor Bank during June to create the third-largest commercial banking group of six, with a 19-branch, 46-ATM network.

Sagicor said RBC Jamaica added $54 billion to its asset base. That's more than five times its $9.5 billion acquisition price.

"Despite the outlay for the RBC acquisition, an additional investment in Sagicor Costa Rica and the dividend distribution to stockholders, the group finished the period with a very liquid position," said the statement from chairman R. Danny Williams and President and CEO Richard Byles.

Sagicor's improved asset base includes a cash hoard of $20 billion, or around four times the holdings at yearend December 2013, "most of which came with the RBC Jamaica portfolio," the company said. A year ago, the company had a cash deficit of $906m, according to its restated accounts.

The dominant business

A breakout of Sagicor Group's segment assets reaffirms insurance as the dominant business with holdings valued at $103b, up from $87b a year ago June 2013. Commercial banking has leapt to second place with assets of $81 billion, due to the merger of Sagicor Bank and RBC Royal Bank Jamaica. The bank is now four times larger than the $20 billion of assets recorded on its books in 2013.

Investment banking also grew from $68 billion to $72 billion, but is now the third-largest segment.

At half-year, insurance also dominated in contribution to net profit, $2.37b; investment banking contributed $397m; while commercial banking made $198 million.

Byles is both the head of Sagicor Group and the man in charge of the insurance operations - Sagicor Life Jamaica; Donovan Perkins, who is seen as Byles' chief lieutenant, now heads up the expanded banking unit - Sagicor Bank Jamaica; while Rohan Miller was promoted to Perkins' former job as head of the investment operations - Sagicor Investments Jamaica Limited.

Total assets for the group grew to $258.9 billion, up 31 per cent from $198.3 billion at December 2013, with the RBC acquisition contributing 90 per cent of the increase, Sagicor said.

Its capital base has climbed from $37.6 billion to $41 billion in the same period.

Sagicor said the 14 per cent improvement in stockholder equity was due to retained earnings, unrealised fair value gains on US corporate bonds, and the purchase of Sagicor Investments' minority shares.

Subsequent to the Sagicor Investments transaction - which included the swap of each Sagicor Investments outstanding share for 1.8 shares in Sagicor Group - the investment company was taken private and delisted from the Jamaica Stock Exchange in May.