Nov 2006 Financial News

SFC Releases Nine Months Results

Nov 14, 2006

All figures are quoted in Barbados Dollars unless otherwise stated.

For the Nine Months ended September 30, 2006, Sagicor Financial Corporation (SFC) reported diluted Earnings Per Share (EPS) of $0.295. Although this represents a fall of 31.71 per cent or $0.137 on the comparable EPS of the same period in 2005, it should be noted that there were exceptional gains of $39.01 million in the nine month period of 2005. If the exceptional gains are excluded from the comparative amounts in 2005, the diluted EPS for the Nine Months ended September 30, 2005 would be $0.284. Using the EPS adjusted for exceptional items as the comparative EPS, the period under review was actually up by 3.87 per cent.

Net Premium Revenue for the nine months amounted to $556.40 million, representing a significant increase of 21.32 per cent on the comparable period in 2005. Q3 2006 on Q2 2006, this figure was up by $12.92 million or 7.10 per cent. Net Investment and Other Income also increased nine months on nine months, moving up 8.94 per cent to end the period at $392.63 million. As a result, the Total Revenue for the period stood at $949.03 million, showing an increase of 10.61 per cent or $91.04 million on the same period in 2005 (inclusive of exceptional gains). Excluding the exceptional gains, the Total Revenue would be up by 15.87 per cent or $130.02 million.

Benefits, which include, insurance benefits, changes in reserves for insurance benefits and interest on customer and other funds, totaled $503.42 million. This figure increased by 13.49 per cent or $59.83 million on the corresponding period of 2005. While Expenses which include: selling and administrative expenses, amortization of intangible assets, premium taxes and finance costs, amounted to $310.74 million. This represents a substantial increase of 26.15 per cent or $64.41 million over the figure for 2005. Consequently, Total Benefits and Expenses rose by a significant 18.01 per cent to end the period under review at $814.16 million.

The Chairman has stated that acquisitions completed between April and November 2005 have contributed to the growth in the respective amounts for revenue, benefits and expenses recorded in the current nine month period over the comparative period in 2005.

Income from Ordinary Activities for the nine month period stood at $134.87 million. When compared to the corresponding period in 2005, this figure (inclusive of exceptional gains) was down by a significant 19.77 per cent. However, if we exclude the exceptional gains from 2005, the Income from Ordinary Activities would be up 4.47 per cent, nine months on nine months. Additionally, if we compare this figure for Q3 2006 on Q3 2005, there is a substantial increase of 51.47 per cent or $16.60 million.

The Effective Tax Rate for the nine month period under review was 15.31 per cent, while for the same period in 2005 it was 8.68 per cent. Net Income for the period amounted to $114.22 million, down by 25.60 per cent or $39.31 million on the comparable period in 2005 (including exceptional gains). Excluding the exceptional gains, the Net Income would actually have been up by a marginal 0.25 per cent.

Assets as at September 30, 2006 totaled $6.75 billion, while Total Liabilities amounted to $5.71 billion. For the first time in the Group’s history, Total Equity has surpassed $1 billion, ending the period at $1.04 billion. Shareholder’s Equity for the period amounted to $768.09 million, compared to $747.55 million as at September 30, 2005.

The shares of SFC are currently trading at a price of TT$12.00. At our Forecasted EPS of TT$1.35 and the current price, these shares are trading at a very attractive multiple of 8.89 times. Thus, we continue to recommend a BUY on this share.


Gia Singh
WISE Equity Research Team