Sagicor is bracing for the major financial hangover likely from Europe even after it concludes the sale of its loss-making business there.
News of this comes as the overall company reports increased profits.
For the six month period ending in June last year, the company based in Barbados had net income of $48.8 million, but up to the end of that time this year its profits were $56.8 million, Chairman Stephen McNamara reported.
The official said the performance was “encouraging”, noting that Sagicor’s Caribbean and United States businesses “continued to perform well, with revenue from continuing operations amounting to US$498.7 million an improvement of US$21.5 million over the corresponding period in 2012”.
But having reached a deal to sell Sagicor Europe Limited, including main subsidiary Sagicor at Lloyd’s Limited to American company AmTrust Financial Services Inc. for $170 million, McNamara said “under the terms of the sale agreement Sagicor will retain interest in the ultimate results of the 2011, 2012 and 2013 underwriting years of account after the syndicate has been formally sold”.
In this regard, he noted that this business recorded a net loss of $83.4 million between January and June this year.
“The operating loss is as a result of a number of factors. The uncertainty in the Lloyd’s market on the future of Sagicor’s syndicate contributed to our inability to reach premium revenue targets,” he said.
“In addition, within certain lines of business, there was a worsening of the claims experience, resulting in the group having to record some large losses and to strengthen claim reserves for business already written.
“As of June 30, Sagicor made an estimate of the financial impact of the ultimate results of the underwriting years retained (2011, 2012 and 2013), and after taking into account the terms of the sale, we have included an impairment provision of US$10.1 million for future losses on this business.
“This provision is based on current estimates and is subject to revision if there is a change in the syndicate’s performance relating to these underwriting years. The provision is also subject to future currency exchange movements,” he explained.
In terms of the company’s overall performance, while net premium revenue was $629.4 million, an increase over the $603.8 million recorded for the same period last year, net investment income and other income improved from $350.6 million to $368 million.
“This improvement in net investment income and other income is after accounting for a capital loss of US$11.8 million (US $5.7 million to shareholders) incurred on Government of Jamaica debt securities when the group exchanged over US$600 million in GOJ debt securities for lower market values, lower coupon rates and extended maturities,” the chairman noted. (SC)
- GUYANA - Legislator who brought down gov't may have committed treason
- GUYANA - Gov't maintains position regarding incident involving Venezuelan navy
- JAMAICA - Twenty murders in first week of 2019
- Caribbean islands record three earthquakes in 24 hours
- GUYANA: Body of child found after gold mine collapses
- REGIONAL - Cruise Line warns passengers to avoid Fish Fry area in Bahamas
- Mobile App