Nov 2010 Financial News

SLJ’s nine-month profit falls 17%

Nov 10, 2010

SAGICOR Life Jamaica’s (SLJ) net profit fell 17 per cent to some $3.4 billion over ninemonths to September year-on-year due to lower interest spreads and local currency appreciation, management at the insurance conglomerate stated.

All the five divisions in the group showed lower profit after tax, due to lower revenues—totaling $19.4 billion down nine per cent — in all except the individual life division.

“Two significant macro-economic developments negatively impacted current year results of the group, namely, lower interest rates as a consequence of the Jamaica Debt Exchange programme (JDX) in February and the strengthening of the Jamaican dollar by four per cent since January, which led to substantial unrealised foreign exchange (FX) losses being recorded,” according to a joint statement by chairman RD Williams and president and chief executive officer Richard Byles which accompanied the financials.

Management added that revenues would been almost flat were its discontinued operations which earned $1.8 billion for nine-months up to September 2009 excluded. In February this year, Sagicor Life of the Cayman Islands entered into a share purchase agreement with Bahamas First Holdings Limited to divest its 75.24 per cent holding, completed in June. Discontinued operations had $1.4 billion in equity for nine months up to September 2009.

SLJ’s administration expenses of $4.2 billion were seven per cent higher than the 2009 amount when discontinued operations are excluded.

The group said that over the review period “new insurance sales” stayed strong and contributed to a healthy growth in net premium revenues, when the effect of the large single premium contract in 2009 is excluded. Adjusting for the foregoing and the effect of large bulk premiums, the normalised ratio of administrative expenses to total revenue was 22 per cent as against 21 per cent in the previous year.

At the same time, the PanCaribbean Financial Services (PCFS) Group, in which SLJ has an 86 per cent interest, generated after tax profits of some $1.1 million, or three per cent below prior year despite the lower interest rates and unrealised FX losses in 2010. Despite the 17 per cent drop in earning per share to $0.89, shareholder equity however jumped 20 per cent in the year to $23 billion.

“This 20 per cent increase was in part due to the growth in retained earnings and the improved fair values of securities held as available-for-sale, for which the after-tax unrealised gains are reflected as a component of equity,” the statement read.

The directors in response to the results declared dividends of $1.6 billion to stockholders or a dividend per share of $0.43 during 2010.

Byles and Williams concluded that the SLJ continues to perform “admirably”.

“We remain confident that the strategies being pursued are effective and will deliver favourable financial results, amidst the challenges and opportunities presented by the changing economic environment in which we operate,” the men stated.


Source:
Jamaica Observer
Wednesday November 10, 2010

http://www.jamaicaobserver.com/business/SLJ-s-nine-month-profit-falls-17-