Aug 2011 Financial News

Sagicor makes a rebound

Aug 25, 2011

Sagicor Financial Corporation has reported a rebound in its second quarter (Q2) results of 2011 of US$22 million in Group net income (GNI), $16 million in shareholder net income (SNI) and earnings per share (EPS) of 5.7 cents.

All three were up from the same period last year. GNI was $12 million, SNI was $8 million and EPS was 2.8 cents.

Group chief operating officer, Richard M. Kellman explained why Sagicor at Lloyd’s (SaL) suffered a Q1 loss of $11.1 million but rebounded to a profit of $22.2 million in the Q2 of April to June, 2011.

“In the year 2010, we had the impact of some significant catastrophes; the Chilean earthquake, wind storms in New Zealand and Australia (which) impacted our Sagicor at Lloyd’s (SaL) subsidiary as well as our overall Group net income. During 2010 we had reduced levels of income, $13.1 million in Q1, $112.3 million in Q2, $8.0 million in Q3 and $8.2 million.”

Kellman said in light of this, the Q2 rebound was “quite significant and does indicate that the company has started on its way back to its accustomed level of profitability.”

Group chief financial officer, Philip Osborne the Group made tremendous strides in every other segment.

“Other than SaL, the Group has made tremendous strides in improved profitability from 2010 into 2011. Going from $21 million to $34 million is a very significant increase in profitability but unfortunately that’s been masked by the losses at SaL which were $23 million for the half year 2011 versus a modest profit of $4 million (in 2010). That is the analysis why our major segments of the Group for the half year was $11 million versus $25 million for the half year in 2010,” Osborne said.

He then cited the indigenous financial institution’s insurance business.

“Sagicor Life Incorporated includes our life insurance business in TT, Barbados, Eastern Caribbean and the Dutch Antilles. The substantial improvement on return in that segment; half year net income of $18 million versus $12 million (in 2010), was largely due to good investment performance and also an improvement in our health claims,” Osborne explained.

Sagicor worked out is book value per share as $1.93 to June 2011 versus $1.96 at December 2010.

Barbados-based Osborne lamented however, Sagicor’s shares were trading much lower on the Barbados Stock Exchange as of last Friday (August 19).

“Shareholders’ equity was $558 million (June 2011) versus $566 million (December 2010), obviously due to the losses in the first quarter. We also paid dividends in the course of the year.

We worked out the book value per share to be $1.93 (but) on Friday our shares were trading at $1.20. It is an unfortunately significant discount which we feel does not reflect the value of our share price. It is apparent that factors outside of the company are responsible for this,” Osborne said.

Referring to the Group’s June offer of over 12 million new common shares at $1.63 and 120 million new convertible redeemable preference shares at $1.00, to shareholders and the International Finance Corporation (IFC), Osborne questioned why the resultant investment of $140.5 million was not reflected in the share price.

“We would have hoped that the share price would have responded to news that shareholders investing $42.2 million demonstrated a level of confidence within the company. Yet at the individual transaction level, we are still seeing shareholders who are willing to part with their shares at a discounted value. We would expect that the share price should be improving but unfortunately I think the combination of individual circumstances and the general economic position may lead particular individuals to dispose of shares at a price which is well below what the true value is,” Osborne said.


Source:
By Sasha Harrinanan
Newsday
Thursday August 25, 2011

http://www.newsday.co.tt/businessday/0,146217.html