Sagicor delivers record earnings
Sagicor Group Jamaica's earnings reached a new record at $11.3 billion for year ending December 2016, reflecting synergies from the amalgamation of the banking operations and earnings from other investments.
Profit rose 15 per cent, while revenue climbed more than eight per cent to land just shy of $60 billion.
Sagicor Group, in its financial report released this week, also disclosed that it noted a "breach of insurance regulations" at its flagship business.
"As at December 31, 2016, one of the group's subsidiaries, Sagicor Life Jamaica Limited, exceeded the regulated 5.0 per cent maximum of related party balances to total assets of the company. Management is in discussions with the regulator, Financial Services Commission, in relation to this matter," the company said in its audited report.
Sagicor Group operates in insurance, commercial banking, investment and wealth management.
Chief Financial Officer Ivan Carter indicated that the group's performance was due in part to synergies from synergies and the streamlining of operations that followed acquisition of RBC Jamaica.
"Furthermore, 2016 was our first full year of operations after implementing a number of new systems and other structural changes. One of our strategies in banking is to grow the banks and so in 2016 we saw expansion of our loans, deposits and credit cards portfolios," Carter told the Financial Gleaner.
Significant capital appreciation
Additionally, Sagicor's Real Estate X Fund's contribution to the group reflected less than four months of "post-acquisition earnings, whereas 2016 reflects a full year," the CFO said. "The hotels in the X Fund performed well. There was also significant capital appreciation of properties in the Sagicor Sigma Real Estate portfolio which is owned 46 per cent by the X Fund."
Sagicor Group now owns 29 per cent of Sagicor X Fund.
All the conglomerate's operating segments grew earnings during the year - the individual insurance line made profit of $3.2 billion on revenues of $23 billion; the employee benefits segment earned $4.8 billion on revenues of $22 billion; the bank earned $1.85 billion on revenues of $9.2 billion; and the investment banking segment earned $1.74 billion on revenues of $4 billion.
The group holds $216 billion worth of financial investments up from $200 billion a year earlier. Most of these investments are in the form of Government of Jamaica securities and corporate bonds.
Sagicor Group recognised $562 million in impairment losses on financial investments during the year, but that was still better than the $967 million recorded a year earlier. Overall, after factoring these impairments, Sagicor earned $19.3 billion in net investment income from its vast portfolio, up from $16.3 billion a year earlier.
As at December 2016, shareholders equity was estimated at $56 billion, while total assets climbed to $341 billion.