Despite the strong group performance of Sagicor Financial Company (SFC), the group’s top management is still cautious about offering investors earnings targets until it has more certainty about how the COVID-19 pandemic is likely to unfold, and the illness’ impact on economies.
Offering its Management Discussion and Analysis following the release of its six-month financial results for the period ending June 30, Sagicor hinted that its improving results could have been much better being it not for the pandemic.
“As a response to this public health emergency, governments around the world have made significant interventions in responding to this threat.
Most Caribbean countries have experienced periods of shut down and periods of significantly reduced air and sea traffic. Similar procedures have also been implemented in the United States, Canada, and elsewhere.
“In addition, Governments have implemented various forms of public lockdowns which have largely curtailed economic and social activity. Companies have therefore implemented work from home policies in response to these restrictions. Sagicor, like other companies, has had to focus on supporting our staff, customers, and suppliers, while developing responses to the business disruption.
The Group has made significant efforts to stabilise revenues while maintaining customer service levels,” the company explained.
It noted that during the six-month review period, there were attempts to modify and relax some of the COVID-19 restrictions implemented earlier in the pandemic. Some countries, Sagicor noted, still continue to experience high rates of infections and low vaccination rates.
“As a consequence, many of the restrictions have continued with a dampening impact on economic activity.
The overall impact of COVID-19 is still evolving, with new variants of the virus continuing to emerge.
Countries are focused on the vaccination of their populations. The ultimate success of the actions taken by Governments, businesses, and communities and the ultimate outcomes may vary by country,” added.
The insurance company, which was established in Barbados in 1840 as The Barbados Mutual Life Assurance Society, is one of the oldest insurance providers in the Americas, with principal markets in Barbados, Jamaica, Trinidad, and Tobago, and the United States. According to the management discussion, the Sagicor group is expecting to be affected by the “uncertain resolution to the pandemic” but its financial results for the second quarter “reflected continued normalization of operations in our markets”.
At the same time, the management team lamented the direct impact of lockdowns and the resulting reduction in global economic activity, “including tourism, which affects our Caribbean economies significantly”.
Sagicor’s management added: “It is unclear when the pandemic will recede enough to fully open the economies in which we operate. As such, we will continue to monitor the situation and will resume providing specific guidance with respect to earnings targets when the timing of economic recovery becomes more certain.
“The global economy is poised to experience its strongest post-recession recovery in 80 years. This strong recovery is expected to be supported by major economies including the United States.
However, the pace of recovery is expected to be uneven as low-income nations struggle with the effects of inequitable vaccine distribution.”