Sagicor profit slides 18%
Insurance giant Sagicor Group Jamaica Limited thinks that business conditions have improved somewhat, compared to a year ago, but profit still dipped 18 per cent for its June second quarter to $3.4 billion.
“Unstable market conditions experienced throughout 2022 have ameliorated somewhat in the current period but continue to provide challenges, particularly to our investment banking businesses, as our net interest margin continues to be challenged by higher interest rates on customer funds,” said Jamaica’s largest insurance group.
Despite the fall in quarterly profit, group revenue grew to $11.1 billion, compared to $9.6 billion a year earlier. This reflected increased insurance sales across most of its product range, and also bank loans.
“The group’s insurance sales continue to show growth along the majority of its product offerings, and the group has continued to experience growth in its banking loan portfolios,” said Sagicor.
Despite the uncertain market conditions, the group led by President & CEO Christopher Zacca demonstrated increased profit over its half-year at $5.6 billion, or 65 per cent higher than the $3.39 billion a year earlier. This uptick was largely driven by short-term insurance, which are contracts lasting less than a year, earnings profit of $45 million, while avoiding losses of $290 million, as was the case a year earlier. Its long-term insurance generated profit of $3.7 billion, down from $4.39 billion a year earlier. Currency fluctuations negatively affected the segment, the company said.
The commercial banking segment produced flat profit of $1.2 billion as it somewhat benefited from heightened activity on card payments portfolios and an increase in net interest margins.
The investment banking segment made profit of $337 million, down from $828.8 million a year earlier. It faced challenges related to rising interest rates, but the Cayman arm showed promise with increased revenue and profit, management stated.
Group equity dipped to $89.5 billion in June from $92.1 billion a year earlier, as liabilities grew slightly faster than assets. That said, the company’s cash pile, a liquid asset, grew to $47.12 billion from $32.3 billion a year earlier. Additionally, all the group’s subsidiaries increased their capital ratios year-on-year while also exceeding regulatory capital requirements, Sagicor oulined in its earnings report.
Sagicor Group expects the challenges posed by inflation and interest rates to persist, pointing to the International Monetary Fund’s projection of a slowdown in the global economy, due in part to central banks’ high interest rate policies. It added that inflation also remains a concern despite some easing in the United States and Jamaica.
“Sagicor Group recognises the Government’s constraints with regard to the threat of inflation and as such, continues to maintain a prudent approach to capital management and liquidity to ensure the company’s financial resilience in these uncertain times,” the company said.