Zacca pins Sagicor's growth prospects on cross-selling, foreign markets - New CEO outlines strategy to maintain profit streak
Christopher Zacca, the still relatively new president and chief executive officer of Sagicor Group Jamaica, has some big shoes to fill and he knows it.
Six months into his latest and possibly most challenging assignment to date, Zacca told the Financial Gleaner that he is keen on maintaining the financial services conglomerate's 17-year record of increasing profits year-over-year.
It's early days yet, but the trajectory has so far been maintained in the insurance conglomerate's past two quarters.
With the domestic insurance market that contributes some 60 per cent of profits being described as "mature", Zacca reckons he can still wring more value out of it through greater integration of services, cross-selling the group's range of products and services, maximising gains from existing branch network, and mining sales-making information from its database of 1.6 million customers and their dependents, beneficiaries and associates.
Sagicor Insurance sales agents are now being trained and licensed to sell securities and other investment products, and equipped to give clients financial advice. Insurance sales are also being driven, Zacca suggested, by stability in the economy, which gives individuals a broader investment horizon with more clients adding investments to their life insurance policies.
And while there is still no significant economic growth, new industries such as the business processing outsourcing sector provide a new market for group health insurance sales.
Sagicor's overseas insurance operations in the Cayman Islands and Costa Rica have not been posting spectacular results, but the Sagicor CEO is happy enough with their performance to identify overseas markets as an area of future growth in the long term.
Costa Rica, while not yet being relied on to add shareholder value, Zacca conceded, is providing cross-selling lessons for Sagicor by pushing a range of microinsurance products in the halls of partner banks.
No details were provided, but Sagicor is said to be laying the groundwork
for expansion through mergers, acquisitions and the scaling up of operations in foreign markets, including Costa Rica and Cayman. Technology is also being leveraged to sell into new markets in the Caribbean and elsewhere without putting down an expensive operational outlay.
With the lessons from Costa Rica, Zacca is now leading an initiative to convert Sagicor banking halls into financial services centres that do banking business, but also sell the group's suite of insurances and investment services.
The plan involves building or buying new properties.
"We are looking at one of two possibilities right now for new financial services centres, which may mean some re-accommodation of current locations," said the Sagicor Jamaica boss in a wide-ranging interview at his offices in New Kingston.
He emphasised, however, that this would not translate into any shrinking of the Sagicor presence in the marketplace and certainly not the reduction of Sagicor Bank branches.
Mandeville is to be the first location for this build-out, but Zacca did not give timelines or a budget for the new facilities designed to make it easier for clients to access all services in one location as part of the push for bigger profits.
Sagicor's continued profit spurt is a legacy of Richard Byles, the man Zacca succeeded as operational head of the listed company. Byles now pilots policy direction as chairman of the group that is heavily invested in its core business of insurance as well as banking, investments, pension funds management, property services and hotels.
The group reported third-quarter net profit of more than $9 billion, a 23 per cent growth year-on-year. In the third quarter - the first full quarter under Zacca's leadership - profit rose from $3.1 billion to $3.4 billion.
The year-to-date performance puts Sagicor Jamaica on track to exceed its 2016 results when net profit spiked above $11 billion.
Zacca is not taking credit for the latest positive numbers: "What we have done so far is a team effort. Richard Byles, myself, my leadership team, my 2,200 team members. We have a coordinated, motivated and engaged team."
As CEO, however, the onus is on him to make sure that the profit-making continues. Already, the group has embarked on a strategy to extract maximum profits from its growing hotel portfolio in which it has invested heavily. Sagicor Real Estate X Fund CEO Rohan Miller has been reassigned to operational control of the group's four Jewel branded properties Jewel Grande Montego Bay, which was opened officially in September, and Jewel Runaway Bay, Jewel Dunn's River and Jewel Paradise Cove, all in St Ann.
The company is easing up on major new investments until the existing hotel holdings begin to produce the expected returns on investment. Up to last year, those investments totalled US$403 million. To this is added the US$90 million Sagicor spent upgrading the former Palmyra condominiums into the Jewel Grande this year. Sagicor also plans to pump another US$200 million into an 800-room hotel on lands it recently acquired next door to the Hilton Rose Hall hotel, which X Fund also owns along with the Hilton Double Tree resort in Orlando, Florida.
Mergers and acquisitions
No new foreign or local acquisitions are said to be ready for announcement, but Zacca noted that these were areas where possibilities are always being considered.
The purchase of RBC Royal Bank Jamaica's operations and its merger with Sagicor Bank some four years is said to progressing smoothly, and be Zacca is now headhunting for a new chief executive for the banking arm to replace Donovan Perkins, the one-time heir apparent to Byles who opted out of the bank and the group three months after being passed over for the job of group president and CEO.
Philip Armstrong, who was Perkins' deputy, is now acting CEO of the bank but is being tipped for a greater role in the group.
Summing up his tenure so far, Chris Zacca, who came to the job with executive and operational experience in newspaper, airline and manufacturing, and as a government adviser, said he has been focused on learning the technical aspects of the admittedly large complex business, meeting his direct reports and streamlining processes and people for greater efficiency without any major upheavals.
"We might have had one or two square pegs in round holes. We are trying to ensure that we have the right fit for everybody in all parts of the business," Zacca said.
Still, he stressed that the group has strong leadership teams in place in all areas, and was upbeat about plans for the future, while noting he was now in the middle of planning for the next three years.
"After six months, I am where I expected to be. Certainly not where a Richard Byles was after 13 years, but I feel comfortable with what I have been able to accomplish," he said.
He said his focus now is to do the best possible job keeping the business humming and growing for the benefit of shareholders, clients and staff. "We have to keep growing, keep our profits moving, expanding our footprint," he added, while noting that the ongoing exercise to maximise client relationships, layered with technology, provided a winning growth formula for Sagicor for the next 17 years.
Other strategies, he said, would be unfurled over time for what he has described as the premier financial services group in Jamaica, if not the Caribbean.