COVID-19 affects Sagicor markets

 Sagicor Financial Corporation says the COVID- 19 pandemic has caused significant economic and financial turmoil and uncertainty and has fuelled concerns that have led to a global recession.

The comments have been outlined in the company’s latest corporate filings on the 2020 financial year ending December 31, 2020. The group, in notes to the financial statements, said all levels of society had been affected in “significant ways” by COVID-19 and this had caused “a contraction in the economies in which the group operates”.

Addressing developments that occurred during the year, the company stated: “The spread of the virus, which resulted in widespread travel restrictions and cancellations, has had a significant, negative effect on global travel and the demand for entertainment and related products offered in key markets in which the Group holds investments.

“Declines in global demand for oil and gas impacted prices and also constrained the Group’s customers. Investment portfolios have been impacted by the widening of credit spreads which resulted in significant fall-off in asset prices, causing significant reduction in investment income and portfolio management fee income.”

While the situation has improved in some parts of the world, particularly in industrialised countries, Sagicor said the situation in the Caribbean remained depressed. The company said corporate and individual incomes have been negatively affected by the contraction in economic activity.

It said waivers and reduction of fees associated with loans, in addition to the decline in loan volumes due to contraction in economic activity, had also affected corporate performances.

The company said it responded to the difficulties facing its clients by offering extensions of moratoriums, payment deferrals, and this had a positive effect on the delinquency levels of its borrowing and insurance portfolios.

“In response to the changing, and increasingly uncertain, economic environment, the Sagicor Group has performed reviews and updated its assumptions, including those related to asset impairment, where necessary,” the company noted.

Sagicor said its management considered the potential impact of the pandemic on actuarial reserves but concluded that it had not significantly undermined actuarial assumptions and the valuation of actuarial liabilities of the Group.

Going forward, the company said while the global vaccination programmes should allow the world, and the countries where it operated to gradually return to normal, this will take time.

As a result, the the financial services company said the pandemic may continue to negatively impact its ability to generate new business, the level of policyholder lapses and surrenders, as well as loan and credit card delinquencies.

In highlights from the financials, the company generated net premium income of US $1.40 billion in 2020, which was an increase from the US$ 1.24 billion in 2019.

Sagicor, which originated in Barbados 180 years ago as The Mutual, is a Bermuda-registered company, with principal offices in Barbados. In November 2018, Sagicor Financial Corporation entered an agreement with Canadian company, Alignvest, a special purpose acquisition company.

The Canadian company, in 2019, changed its name to Sagicor Financial Company Ltd and has acquired all the issued and outstanding shares in Sagicor. It now owns 100 per cent of Sagicor Financial Corporation. (IMC1)