Sagicor Jamaica sells general insurance subsidiary
Sabrina Gordon, Business Reporter
Sagicor Life Jamaica Limited (SLJ) has sold off its general insurance business in Cayman Islands to Bahamas First Holdings Limited but is awaiting regulatory approval for final closure of the deal, three years after it had increased ownership in the company to 75 per cent.
Sagicor Jamaica is saying little about the sale transaction ? SLJ president and chief executive officer Richard Byles declined comment Tuesday, citing confidentiality agreements - but market disclosures by the company suggested that the general insurance operation had been underperforming for the past two years and has now become a more than $200-million loss-maker for the group, whose main business is in the life market.
"We are of the view that as a property and casualty insurance operation, Sagicor General Cayman did not offer sufficient strategic value to SJL at this time," said SJL in its report to shareholders attached to the audited financial statement for the year ending December 2009.
The year before, Sagicor Jamaica reported to shareholders that the Cayman company's revenue of US$29 million in gross written premiums had fallen below its 2007 position of US$29.9 million in the property and casualty market, and that while its health premiums had risen 16 per cent to US$16.3 million, profits from that segment of the business was at half the targeted levels because of high claims.
Remain in Cayman
The deal for the sale of Sagicor Jamaica's 75.25 per cent share to Bahamas First Holdings was reached January 1, but the parties said Monday that the transaction was expected to close this month.
The deal includes Sagicor Re Insurance Limited, a subsidiary of Sagicor General.
Sagicor Jamaica will maintain a presence in the Cayman market through its life insurance and annuity subsidiary.
No details were given on the price at which the shares were sold.
A loss of $395 million attributed to discontinued operations was noted on SLJ's income statement.
Sagicor General operates three lines of business ? property and casualty, employee benefit and captive management.
Three years ago, SJL increased its stake in the business from 51 per cent to 75.2 per cent. At that time, Sagicor General enjoyed a 25 per cent share of the property and casualty market and 15 per cent of the group health insurance market. SLJ paid $277 million for the additional 24 per cent stake in 2007.
Sagicor Jamaica at the end of 2009 made yearly profit of $4.9 billion, an eight per cent improvement over 2008, though revenue had dipped two per cent to $27.8 billion.
But its general insurance segment posted a net loss $216.7 million at December 2009 compared to a profit of $28.9 million in the previous year.
SJL, however, posted improved results with net profits up eight per cent over the previous year to $4.9 billion on total revenues of $27.8 billion. While net profits were up total revenues for the reporting period saw a two per cent dip, due, the company said, to a single large annuity premium which was not repeated in 2009.
Its balance sheet assets rose from $118 billion to $135.5 billion.
Like Sagicor General, Bahamas First provides a wide range of property and casualty services with its major lines of business being accident and crime engineering, marine motor, professional indemnity, property, and public and personal liability.
At the end of 2008, Bahamas First earned BS$103 million in underwriting income, while on-balance sheet assets were recorded at of BS$127 million.
The company, which is run by group president Patrick Ward, is in the business of insurance, banking and financial services, real estate, and other lines of business, according to its website.