Sat | Jun 6, 2020

Sagicor Group takes $5b COVID hit

Published:Wednesday | May 20, 2020 | 12:24 AM
Christopher Zacca, president and CEO of Sagicor Group Jamaica Limited.
Christopher Zacca, president and CEO of Sagicor Group Jamaica Limited.

Sagicor Group Jamaica Limited took a $5-billion hit on its investment securities, which led to lower profit in the March quarter.

Revenue also declined from $20 billion to $16.8 billion due to the COVID-related impairments.

“The revenue dipped but a large portion of that decline is unrealised capital losses. If you take those out, then our revenues increased by 15 per cent or $3.05 billion,” said Sagicor Group President and CEO Christopher Zacca.

“As a group we remain strong and solvent,” he said.

Sagicor Group’s book value shrank from $121 billion in December to $116.4 billion.

The financial conglomerate, which operates Jamaica’s largest insurance company and the fourth largest commercial bank, also recorded a two-thirds reduction in profit, from $3.5 billion in the March quarter of 2019 to $1.1 billion in the current period. But Zacca chose to highlight a different measure of earnings – profit attributable to shareholders – which had a smaller variance. By that measure, profit shrank by less than a billion dollars, from $2.7 billion to $1.8 billion.

“Profit attributable to shareholders – that is by far the most pertinent number to our shareholders and it is the number that should be focused on by the business press,” said Zacca. “I am asking that you focus on that number,” he said.

Two of Sagicor’s four business segments posted lower profit: the employee insurance benefits line, down from $1.26 billion to $1 billion; and commercial banking, down from $364 million to $131 million due to loan loss provisions.

Individual insurance lines grew profit from $598 million to $1.2 billion; and investment banking rose from $373 million to $535 million.

Outside the group’s core insurance and financial activities, Sagicor absorbed an $800-million impairment on its tourism assets due to the closure of hotels brought on by the pandemic, said Zacca. The company holds interest in hotels directly and indirectly in Jamaica, Florida in the United States, Dominican Republic and Mexico.

Sagicor Group plans to proceed with the payment of a dividend at 40 cents per share to shareholders owning one per cent less of the company, but Zacca says the distributions await the approval of large owners.

“Some 12,700 shareholders will benefit from this payment and we are awaiting the approval of the five shareholders, who hold over one per cent,” he said.

The company also intends to do a second interim dividend, but a decision about that distribution is “four or five months away”, Zacca said.