After recording a modest decline of two per cent during the second quarter, the financial performance for the rest of this year for Barbados’ largest insurance firm, Sagicor Financial Company Ltd, cannot be easily predicted.
Group President and Chief Executive Officer Dodridge Miller said while several plans have been put in place to lessen any potential fallout from the COVID-19 pandemic, there was still a high level of uncertainty.
“The company’s financial performance for the balance of 2020 remains uncertain,” he said in the recently released second quarter 2020 results report.
“We have put in place a series of initiatives to mitigate the effect of the pandemic on our operations and financial results. We are cautiously optimistic that signs of improving conditions will persist through quarter three and quarter four of 2020. However, because the length and severity of the economic contraction in our operating jurisdictions remain unpredictable, the impact of the pandemic on financial results for the balance of the year remains uncertain,” he explained in his outlook.
Looking back at the second quarter, Miller said while the pandemic continued to impact new business growth, Sagicor delivered “consistent topline revenue” demonstrating resilience and an ability to sustain the business in challenging times due to diverse sources of income.
“The outlook for the regions in which we operate remains uncertain given the unpredictable nature of the length and severity of the contraction of economic activity, which also continues to impact new business.
“However, the pandemic has accelerated the implementation of various innovations for meeting and exceeding the needs of our clients despite the challenges presented by COVID-19 and the ‘new norm’. Sagicor also continues to pursue new, innovative ways of doing business that create value and the best possible service to its clients,” he explained.
Miller said: “We are also generally pleased that the underlying performance of our company demonstrates that our business can navigate such economic challenges. Many of the asset price declines we observed in March 2020 have substantially reversed themselves already in quarter two. While new business generation will continue to be disrupted for the foreseeable future, as borders slowly reopen and when economies resume normally, we remain in a strong capital position to move forward our growth objectives.”
The company recorded total revenue of US$459 million representing a decline of two per cent in the quarter under review, compared to the same period last year.
The report said revenue was generally impacted by lower new business sales across all segments due to challenges in the operating environment, offset by higher net investment income.
“Net income from continuing operations attributed to shareholders was a loss of US$0.3 million in the quarter.
“Excluding a $10.6 million after-tax reduction in net income due to a change in reserves related to an internal reinsurance transaction, net income would have been $10.3 million. Net income in the quarter was impacted by declines in new business sales and increases in expected credit losses, offset by positive net investment income as asset prices retraced most of their losses in quarter one,” said the report.
Book value per share was US$7.21, an increase of two per cent from the first quarter.
As previously announced, Sagicor authorized a share buyback programme that will allow it to repurchase up to three million of its common shares under a normal course issuer bid.
As at June 30, 2020, the company had purchased 963,000 shares in the open market for cancellation for an aggregate purchase price of approximately US$3.9 million.
The company said it would continue to review its dividend policy going forward given the economic situation stemming from the COVID-19 pandemic.
The Board of Directors of Sagicor Financial Company Ltd approved and declared a quarterly dividend of US$0.05625 per common share payable in the third quarter. This quarterly dividend will be paid on September 18, 2020, to shareholders of record at the close of business on August 28, 2020. (MM)