ANNUAL MEETING OF SHAREHOLDERS JUNE 18, 2014
SAGICOR FINANCIAL CORPORATION!
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Shareholders Briefing June 2014 !
AGENDA 1. Economic Overview 2. Financial Review 2013 3. Acquisition of RBC Jamaica 4. Review of Q1 2014 5. Outlook for 2014 6. Questions
ECONOMIC OVERVIEW § The global economy improved during 2013, growing by an estimated 2.9%. § The US economy grew by about 2.3% during year; § Europe had a more patchy performance with Germany enjoying marginal growth, while many others remained in recession. § UK economy grew by 1.9% during 2013, the fastest rate since 2007.
ECONOMIC OVERVIEW § Caribbean economies (excluding Trinidad) most experienced weak economic conditions during 2013; § The Jamaica Government implemented an NDX in February and entered into an IMF agreement in March. § The Barbados economy declined further in 2013 and had its rating downgraded by S&P to BB- with negative outlook; § Across the Eastern Caribbean, the economies were also under pressure, with Grenada suspending interest payments on its debt and commencing negotiations with the IMF; § St. Lucia was also exploring expenditure cuts to improve its fiscal position.
ECONOMIC OVERVIEW § Global economy improved; § Caribbean economies (excluding Trinidad) remained in recession, § Interest rates remained low; § Unemployment rates continue to climb; § Economic activity slowed across all sectors.
SAGICOR FINANCIAL CORPORATION Key factors which influenced 2013 performance: § Sale of Sagicor Europe § Debt restructuring in Jamaica (NDX) § Debt impairment in Grenada § Low interest rates across all countries § General weak economic activity.
SAGICOR FINANCIAL CORPORATION Sale of Sagicor Europe: § Agreement reached with AmTrust on July 26th 2013; § Selling price of US $85 million; § Release of US $130 in cash; § Sagicor retained interest in the ultimate results of the 2011, 2012, 2013 underwriting years; § Up to a limit; § Regulatory approval received in December 2013.
SAGICOR FINANCIAL CORPORATION Sagicor Europe 2013 Performance
Operating l oss for the year Write off of carrying value of i nvestment Expenses i ncurred on disposal Loss from Sagicor Europe for year
2013 33.9 21.1 2.9 57.9
2012 31.8 10.2
§ US $17.6 million in previous years currency translation losses were recycled as a non cash item through the P&L.! § This had no impact on shareholders equity.!
42.0
SAGICOR FINANCIAL CORPORATION Jamaica National Debt Exchange (NDX) § Implemented in February 2013; § Sagicor exchanged US $600 million in existing GOJ debt securities for new debt securities; § The new securities had lower market values, lower coupons and extended maturities; § The impact was a one-time capital loss of US $11.8 million to the Sagicor Group. US $5.7 million to shareholders; § Lower future interest rates also affected investment income.
SAGICOR FINANCIAL CORPORATION Grenada Debt Default § Suspended payment of interest on its debt; § Commenced negotiation with the IMF for Balance of Payment support; § Initiated discussions with bond holders on options to restructure the debt; § No firm position by end of year; § Sagicor made a provision of US $10.3 million against the outstanding debt.
SAGICOR FINANCIAL CORPORATION Financial Review 2013 (US $ Millions) Net Income from Continuing Operations
2013 79.6
2012 75.3
§ Group Net income from continuing operations increased by 6% to US $79.6 million.! § After accounting for capital losses of US $22.1 million from various Caribbean debt actions.! § 2012 included US $20.9 million in one-off acquisition gains.! § All major operating segments contributed to the improved performance.!
SAGICOR FINANCIAL CORPORATION Financial Review 2013
(US $ Millions) Net Income from Continuing Operations Net Loss from Discontinued Operations Group Net Income before currency translation losses Non Cash previous years Currency translation losses Group Net Income for the year
2013 79.6 (57.9) 21.7 (17.6) 4.1
2012 75.3 (42.0) 33.3
§ Total non cash losses of US $38.7 million. US $10.2 million for 2012.! § US $17.6 million had no impact on shareholders equity.!
33.3
SAGICOR FINANCIAL CORPORATION Financial Review 2013 (US $ Millions) Group Net Income for the Year Caribbean Debt Actions: Jamaica NDX Grenada debt i mpairment Total losses from debt actions
2013 4.1
2012 33.3
11.8 10.3 22.1
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Disposal of Sagicor Europe: Write off of Carrying i nvestment Expenses i ncurred i n disposal Previous year Currency translation l osses Total losses associated with disposal
21.1 2.9 17.6 41.6
10.2
Group Net Income before above mentioned items
67.8
43.5
10.2
SAGICOR FINANCIAL CORPORATION Financial Review 2013
(US $ Millions) Net Income from Continuing Operations NDX Grenada debt impairment Net Income from Continuing Operations before debt actions
2013 2012 79.6 75.3 11.8 10.3 101.7 75.3
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.! § Net income from continuing operations improved by 6% over 2012;! § It improved by 35% before accounting for the Caribbean debt actions.!
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SAGICOR FINANCIAL CORPORATION Income Statement 2013 (US $,000)
2013
2012
Net premium r evenue
657,028
665,003
Net i nvestment i ncome
279,350
295,026
Fees a nd other r evenue
103,105
104,253
1,039,483
1,064,282
535,179
570,918
57,611
68,465
592,790
639,383
203,959
190,749
Commissions a nd s elling expenses
99,821
88,626
Premium a nd a sset taxes
11,988
11,956
Finance c osts
17,143
17,897
Depreciation a nd a mortization
15,230
15,901
348,141
325,129
98,552
99,770
(18,924)
(24,450)
79,628
75,320
(75,508)
(42,034)
4,120
33,286
REVENUE
Total r evenue BENEFITS Net policy benefits a nd c hange i n a ctuarial l iabilities Interest expense Total benefits EXPENSES Administrative expenses
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Total expenses NET INCOME BEFORE TAXES Income taxes NET INCOME FROM CONTINUING OPERATIONS Net l oss from discontinued operations NET INCOME FOR THE YEAR
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SAGICOR FINANCIAL CORPORATION Financial Review 2013 (US $,000)
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ASSETS: Financial assets Assests from discontinued operations Other assets Total assets LIABILITIES: Policy l iabilities Deposits and security l iabilities Notes and l oan payable Liabilities of discontinued operations Other l iabilities Total l iabilities CAPITAL Shareholders Equity Non-‐controlling i nterest Total Capital Total liabilities & capital
2013
2012
4,191.8 0.0 1,106 5,297.8
4,041.3 705.7 802 5,549.0
2,885.7 1,106.1 290.2 55.0 235.6 4,572.6
2,574.3 1,092.4 241.5 630.9 206.8 4,745.9
512.1 213.1 725.2 5,297.8
587.1 216.0 803.1 5,549.0 2
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SAGICOR FINANCIAL CORPORATION Financial Review 2013 (US $,000)
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Total assets Total capital Notes and l oans payable Debt: Equity Ratio Risk Based Capital (MCCSR) AM Best Rating S&P Rating
2013
2012
5,297.8 5,549.0 725.2 803.1 290.2 241.5 40.0% 30.1% 259% 250% A-‐ (Excellent) A-‐ (Excellent) BB+ BBB-‐
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SAGICOR FINANCIAL CORPORATION Financial Review 2013 Summary Key impact issues: o Sale of Sagicor Europe o Caribbean Debt actions Performance: o .! Net Income from continuing operations improved over 2012; o ! All major operating segments contributed to the improved performance; o Capital position remained strong. 2
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SAGICOR FINANCIAL CORPORATION Acquisition of RBC Jamaica § Banking operations of RBC Jamaica acquired in December 2013; § Purchase price of US $90 million; § Funded entirely from resources within the Jamaica Operations; § No new capital from Sagicor § No additional exposure to GOJ debt; § .! Balance sheet is long in US dollars; § ! Major non-performing loans were excluded from the acquisition; § Replaced with US dollar cash. § Enhance market dominance while being accretive to net income. 2
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SAGICOR FINANCIAL CORPORATION Review of Q1 2014 § Group Net Income was US $15.1 million, compared to US $8.1 million for same quarter 2013; § Group Net income from continuing operations was US $15.6 million, up from US $14.3 million for 2013; § Net Income from continuing operations attributable to shareholders .!
amounted to US $10.4 million, against US $11.5 million for 2013.
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SAGICOR FINANCIAL CORPORATION Review of Q1 2014 § Total revenue was up, reaching US $261.7 million compared to US $249.9 million for 2013; § This reflected the improvement in investment and other income of 14%; § Benefits were US $156.2 million, up 4% and reflected the increased .!
benefits paid to policyholders;
§ ! Expenses increased to US $85.7 million from US $82.1 million, and included US $2.3 million in restructuring costs.
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SAGICOR FINANCIAL CORPORATION Review of Q1 2014 § Other comprehensive income improved by US $3.5 million, against a loss of US $15.0 million for 2013;
§ Total assets grew to US $5.4 billion, up from December 2013;
§ .! Total capital also grew to US $727.8 million from US $725.2 million as ! at December 2013.
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SAGICOR FINANCIAL CORPORATION Review of Q1 2014
§ EPS was US 3.2 cents for the quarter;
§ Return on Common shareholders’ equity was 8.4% annualized.
§ A.! solid performance for the quarter.
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SAGICOR FINANCIAL CORPORATION Review of Q1 2014 (US $,000)
2014
2013
164,436
164,382
97,280
85,402
261,716
249,784
Benefits
156,248
149,929
Expenses
85,725
82,091
241,973
232,020
NET INCOME BEFORE TAXES
19,743
17,764
Income taxes
(4,125)
(3,506)
NET INCOME FROM CONTINUING OPERATIONS
15,618
14,258
REVENUE Net premium r evenue Net i nvestment a nd other i ncome Total r evenue BENEFITS
Total benefits
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Net l oss from discontinued operations NET INCOME FOR THE YEAR
Total assets Total Capital
(477) 15,141
(6,166) 8,092
Mar-‐14 Dec-‐13 5,404,711 5,297,752 727,756 725,186 2
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SAGICOR FINANCIAL CORPORATION Outlook for 2014 § The Global economy expected to continue to improve; § Growth forecasted at 3.6% § Caribbean economies (excluding Trinidad), weak economic conditions are expected to continue through 2014; § Jamaica economy is expected experience further improvements § .! Jamaica currency will depreciate but at a slower rate.
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SAGICOR FINANCIAL CORPORATION Outlook for 2014 § Sagicor will continue to restructure to reduce operating cost; § Grow our revenue; § Remain positively exposed to rising interest rates; § Optimistic about our results for 2014.
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Thank You!
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ANNUAL MEETING OF SHAREHOLDERS JUNE 18, 2014
ELECTION OF DIRECTORS ANNUAL MEETING OF SHAREHOLDERS JUNE 18, 2014
ANDREW ALEONG
Photo / Chart / Graph
Citizen of Trinidad and Tobago Independent Director since 2005 Group Managing Director – Albrosco Group of Companies, T&T Director: - Sagicor Life Inc - Sagicor Capital Life Insurance Co. Ltd MBA – Richard Ivey School of Business, University of Western Ontario
PROFESSOR SIR HILARY BECKLES Citizen of Barbados Independent Director since 2005 Principal and Pro-Vice Chancellor, Cave Hill Campus, University of the West Indies Director: - Sagicor Life Inc - Sagicor Life Jamaica PhD – Hull University, United Kingdom
JOHN SHETTLE, Jr.
Citizen of the United States of America Independent Director since 2008 Operating Partner, Stone Point Capital Director: - Sagicor USA - Sagicor Life Insurance Co. MBA – Sellinger School of Business at Loyola College, Maryland
RICHARD P. YOUNG Citizen of Trinidad and Tobago Independent Director since January 2014 Financial Consultant Former Managing Director of Scotiabank Trinidad & Tobago Limited Former Managing Director of NEM (West Indies) Insurance Ltd. Former partner with Price Waterhouse, Trinidad & Tobago FCCA – UK
ANNUAL MEETING OF SHAREHOLDERS JUNE 18, 2014
