ANNUAL
REPORT
—
2016
The curious thing about potential, is that talking about it
isn’t enough. The power lies in action.
That’s why at Sagicor, we make sure people achieve their full
financial potential. We work with them to ensure they make
prudent and informed financial decisions today, that will lead
to a brighter, more prosperous tomorrow.
OUR VISION
To be a great company,
committed to improving
the lives of people in the
communities in which
we operate.
102
INDEX TO THE FINANCIAL
STATEMENTS
• Financial Statements & Notes
228
SHAREHOLDER INFORMATION
• Advisors & Bankers
• Offices
CONTENTS
6
ABOUT SAGICOR
60
OPERATING AND FINANCIAL
REVIEW
10
76
CHAIRMAN’S STATEMENT
Financial Highlights
BOARD OF DIRECTORS
16
CORPORATE SOCIAL
RESPONSIBILITY
50
82
CORPORATE GOVERNANCE
96
HUMAN CAPITAL REPORT
EXECUTIVE MANAGEMENT
2016 ANNUAL REPORT
2016 ANNUAL REPORT
3
3
ABOUT SAGICOR
There’s no telling which direction your life will take, but by being
thoughtful and rigorous now, you can ensure that your future
will always be bright. When you place your trust in Sagicor,
rest assured that we will be there for you every step of the way
to help you reach your full potential.
Sagicor supports education at the primary, secondary and tertiary level,
and sponsors a number of adult education and development activities.
As we move forward through these challenging times in the economic
life of our region and the rest of the world, Sagicor’s core business
strategies will continue to provide a wide range of financial products
and services, while focused on our vision, “To be a great company,
committed to improving the lives of people in the communities in
which we operate.”
AB OUT SAGICOR
Sagicor is a dynamic, indigenous Group which has been redefining
financial services in the Caribbean. Following a carefully crafted
business strategy, the company transformed from a local single-line life
insurance company to a financial services group with a solid regional
base, before expanding into the international financial services market.
After the company demutualised in 2002, Sagicor Financial
Corporation was formed as a publicly listed holding company. The word
Sagicor means “wise judgment”, and reflects the quality of the financial
advice and services we offer. Sagicor now operates in 22 countries in the
Caribbean, the USA and Latin America.
For 176 years, Sagicor’s business has been based on long-term
relationships with its customers, employees, and communities who
entrust us with their financial well-being. Our name and reputation
draw on the strength, stability and financial prudence that are our
heritage, and this identity defines the flexibility that wise financial
thinking can bring to our customers throughout their lives. Through
local expertise and in partnership with world-class asset managers,
reinsurers, together with sound risk management practices, Sagicor
is able to provide wise financial advice, that meets the needs of its
customers.
For many decades, Sagicor provided financial support and voluntary
assistance, primarily in the areas of health, education, youth
development and sports, to a number of organisations and institutions.
Sagicor continues to provide significant support for the prevention
of non-communicable diseases by promoting healthy living, and
improving access to and facilities for health-care in the region.
6
6
SAGICOR
SAGICOR FINANCIAL CORPORATION LIMITED
2016 ANNUAL REPORT
2016 ANNUAL REPORT
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7
CHAI RMAN’S STATEMENT
Our guiding principle has always been to act wisely.
By using the knowledge we have acquired over the years,
we can do what is best to lead the way, and make
everyone’s future as bright as possible.
CHAIRMAN’S STATEMENT
The economic circumstances of the markets
in which the Sagicor Group operated during
2016, showed little improvement over that of
2015. The US economy grew at a pace much
lower than expected, while the situation in the
Caribbean was very mixed. The performance
of the Jamaican economy continued to show
signs of improvement, while the economy
of Trinidad & Tobago slipped deeper into
recession. The economies of Barbados, and
those of the Eastern Caribbean, enjoyed the
early signs of a return to growth. However, the
high debt to GDP ratios continue to constrain
the growth, and expose these economies to the
negative impact of external shocks. As a result,
the environment, for the most part, reflected
these economic realities, with businesses
experiencing slow revenue growth, and having
to rely heavily on strategies which emphasised
conservation and operating efficiencies.
Within this context, it is my pleasure to report
to you on the 2016 financial performance of
the Sagicor Group, which experienced a solid
performance, with net income for the year
closing at US $109.3 million, compared to
US $76.8 million in the prior year.
Net income attributable to shareholders
was US $61.7 million, compared to
US $34.7 million in the prior year, an increase
of US $27.0 million. Earnings per common
share was US 20.0¢, and represented an
annualised return on common shareholders’
equity of 12.6%, compared to 7.0% for the
prior year.
Total revenue increased by 2.7% to US
$1,134.1 million, compared to the prior year
amount of US $1,104.2 million, an increase
of US $29.9 million. Net premium revenue
closed at US $664.0 million, marginally
under 2015’s net premium revenue of
US $673.9 million, and was impacted by
lower annuity business written in our USA
segment, together with the impact of the
depreciation of the Jamaica Dollar to the US
dollar on translated premiums. Net investment
income closed the period at US $353.4 million,
up from US $322.2 million in the prior year,
driven mainly by increased realised gains
on our international investment portfolios,
and exceeded the prior year amount by
US $31.2 million, or 9.7%. Fees and other
revenue amounted to US $116.8 million,
compared to US $109.1 million in 2015, an
improvement of US $7.7 million, or 7.1%.
Total benefits closed at US $560.4 million, and
marginally exceeded the prior year amount of
US $552.9 million.
Expenses (including agents’ and
brokers’ commissions) closed the year at
US $424.2 million, and were below the prior
year amount of US $427.7 million. Expenses
reflected the lower commissions and related
expenses, consistent with the lower premium
revenue. Premium and asset taxes were also
lower when compared to the prior year, and
resulted from a reduction in premium and
asset taxes in the Jamaica segment.
Stephen McNamara, CBE
Chairman
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10
SAGICOR
SAGICOR FINANCIAL CORPORATION LIMITED
business conservation, and process
improvement to positively impact our financial
performance and overall financial condition.
We recognise the challenges still facing our
Caribbean Region, and we will continue to
work with other private sector institutions
and governments to play our part in the
revitalisation of the economies, for the long-
term benefit of our customers, shareholders
and the communities in which we operate.
On behalf of the Board of Sagicor, I wish to
thank our Shareholders and Customers for
their continued support.
Stephen McNamara
Chairman
March 31, 2017
Total comprehensive income closed the year
at US $96.7 million, compared to a loss
of US $0.6 million for the prior year. The
main contributor to the improvement in
comprehensive income was an underlying
improvement in net gains on financial
assets of US $142.3 million. Included
in comprehensive income were net
gains for the year on financial assets of
US $39.2 million, resulting from mark-to-
market gains on financial assets associated
with our international portfolios. The Group
experienced net declines of US $103.2 million
for the 2015 financial year. Retranslation losses
amounted to US $28.5 million, compared
to US $15.7 million reported in 2015, and
resulted from declines in the Jamaica dollar
of US $21.0 million and the Trinidad dollar,
US $7.5 million, when compared to the United
States dollar.
In the statement of financial position as
at December 31, 2016, assets amounted
to US $6.5 billion, compared to
US $6.4 billion in the prior year. Liabilities
closed at US $5.7 billion, the same
level as in 2015. Sagicor’s Group equity
totalled US $795.4 million, an increase of
US $56.2 million, or 7.6% over the 2015
financial year.
The Group’s debt was US $395.2 million. The
debt to capital ratio was 33.2%, down from
39.2% for the prior year, and was impacted
by the fact that the Company redeemed all its
outstanding convertible redeemable preference
shares amounting to US $120.0 million
during the year.
The Board declared dividends of US 2.5
cents per common share, payable on May 15,
2017, which is consistent with the dividends
paid on November 15, 2016, and represents
a 25% improvement on the dividend paid on
May 17, 2016.
On June 8, 2016, Shareholders approved
the redomiciliation of Sagicor Financial
Corporation to Bermuda. This was achieved
on July 20, 2016, when the Company was
continued under Bermuda Law as Sagicor
Financial Corporation Limited. This is
the first phase of a three-part process to
immunise the Sagicor Group from non-
investment grade domiciles, and to protect
the credit rating of the Group. The second
phase is the incorporation of a reinsurance
company in Bermuda, while the third is the
re-organisation of the corporate structure
to re-organise the main operating entities
as direct subsidiaries of Sagicor Financial
Corporation Limited.
On December 23, 2016, S&P Global Ratings
re-affirmed the credit rating of Sagicor
Finance (2015) Limited at “BB-“ with stable
outlook. Sagicor Finance (2015) Limited is the
Sagicor subsidiary through which the Sagicor
international corporate bond was issued.
During 2017, the company will continue
its focus on its corporate re-organisation,
2016 ANNUAL REPORT
2016 ANNUAL REPORT
11
11
F INANCIAL HIGHLIGHTS
Amounts in US$ millions unless otherwise stated
NET INCOME 1
COMMON DIVIDENDS
SHAREHOLDER RETURNS
60
56
75
60
45
30
15
0
14
12
15
10
5
0
BOOK VALUE PER SHARE
Amounts in US cents
177
166
300
200
100
0
2016
2015
2016
2015
2016
2015
1 from continuing operations
Basic earnings per share 1
19.5¢
18.2¢
Return on shareholder’s equity 1
12.3%
11.7%
2016
2015
NET INCOME1
REVENUE
BENEFITS
GROUP RESULTS
108
98
125
100
75
50
25
0
1500
1000
500
0
1,134
1,104
560
553
1000
500
0
2016
2015
2016
2015
2016
2015
1 from continuing operations
12
SAGICOR FINANCIAL CORPORATION LIMITED
Amounts in US$ millions unless otherwise stated
GROUP FINANCIAL POSITION
ASSETS
OPERATING LIABILITIES
EQUITY & DEBT CAPITAL (TOTAL CAPITAL)
7000
6,532
6,400
6000
5,341
5,139
3000
0
1,191
1,215
1500
1000
500
0
2016
2015
2016
2015
2016
2015
2016
2015
Debt to Capital 33.2% 39.2%
MCCSR 291% 301%
SAGICOR LIFE INC - NET INCOME
SAGICOR GROUP JAMAICA- NET INCOME
SAGICOR USA - NET INCOME
SEGMENT RESULTS
65
71
100
90
80
50
0
20
10
0
10
7
2016
2015
2016
2015
2016
2015
2016
2015
Revenue
411
471
Assets
1,928
1,904
2016
2015
Revenue
524
511
Assets
2,674 2,513
2016
2015
Revenue
149
78
Assets
1,901
1,783
2016 ANNUAL REPORT
13
3500
0
80
60
40
20
0
CORPORATE & SOCIAL
RESP ONSI BILITY
Our pride lies in our community. We support the people and places
around us, because when they become better, we do too.
At Sagicor, we are honoured to give back to our community, because
we know that together, we have the power to transform it.
I NT RODUCTION
The foundation of Sagicor’s business has been built on long-term and
meaningful relationships with its customers, communities and employees.
As a company whose vision is “committed to improving the lives of people
in the communities in which we operate”, our name and reputation draw on
the strength, stability and financial prudence that are intrinsically linked to
our heritage. For many decades, Sagicor has provided financial support and
voluntary assistance in the areas of health, education, youth development
and sports to a number of organisations and institutions - with the hope that
our investment in the community contributes to its social and economic
advancement.
Sagicor’s Corporate Social Responsibility (CSR) policies are considered
a core and inseparable element of the overall service and products we
offer. This approach ensures that our strategic goals offer a sustainable
future for both the company and the communities in which we operate.
Our values are demonstrated through our CSR policies, which helps
pave the way for Sagicor to continue to strengthen the partnerships and
relationships it has with its customers, communities and employees.
These relationships are further strengthened by our activities and our
interactions with the organisations with which we partner and support.
16
SAGICOR FINANCIAL CORPORATION LIMITED
HEALTH
THE BARBADOS DIABETES FOUNDATION - SAGICOR GROUP
OF COMPANIES
Sagicor presented a donation of BBD $50,000 to the Barbados Diabetes
Foundation in memory of Dr Oscar Jordan, a former board member and
Chairman of the Barbados Diabetes Foundation. Dr Jordan dedicated
his life to medicine and creating national awareness about diabetes and
hypertension in Barbados. Sagicor’s gift was a tribute to his name and to a
cause to which he was most passionate. The presentation was made to his
widow, Mrs Marsha Jordan, who was accompanied by two of their children,
Julian Jordan and Claire Jordan.
SAGICOR GLOBEATHON 5K WALK & RUN TO END
GYNAECOLOGICAL CANCERS - SAGICOR LIFE INC - BARBADOS
As champions of wellness and initiatives that raise awareness about the
prevention and control of chronic non-communicable diseases, Sagicor Life
Inc (SLI) and Sagicor General Insurance Inc (SGI) in Barbados proudly
returned as title-sponsors of the 4th Annual Sagicor Globeathon event.
In September, approximately 2500 people participated in the 5K Walk &
Run, the only international movement focused on the prevention and early
detection of all gynaecological cancers including uterine (endometrial),
cervical, ovarian, vaginal and vulvar. The movement to end women’s
cancers was also supported by international gynaecologists, gynaecological
oncologists and doctors, as well as gynaecological cancer survivors. All
proceeds from the event were donated to the Gynaecological Cancer and
Diagnostic Unit at the Queen Elizabeth Hospital.
1
2
The mission of the Globeathon is to increase awareness of women’s
cancers, address disparities, and transcend the barriers of ethnicity,
race, politics, geography, financial position, culture and religion through
educational outreach and global community engagement.
1.
(l to r) Sagicor Group Chairman, Stephen McNamara; Sagicor Group Director,
Dr Jeannine Comma; Marsha Jordan; Claire Jordan; Julian Jordan; Barbados Diabetes
Foundation CEO, Callie Boyea, and Sagicor Group President and CEO, Dodridge
Miler, at the presentation to the Barbados Diabetes Foundation in honour of the late
As a result of his first place finish in the 2015 event, runner Oein Josiah
travelled to Jamaica to participate in the Sagicor Sigma Corporate Run
2016. Sagicor Life Inc Barbados and Sagicor Group Jamaica coordinated
his travel to Jamaica to join over 24,000 participants running and
walking to support various charities. Josiah placed 7th overall in the
event.
Dr Oscar Jordan.
2. Runners at the start line of the 2016 Globeathon to End Gynaecological Cancers.
2016 ANNUAL REPORT
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ROTARY CLUB’S 3RD ANNUAL AUTISM WALK - SAGICOR
LIFE (EASTERN CARIBBEAN) INC - ANTIGUA
In April, staff of SLI walked to raise funds for persons affected by autism. An
enthusiastic and uniformed team, bedecked in Sagicor shirts, joined other
participants of the Rotary Club in Antigua’s 3rd Annual Autism Walk. The
proceeds were donated towards the purchase of educational materials and
seminars for children, as well as for parents of children with autism and
other learning disabilities. Team Sagicor received an award for Best Dressed
Team in their Sagicor 175 Endowment Plan polo shirts.
QUEEN ELIZABETH HOSPITAL CHRISTMAS DONATION -
SAGICOR GENERAL INSURANCE INC - BARBADOS
Knowing that the holiday season can be a challenging time for children in
hospital, the staff of SGI felt the need to spread some holiday cheer, and
ensured that the children in the Paediatric Unit of the Queen Elizabeth
Hospital were not forgotten during the Christmas season. Members of the
Social Club of Sagicor General rallied to donate a television with DVD player
and an electrical fan for the children hospitalised in two wards.
3
SAGICOR PHOENIX WALK/RUN - SAGICOR LIFE INC –
TRINIDAD AND TOBAGO
Sagicor Life Inc continued its 175th celebrations in Trinidad and Tobago with
the Sagicor Phoenix Walk/Run, one lap around the Queen’s Park Savannah.
More than 2,500 participants, including Sagicor staff, family members,
clients and suppliers, and members of the public ran or walked for
charity, while being entertained by three light shows along the way, the
rhythmic sounds of Hands of Rhythm and the high energy of Outlaws
International Tassa Drummers. The event raised TT $100,000, of which
donations were presented to the LIFE Centre for Autism in Petit Valley,
and the Friends of the Blood Bank Association.
3. Participants warming up at the beginning of the Phoenix Walk and Run in Belize.
4. Runners and walkers after the 2016 Sagicor Phoenix Run in Port of Spain, Trinidad and
4
Tobago.
18
SAGICOR FINANCIAL CORPORATION LIMITED
SAGICOR PHOENIX WALK/RUN - SAGICOR LIFE INC –
BELIZE
Sagicor Life Inc partnered with the Kidney Association of Belize to advocate,
“Prevention is better than treatment”, and hosted the inaugural Sagicor
Phoenix Walk/Run in Belize. With a view to making a positive impact in its
community, Sagicor Life supported the Association’s objective of educating
Belizeans on the prevention of kidney disease. The event raised BD $13,475
towards the Kidney Associations efforts.
SIGMA RUN 2016 - SAGICOR GROUP JAMAICA LIMITED -
JAMAICA
In February, the Sagicor Foundation hosted its 18th Annual Sigma Corporate
Run, with approximately 24,000 persons in attendance, raising a total of
JA $43 million in cash and kind for its beneficiaries: children with cancer
across Jamaica, the Black River Hospital Paediatric Unit and the Jamaica
Cancer Society. The Black River Hospital was presented with an arterial
blood gas analyser - a machine to test or measure the oxygen and carbon
dioxide levels in babies and children - to strengthen their paediatric unit,
while the other two beneficiaries took responsibility for sourcing the other
equipment to strengthen their respective units.
5
5. School children accompanied by Sagicor volunteers at an Adopt-a-School event.
CORNWALL REGIONAL HOSPITAL SIGMA RUN HAND OVER
- SAGICOR GROUP JAMAICA LIMITED - JAMAICA
Equipment and supplies valuing JA $16 million were handed over to the
special care nursery and paediatric units of the Cornwall Regional Hospital
from the proceeds of the 2015 Sagicor Sigma Corporate Run in the second
quarter. The money was used to purchase and retrofit the air conditioning
for the Special Care Unit, purchase ventilators, incubators, respirators,
humidifiers and accessories, suction machines and other much-needed
equipment for the Special Care Unit. Welcome and directional signage
with the Sagicor Foundation branding was also donated and unveiled in a
ceremony at the institution in June.
SAGICOR FOUNDATION ADOPT-A-SCHOOL WELLNESS
HEALTH TOUR - SAGICOR GROUP JAMAICA LIMITED -
JAMAICA
All the schools taking part in the Sagicor Foundation Adopt-a-School
programme in Jamaica were visited by the Mobile Wellness Unit, from
which wellness checks were conducted for each student. Dubbed as the
Sagicor Back-to-School Health Tour, staff from each branch attached to the
institutions visited the schools, where close to 500 children were also given
back-to-school supplies. Some of the tests offered were vision, height, weight
and hearing.
2016 ANNUAL REPORT
19
RELAY FOR LIFE – OCHO RIOS AND KINGSTON - SAGICOR
GROUP JAMAICA LIMITED - JAMAICA
The Sagicor Foundation partnered with the Jamaica Cancer Society for its
inaugural Relay for Life Cancer Walk. This was the second of two stagings
held at the Turtle River Park in Ocho Rios to foster awareness, and in
memory of those who have lost their battle to breast cancer. Sagicor staff
turned out in large numbers to support the cause, ensuring that Sagicor’s
support was the largest team of the night.
NIGHT OF HEROES - SAGICOR LIFE INSURANCE COMPANY -
USA
For the third year, members of SLIC were in attendance at the annual
“Night of Heroes”, an awards reception celebrating the success of the Tampa
Bay Chapter of the Arthritis Foundation’s two major annual fundraisers,
the Jingle Bell Run and the Walk to Cure Arthritis. In 2016, Sagicor was
recognised for its fundraising efforts as the 2nd place corporate team in the
2016 Walk to Cure Arthritis event.
2016 WALK TO CURE ARTHRITIS - SAGICOR LIFE
INSURANCE COMPANY - USA
In May, Sagicor Life Insurance Company’s (SLIC) Tampa staff participated
in the 2016 Walk to Cure Arthritis at Al Lopez Park in Tampa, Florida. Team
Sagicor not only participated in the Walk, which consisted of a 3-mile course
through the park, but also raised funds to help the one-day event raise a total
of USD $86,566. This was the 8th year of Sagicor’s participation, with all
proceeds going to the Arthritis Foundation. The Walk to Cure Arthritis takes
place in a number of cities throughout the United States annually, and the
funds raised go to research aimed at finding a cure for arthritis, America’s
leading cause of disability.
PHOENIX CHILDREN’S HOSPITAL RADIOTHON - SAGICOR
LIFE INSURANCE COMPANY - USA
SLIC is committed to supporting many worthy causes in its communities,
one of which is Phoenix Children’s Hospital (PCH) in Arizona. For several
years, SLIC has donated money and volunteer time to PCH, and has
partnered with a television station to host a telethon, and a radio station
to host a radiothon. As well as pledging and donating funds towards both
events, staff from the Scottsdale office volunteered to work as greeters who
signed in other volunteers, as well as answered calls and took donations
on the phone bank. Now in its 16th year, the annual Give-A-Thon for PCH,
themed “Champions of Hope”, became the top fundraiser of its kind in
the United States, raising USD $1.57 million in just 19 hours. Through the
support from corporate bodies and the general public, PCH has been able
to expand its facilities and extend its services into communities around the
state with specialty and urgent care centers, and is now one of the ten largest
children’s hospitals in the United States.
ANNUAL PHOENIX CHILDREN’S HOSPITAL GOLF
TOURNAMENT - SAGICOR LIFE INSURANCE COMPANY - USA
In December, representatives from SLIC participated in the 18th Annual
Phoenix Children’s Hospital Golf Tournament. The Sagicor team narrowly
missed the winning position, losing the tie-breaker for lowest score.
20
SAGICOR FINANCIAL CORPORATION LIMITED
6
6. Members of Team Sagicor at the 2016 Walk to Cure Arthritis.
JOHNS HOPKINS ALL CHILDREN’S HOSPITAL RADIOTHON
- SAGICOR LIFE INSURANCE COMPANY - USA
Staff from SLICS’s Tampa office volunteered to work the phone banks at
Johns Hopkins All Children’s Hospital’s for the 9th Annual US 103.5 FM
Cares for Kids Radiothon. The staff also presented a USD $10,000 donation,
on behalf of Sagicor, towards the hospital’s fundraising efforts. Patients and
families from the local area came to share powerful stories about the role
that All Children’s has played, and continues to play, in their lives. While
some members of the Sagicor management team spoke on air about Sagicor,
its mission and its commitment to its communities, others worked the
phones and processed donations.
8
9
7
7. SLIC staff volunteering at the Phoenix Children’s Hospital Telethon phone banks, (8)
the Radiothon, and (9) the annual Give-A-Thon for the John Hopkins All Children’s
Hospital.
2016 ANNUAL REPORT
21
EDUCATION
SAGICOR CAVE HILL SCHOOL OF BUSINESS AND
MANAGEMENT - SAGICOR FINANCIAL CORPORATION
LIMITED - BARBADOS
At the end of 2016, the Cave Hill School of Business Inc - The University of
the West Indies (CSHB) was renamed in honour of its major benefactor and
long-term strategic partner, Sagicor Financial Corporation Limited. During
a ceremony hosted at the CHSB Conference facility, the unveiling of Sagicor
Cave Hill School of Business and Management U.W.I. was conducted in the
presence of more than one hundred key stakeholders, as well as local and
regional media representatives.
Sagicor has been a strategic partner of CHSB-UWI for over ten years.
The renaming of the business school is a component of a mutually
beneficial collaborative agreement which was signed on July 18, 2014.
The significant value derived from the partnership between Sagicor and
CHSB will enhance the business school’s capacity for efficient delivery
and promotion of programmes which, through advanced technology
and a dedicated customer-centered methodology, will improve the CHSB
experience for companies and clients of the organisation.
2
SAGICOR VISIONARIES’ CHALLENGE – SAGICOR GROUP OF
COMPANIES
The Sagicor Group of Companies concluded the 2016 Sagicor Visionaries’
Challenge with the finalists participating at the STEM Ambassador
Programme in Tampa, Florida. The focus of the programme, hosted by
the museum of Science and Industry (MOSI) was on teaching participants
how design-thinking could be used to tackle real-world challenges, such as
transportation and climate change. Teams were challenged to design and
build a Hydrogen Fuel Cell Vehicle using rapid prototyping techniques, and
technologies such as 3d printing, as well as present out-of-the-box solutions.
The participants also designed, tested and launched high-flying chemical
rockets, and visited the Kennedy Space Centre. There was also a tour of
the College of Arts and Sciences and Engineering Departments at the
University of South Florida.
22
SAGICOR FINANCIAL CORPORATION LIMITED
Schools from Antigua & Barbuda, Barbados, Belize, Dominica, Guyana,
St Lucia, Tampa (Hillsborough County) and Trinidad & Tobago
were invited to work with a teacher at their institution to identify a
problem facing their school or community. Using science, technology,
engineering and mathematics (STEM), they had to develop effective,
1
innovative and sustainable solutions to the problem identified. The
competition was intended to:
• Ignite interest among youth in the Challenge Territories for
innovation in STEM to help build and integrate sustainable
communities throughout the Caribbean.
• Integrate knowledge gained from formal and informal education to
enable tomorrow’s leaders to build a more sustainable Caribbean.
• Boost institutional capacity in STEM in the secondary schools in
the Challenge territories.
STEM education is a vital part of Sagicor’s educational CSR programme.
Through the implementation of the Sagicor Visionaries Challenge, STEM
affects what is nearest and dearest to us - our children. STEM is essential
to their future in the technological age in which they live and will grow
up, offering their best career options, and their key to wise decisions.
By extension, STEM is vital to the future of the Caribbean region, as
it shapes our everyday experiences, and is at the core of our natural
world. It is for these reasons that the Sagicor Visionaries’ Challenge was
developed and launched.
1. The unveiling of the Sagicor Cave Hill School of Business and Management. (l to r)
The Honourable Donville Inniss, Minister of Minister of Industry, International Business,
Commerce & Small Business Development; Professor Sir Hilary Beckles, Vice-
Chancellor of The University of the West Indies, Dr Jeannine Comma, Chief Executive
Officer and Managing Director of The Sagicor Cave Hill School of Business; Stephen
McNamara, Sagicor Group Chairman; Dr Charmaine Gardner, Sagicor Cave Hill School
of Business Chairman, Professor V Eudine Barriteau, Pro Vice-Chancellor and Principal
of The University of the West Indies, Dodridge Miller, Sagicor Group President and
Chief Executive Officer.
2. Sagicor Visionaries’ Challenge winners in the zero gravity chamber at the Kennedy
Centre, Florida.
3. and 4. (above and below) Participants of the 2016 STEM Ambassador Programme in
Tampa.
3
4
2016 ANNUAL REPORT
23
SAGICOR VISIONARIES – SAGICOR LIFE INC, BARBADOS
The winning team from Barbados, Queen’s College, designed the Sweet
Coconut Grey Water Filtration System, aimed at recycling grey water from
domestic uses to flush the toilets in schools and homes.
of the Sagicor Visionaries’ Challenge with their Project Eco-Clean. The
Project also placed second in the Regional competition and received a special
prize for “Most Community Involvement”, and “Most Relevant to School or
Community”.
The Eco-Clean objective was to create environmentally-friendly
by-products from used cooking oil, and to encourage households, schools,
communities and fast food outlets to adopt this efficient method for the
disposal of used cooking oil.
Guyana: In Guyana, the Bygeval Secondary School placed first, with a
two-member team. With the recent uptake in mosquito-borne diseases,
such as Chikungunya and Zika, the winning project “The Eradicator”
aimed to address the problem with a new, environmentally-friendly and
health conscious mosquito repellent.
SAGICOR VISIONARIES - SAGICOR LIFE INC, BELIZE
During 2016, Sargassum seaweed plagued several Caribbean coastlines. This
natural occurrence provided the inspiration for the team from Belize High
School, to use the sargassum as a raw material to create saleable products,
such as a body scrub, and milkshake. The idea won the national title.
5. Trinidad and Tobago’s national winners from Five Rivers Secondary School with their
teacher, and members of the Sagicor’s management team.
The students opined that water scarcity is a problem which has been
plaguing the Barbadian community for years, to the point where
Barbados is now ranked on the global scale as one of the most water-
scarce countries. However, regardless of this crisis, water is still being
wasted via various domestic and recreational activities. With prolonged
water wastage, Barbados’ reservoirs may become depleted, leaving
the country to depend on expensive desalination processes and water
imports. This could result in implications for the environment, economy,
society and overall development. The solution to water scarcity presented
by Queen’s College, the Sweet Coconut Greywater filter, is constructed
almost entirely of recycled, natural and easily-sourced materials, and
does not require extreme skill to set up, nor does it occupy a large area.
The filter uses coconut shells and other materials to filter waste-water for
other uses. Overall, the created design is cost-effective and its complexity
reduced, so that the average person can utilise it. Queen’s College also
won a number of special awards, such as Most Community Involvement,
Most Creative and Innovative, Best Project Solution and Most Relevant to
School or Community.
SAGICOR VISIONARIES - SAGICOR LIFE (EASTERN
CARIBBEAN) INC, ANTIGUA
The St Anthony’s Secondary School was presented with the prizes won
during the regional round of the Sagicor Visionaries Challenge. SLI Antigua
representatives awarded Zion Michael 2nd runner-up with her project
“Organic Waste Reduction in Residential Areas”. The School also received a
special award for the Best Presentation, which factored in the display model
created, and the representative’s oral presentation. Along with a trophy, St
Anthony’s received USD $1,000.
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SAGICOR VISIONARIES - SAGICOR LIFE INC, TRINIDAD AND
TOBAGO
In Trinidad, Five Rivers Secondary School walked away as national winners
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SAGICOR FINANCIAL CORPORATION LIMITED
SAGICOR VISIONARIES - SAGICOR LIFE INSURANCE
COMPANY - USA
The U.S. finalists for the 2016 Sagicor Visionaries’ Challenge were
announced at a special meeting for participants. Mr. Jai Patel, from Walker
Middle School, for Generator Turbine Power; Ms. Hannah Anderson, from
Indian Rocks Christian School, for Height of a Bouncing Ball, and Mr.
Anish Amin, from Walker Middle School, for Sinkhole, competed against
each other to determine which project and student would represent the
U.S. against Visionaries’ winners from the other participating schools. Jai
Patel and his Generator Turbine Power project emerged as the winner. The
winner and runners-up each received a laptop and a trophy, while their
schools received a cash donation to further develop STEM programmes for
all students. Jai and his teacher, Nancy Robords, went on to attend the STEM
Ambassador Programme.
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SCHOOL GRANTS - SAGICOR LIFE (EASTERN CARIBBEAN)
INC - DOMINICA
Sagicor’s Dominica office embarked upon an awards programme whereby
children could benefit from financial grants based on their academic
performance. Each year, the Dominica office will award XCD $500 and
$1,000, to two students transitioning from primary to secondary school, and
two students transitioning from secondary school to college respectively. In
order to be considered for the grants, students are required to submit copies
of their common entrance grades or official CXC results, along with their
applications. Secondary school students are also required to submit an essay
of 500-750 words entitled “How will my chosen area of study contribute to
my career plans?” Guided by the belief that the Company has a fundamental
responsibility to contribute to enhancing and sustaining the lives of people
within the communities we serve, this initiative is in alignment with
Sagicor’s vision and its dedication to support the areas of education and
youth development. Sagicor recognises the significance of the transitioning
phases from the primary to secondary to tertiary institutions, and sees
this programme as a most important investment in education. The grants
will serve as rewards for good academic performance and encouragement
for continued excellence in students’ academic endeavours. The awards
programme will run for three years.
6. Recipients of the School Grants with members of the management team at the
Dominica office.
DOMINICAN CUB SCOUTS - SAGICOR LIFE (EASTERN
CARIBBEAN) INC - DOMINICA
In the summer of 2016, SLI made a donation to the Dominican Cub Scouts
to assist with their travel to the 14th Annual Caribbean Cuboree. The event,
hosted in Guyana, brought together more than 800 cubs between the ages
of 7 and 11, from fourteen Caribbean countries. The aim of the Cuboree was
to provide a forum for cubs to interact with each other and to foster lasting
friendships. Scouts believe that this is fundamental in creating a better
world, where people learn from, and support each other, and treat each other
equally. Sagicor’s contribution assisted in providing a productive outlet with
positive exposure to different cultures and experiences, which all go a long
way in helping to mold and prepare the youth for the future.
ROTARACT CLUB OF GRENADA - SAGICOR LIFE (EASTERN
CARIBBEAN) INC - GRENADA
Sagicor’s Grenada office sponsored the Rotaract Club of Grenada’s 29th
Annual National Spelling ‘Bee’ Competition, by providing prizes to winning
students. Eleven primary schools from Grenada, Carriacou and Petite
Martinique were represented in the finals of the Competition.
2016 ANNUAL REPORT
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SAGICOR INSPIRE PROJECT - SAGICOR GROUP JAMAICA
LIMITED - JAMAICA
Approximately 130 selected young leaders and high achievers from tertiary
institutions across Jamaica were treated to a highly motivational and
impactful weekend at the Hilton Rose Hall Resort and Spa in Montego Bay.
Known as the “Inspire Project”, this event was conceptualised with the
intent of empowering, inspiring and motivating future leaders who have
demonstrated remarkable academic accomplishments and/or leadership
at their respective institutions. The inaugural Sagicor Inspire Project
accomplished just that and more, as these young leaders experienced an
unforgettable weekend. After the arrival fanfare and a smooth check-in
process, the students were immediately ushered to the first series of
activities, the Power Hour Sessions with the Sagicor Executive team,
who shared their business and personal success stories to help boost
the minds of the future leaders, in preparation for their venture into
the workplace. On the second day, the young leaders were treated to a
number of inspirational speakers on the main stage before heading off to
one of three breakout sessions entitled, “Brand Me”, “Smart Financing”,
and “Preparing for Work”. During the main session, participants were
‘inspired’ by motivational speaker, Michael Maragh; Lifestyle doyenne,
Novia McDonald Whyte; Sagicor Top Financial Advisor, Loeri Robinson,
and The Apprentice’s first black winner, motivational speaker and
businessman Dr. Randal Pinkett. The weekend culminated with an
informative breakfast session where Group President and CEO, Richard
Byles, imparted life lessons which he has garnered over an illustrious
business career. Students were invited to put questions to the executives
before leaving the ballroom, being inspired in order to inspire.
7. A group photo of Sagicor Inspire Project’s high achievers
8 Assistant Team Captains of the Adopt-a-school programme with students from their
Adopted Schools after the launch of the 2016 Adopt-a-School programme..
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ADOPT-A-SCHOOL PROGRAMME - SAGICOR GROUP
JAMAICA LIMITED - JAMAICA
In May, the Sagicor Foundation Adopt-A-School 2016 programme was
launched with Sagicor’s Bank, Life, and Investments branches coming
together to offer support to ten early childhood Iinstitutions. The first set
of activities in the schools began on Labour Day, May 23, as Sagicor Branch
Managers and team members across the island refurbished their assigned
school by repainting the edifice, fixing and improving the play areas, and
renovating the kitchens and bathrooms. The programme was expected to
impact over 1000 students across the island.
During May, Child’s Month, Sagicor Foundation and Lasco iCool
partnered to provide over 300 students to a day of fun, frolic and
edutainment at the Hope Zoo, dubbed “Reading is cool.” The event was
held in honour of the nation’s children, which was a part of the thrust by
both companies to culminate May’s Child Month activities. The students
were chosen from Sagicor’s existing list of Adopt-a-school locations
across the island, as well as schools that have a close relationship with the
Lasco Group.
In December, the volunteer captains from the tag team branches across
the island organised a children’s treat for students from the respective
adopted schools in Jamaica. All students from the nine early childhood
adopted schools ended the school year enjoying a Christmas treat
with Sagicor staff. Each child received a toy courtesy of the Sagicor
Foundation.
SCHOLARSHIP AWARDS - SAGICOR GROUP JAMAICA
LIMITED - JAMAICA
The Sagicor Foundation awarded and recognised outstanding GSAT and
tertiary scholarship awardees at its Scholarship Awards Ceremony at the
Jamaica Pegasus Hotel. Twenty-seven tertiary students were selected to
receive a total of JA $6,750,000 towards their tuition fees. Successful
recipients were selected on the basis of academic merit, leadership,
community involvement and financial need. Fifteen students, who excelled
in the Grade Six Achievement Test (GSAT), were awarded academic
scholarships to secondary institutions valued at JAD $750,000. In addition,
the Champion girl and boy from the JTA/Sagicor Athletics Championship
were awarded academic scholarships to the secondary school of their choice.
The scholarship programme started in 2009, and there are currently 53
students benefiting from the initiative. A total of JAD $15.5 million was
invested in the programme for 2016 for new and returning scholars.
SCHOOL SUPPLIES DRIVE - SAGICOR LIFE INSURANCE
COMPANY - USA
SLIC Staff from the Scottsdale and Mesa offices started the year with a
Potluck Fundraiser, with all funds going to the Company’s school charities.
The Client Services and Records Management Departments provided a
fabulous array of food and treats for employees to purchase.
The Tampa office raised money for the school supply drive with an
“Italian Themed Lunch and Raffle”. In April, the team hosted a lunch,
and tickets for the meal were purchased in advance. As an added touch,
a surprise bonus raffle for movie tickets and Butterball Grocery Gift
Cheques was also offered.
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2016 ANNUAL REPORT
27
In May, the Scottsdale office held another fundraiser for the School
Supplies Drive. Each executive was given a designated donation jug, in
which staff placed their nominations for the executive they wanted to see
dressed in a costume. The three executives with the most nominations
received the honour of wearing a costume for a day. The winning
costumes included a Black and Blue Power Ranger, an Elvis look-alike,
and an old-time Mariachi singer.
HILLSBOROUGH EDUCATION FOUNDATION VOLUNTEERS -
SAGICOR LIFE INSURANCE COMPANY - USA
In June, volunteers from the Tampa office offered their assistance to the
Teaching Tools Store, sorting and packing donated school supplies. The
Teaching Tools Store is part of the Hillsborough Education Foundation, and
provides free school supplies to economically disadvantaged students who
attend schools designated as “Title 1”. Of the 266 schools in Hillsborough
County, 164 qualify for the Title 1 designation. The Teaching Tools Store
relies on donations from the community and dedicated volunteers who sort
donations, stock shelves and assist teachers in procuring supplies to take
back to their classrooms. Sagicor has been involved with the Hillsborough
Education Foundation for a number of years, and is proud to support the
Foundation.
ANNUAL BACK-TO-SCHOOL CLOTHING DRIVE - SAGICOR
LIFE INSURANCE COMPANY - USA
Staff from the Scottsdale and Mesa Riverview offices volunteered at Grand
Canyon University Arena to assist children from Kindergarten to 6th Grade
with much needed supplies. Volunteers helped with registering students and
distributing badges; stuffing and distributing backpacks; escorting students
through each department as a ‘personal shopper’; measuring and making
sure the clothes and shoes fit each student; scanning clothing items into
computer inventory and placing backorders. The Back-to-School Clothing
Drive’s mission is to provide school supplies and essentials to children in
need, with a goal of supplying more than 25,000 children who attend Title
1 public elementary schools in Maricopa County with new uniforms and
outfits, backpacks and school supplies. Thirty-nine volunteers from Sagicor
donated over 234 hours in a variety of capacities.
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9. SLIC volunteers at the School Supplies Drive.
10. Staff from SLIC sorting and packaging donated school supplies for the Hillsborough
Education Foundation.
11. Sagicor Foundation Board of directors, R. Danny Williams, Richard Byles, Stephen
Facey and Chantal Hylton-Tonnes, with the 2016 scholars at the Awards Ceremony at
the Jamaica Pegasus Hotel.
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SAGICOR FINANCIAL CORPORATION LIMITED
whole. PCA Tampa Bay will soon name 25 scholarship finalists who will be
interviewed by members of a selection committee, an experience that in and
of itself, helps prepare the candidates for life beyond their sports endeavours.
SAGICOR SPONSORS 2017 PCA-TAMPA BAY SCHOLARSHIP
PROGRAMME - SAGICOR LIFE INSURANCE COMPANY - USA
In September 2016, SLIC increased its commitment to the Tampa Bay
Chapter of the Positive Coaching Alliance (PCA) by becoming the presenting
sponsor of the Class of 2017 Triple-Impact Competitor Scholarship Awards.
PCA Tampa Bay was originally launched in 2014 with financial support
from the Tampa Bay Rays, Tampa Bay Lightning, Triad Foundation, Sagicor
and other local Tampa Bay companies. PCA develops “better athletes,
better people” through resources for youth and high school sports, coaches,
parents, administrators and student-athletes. Nationally, PCA has reached
over 8.6 million with their programmes. The PCA Tampa Bay Scholarship
Programme honours area high school student-athletes who impact sport
on three levels: by improving themselves; teammates, and the game as a
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2016 ANNUAL REPORT
29
YOUTH & COMM UNITY DEVE LO P M E N T
HELPING HAITI - SAGICOR GROUP OF COMPANIES
In October, Hurricane Matthew struck Haiti, leaving more than 1,000
people dead and over 100,000 homeless. The United Nations estimated
that at least 1.4 million Haitians were in need of urgent assistance, as clean
water, food and medicine were in short supply. The cholera epidemic was
worsening, with the World Health Organisation reporting 800 new cases per
week after Matthew’s passing.
Knowing that Haiti was still recovering from the devastating 7.0
earthquake of 2010, the Sagicor family in the United States, Barbados,
Trinidad and Tobago, and the Eastern Caribbean raised a total of USD
$20,711 for Haiti. The Sagicor Group of Companies donated the money
to Shashamane Sunrise, a US-based non-profit organisation that is
assisting Haiti in its recovery. Shashamane Sunrise, in collaboration with
the Edeyo Foundation and the Children of the Caribbean Foundation,
is targeting relief efforts on rebuilding a school and delivering much-
needed food and medical supplies, as well as school supplies to the
community.
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BARBADOS 50TH INDEPENDENCE ANNIVERSARY
CELEBRATIONS - SAGICOR LIFE INC - BARBADOS
On November 30, Barbados marked its 50th Anniversary of Independence,
and Sagicor Life Inc celebrated the Golden Jubilee by sponsoring the
momentous occasion. For over 20 years, Sagicor Life Inc has sponsored the
annual Lighting Ceremony on November 1, which marks the beginning
of the official activities for the month, and signals the illumination of
landmarks and roundabouts across the island. Celebrations were also
extended to customers through a project, spearheaded by Sagicor’s Customer
Experience department, recognising “A Special Moment in the Life of Eight
Long-time Clients”. Those clients celebrated either their 50th birthday or
their 50th Anniversary as a Sagicor customer during the month of November
2016, and were treated to a special luncheon with senior executives as a show
of appreciation for their loyal patronage.
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(l to r) Anderson King Vice President, Corporate Communications and Marketing;
Wendy Fitzwilliam and Dr. Rene Williamson, Ambassador and Executive Chairman for
the Shashamane Sunrise Foundation; Robert Trestrail, Executive Vice President and
General Manager, Sagicor Life Inc Trinidad and Tobago, and Diane Loutan-Ali, Vice
President, Branch Operations, Sagicor General Insurance, Trinidad and Tobago, at the
presentation of Sagicor’s donation to rebuild the Marion School in Haiti.
HOSTING OF THE BROKEN TRIDENT - SAGICOR LIFE INC &
SAGICOR GENERAL INSURANCE INC - BARBADOS
In addition to having the honour of ushering in Barbados’ 50th Anniversary
Celebrations, Sagicor Life Inc also hosted the Commemorative Broken
Trident on November 1, at the Belleville Branch, Collymore Rock, and on
November 2, at the Wildey location, as one of the national activities of the
“Carrying Our Pride” programme. Staff and clients were invited to view the
Broken Trident and sign the Pledge Book. Sagicor Directors, in Barbados for
Board Meetings, were on hand for a commemorative photo with the Broken
Trident.
Sagicor General Insurance also hosted the Broken Trident at its Haggatt
Hall offices. To loud applause from staff members lining the stairways,
the Broken Trident was handed over to customer Kimberley Lavine,
who passed it on to SGI President and CEO, David Alleyne, who proudly
accepted it and briefly addressed staff on the significance of the occasion.
TED X - SAGICOR LIFE INC - BARBADOS
Sagicor Life Inc sponsored the Ted X Bridgetown Forum for the first
time. The event featured speakers discussing the various areas in which
they specialise, and sharing inspirational life experiences. The objective
of the event was to share ideas and encourage constructive action among
participants. Under the theme “Crafting Our Fate”, speakers included
calypsonian, The Mighty Gabby; Peter Wickham, researcher and political
analyst; a visually impaired young woman, Janeil Odle; Dr. Srinivasa
Popuri, an expert on sustainable technologies, and Gabriel Abed, CEO of the
Barbadian digital currency facilitation company, Bitt.
SAGICOR’S WATER RELIEF EFFORTS - SAGICOR LIFE INC -
BARBADOS
The Barbados Water Authority was faced with considerable challenges that
affected the supply of water to many areas of Barbados. As a result, some of
the rural communities were without water for extended periods. Realising
that they were in a position to provide some relief, staff rallied to assist in
mitigating the impact of the crisis. In October, Sagicor Life Inc and Sagicor
General Insurance collaborated for the first water relief distribution mission.
Under the guidance of the Barbados Water Authority, staff volunteered to go
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2016 ANNUAL REPORT
31
2. The Sagicor-sponsored Garfield Sobers Roundabout decorated and lit in Barbados
Independence colours.
3. Members of the Sagicor Group and Sagicor Life Inc Board with the commemorative
Broken Trident. (l to r) Andrew Aleong; Peter Clarke; Dodridge Miller; Richard
Kellman; Dr Jeannine Comma; Chairman, Stephen McNamara; Pat Downes-Grant; Ian
Carrington; Ravi Rambarran, and David Wright.
4. Sagicor General Insurance Inc President and Chief Executive Office, David Alleyne,
shares a pose with customer, Kimberley Lavine.
into the affected communities of Hillaby, Mount Hillaby and White Hill in St
Andrew, as well as Farm Park in St Thomas, and distributed over 100 cases
of bottled water, all of which were donated by Sagicor staff. After the initial
distribution, Sagicor liaised with the Barbados Water Authority to determine
which districts were in greater need. Every Sunday during November and
December, volunteers visited the communities of Rock Hall, St Andrew;
Four Hill, Gays, French Village and Mount Brevitor in St Peter, along with
Horse Hill, Suriname and Bowling Alley in St Joseph delivering water to
residents. Advisors and staff from multiple departments distributed over
1,000 gallons of bottled water.
FINANCIAL INFORMATION MONTH - SAGICOR LIFE
(EASTERN CARIBBEAN) INC – DOMINICA
During October, the Sagicor team in Dominica partnered with the Eastern
Caribbean Central Bank in its activities surrounding Financial Information
Month. One of the activities, “Visit a School”, welcomed the adoption of the
Kalleb Laurent Primary School by Sagicor. Sagicor representatives visited the
school as part of an outreach programme, and held sessions with grades 3
and 4 children to sensitise them to the different Eastern Caribbean currency
notes, and discussed ways in which they could save money.
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5. SLI staff member distributing water as part of the Sagicor Water Relief efforts.
6. Avril Elie from Sagicor Life (Eastern Caribbean) Inc’s Dominica office with children
form the Kalleb Laurent Primary School for a “Financial Information Month” activity.
7. Members of the Sagicor St Vincent team take some time out with the Coast Guard
Youth Development Summer Programme Participants.
8. Team members from Sagicor General Insurance Inc present a door prize to a BIBA
Networking Event participant.
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9. One of many vehicles on display at the Classic Cars Exhibition.
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SAGICOR FINANCIAL CORPORATION LIMITED
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ST VINCENT AND THE GRENADINES COASTGUARD YOUTH
DEVELOPMENT SUMMER PROGRAMME - SAGICOR LIFE
(EASTERN CARIBBEAN) INC - ST VINCENT AND THE
GRENADINES
The St Vincent and the Grenadines office renewed its annual sponsorship of
the St Vincent and the Grenadines Coastguard Youth Development Summer
Programme, which provides constructive activities for young people
between the ages of 14 and 18. The 2016 programme exposed participants
to new learning skills, enabling them to gain new perspectives in areas
such as social and professional etiquette, first aid, leadership development,
swimming and lifesaving, human sexuality and conflict resolution. Members
of the St Vincent office also conducted sessions on budgeting and saving
for the participants. Sagicor’s commitment to the programme supports the
Coastguard’s continued contribution to the development of the youth of St
Vincent and the Grenadines.
NINE MORNING FESTIVAL - SAGICOR LIFE (EASTERN
CARIBBEAN) INC – ST VINCENT AND THE GRENADINES
The St Vincent and the Grenadines office once again provided support for
the national Nine Morning Festival, with a donation towards the activities
in the southern village of Stubbs. The Nine Morning Festival is a unique
Vincentian festivity associated with the Christmas season, and is celebrated
on the mornings of the nine days leading up to Christmas with various
exhibitions and concerts.
BIBA NETWORKING EVENT - SAGICOR GENERAL
INSURANCE INC - BARBADOS
Close to two hundred professionals from various sectors came together for
the BIBA Networking Event at the Concorde Experience, Barbados. The event
was jointly sponsored by Sagicor General Insurance, Courtesy Garage and
Globe Finance. The session coincided with 50th Independence anniversary
celebrations across the country. Conversations ranged from the recall of jokes
among friends, to more serious issues like the continued challenging state of
the economy and the importance of the island’s 50th anniversary of political
independence from Britain. In between the chatter and mingling, several
lucky attendees also took away vouchers for products and services from the
sponsors following a business card draw.
CLASSIC CARS - SAGICOR GENERAL INSURANCE INC -
BARBADOS
Sagicor General Insurance Inc continued its support of the “Classic Cars”
Exhibition, where hundreds witnessed a live auction of an attractive 1937
Ford Coupe changing ownership at Content, St Thomas, Barbados. The
curvy and distinctive-looking vehicle fetched a price of BDS $50 000, and
was reportedly purchased by a Canadian-based buyer. The salmon and black
80-year-old car was among the star attractions at the show, where more
than 50 classic and retro vehicles were showcased. The event was jointly
sponsored by Courtesy Garage and Sagicor General Insurance, and brought
together members and cars from the Barbados Association of Classic Cars
and the Retro & Classic Car Association – the two leading clubs on the
2016 ANNUAL REPORT
33
island. Several prizes were presented on the day, including “Car of The
Show” (a 1967 Honda Mark 1 convertible) and “Most Original Car” (a 1983
Subaru GLF). Close to 600 automobile enthusiasts, motorsport fans and
visitors were among those taken back in time during the exhibition, which
also featured several vintage cars that were no longer in production. Sagicor
General used the occasion to promote its recently launched Key Protector
Classic & Retro Motor Policy.
PROFESSIONAL INDEMNITY (PI) AND DIRECTORS AND
OFFICERS (D&O) LIABILITY SEMINAR - SAGICOR GENERAL
INSURANCE INC - BARBADOS
Efforts to implement stricter corporate governance regulations in Barbados
and the wider Caribbean are also exposing Directors of companies and
professional service providers to higher risks in an increasingly litigious
environment. In such circumstances, with the growing need to provide cover
and security for these increasing exposures, Sagicor General Insurance
teamed with Empirical Insurance Brokers, Guardian General and global
reinsurer, Munich RE, to refocus and enhance their products which cover
Professional Indemnity (PI) and Directors and Officers (D&O) liability
insurance.
The companies hosted a seminar at Hilton Barbados, to update Directors
and Officers of companies and professional service providers on
liability insurance exposure and coverage. Representatives from Sagicor
General Insurance informed participants that individuals, partners
and firms were eligible to be insured under Professional Indemnity
Insurance. The audience also received valuable information on how
Professional Indemnity Insurance could be extended to cover such areas
as defamation, where unintentional libel or slander may arise by reason
of words written or spoken by the Insured in the performance of their
professional business activity.
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EDUCATIONAL SESSION WITH DOCTORS - SAGICOR
GENERAL INSURANCE INC - BARBADOS
Some of the challenges facing doctors and the insurance industry came
under the microscope during an interactive seminar hosted by Sagicor
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SAGICOR FINANCIAL CORPORATION LIMITED
10. Members of the panel from Sagicor General Insurance, Empirical Brokers, Guardian
General and Munich Re updating their audience on liability insurance exposure and
coverage.
11. Dr Michael Hoyos addressing doctors during an interactive seminar hosted by Sagicor
General Insurance Inc.
General Insurance. In a changing environment which has seen major global
growth in the specialty area of Insurance Medicine, several of the island’s
young doctors were recently provided with timely advice and had their
questions answered during the evening session.
Featured presenter for the event, Dr. Michael Hoyos, underscored the fact
that doctors had an important role to play in helping all parties to achieve
accurate and fair assessments of claims in events where patients suffered
injuries.
Dr Hoyos, a physician with over 40 years’ experience, cautioned his
younger colleagues that insurance reports had to be clinically accurate,
thorough and supported by scientific tests. He further stressed that any
opinions offered must be based on the whole picture, taking into account
the clinical status of the patient, as well as the impact of the injury on
the person. Dr Lana Husbands also presented on the not-so-obvious
infections which affected babies and children. She advised her audience
that, since babies and toddlers are unable to speak for themselves, it was
imperative that doctors are thorough in their assessments. Dr Husbands
offered tips on when parents and doctors should be concerned, and
cautioned that the presence of fever could be a sign of a simple illness or
something more severe. SGI is of the view that such educational sessions
should be staged specifically for health-care professionals, as liability
issues and the adjudication of claims were critical matters facing the
Insurance industry on a daily basis.
2016 ANNUAL REPORT
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HABITAT FOR HUMANITY - SAGICOR LIFE INC - TRINIDAD
AND TOBAGO
Sagicor staff, advisors, and management team, as part of the 175th
anniversary celebrations, joined forces with Habitat for Humanity Trinidad
and Tobago, to assist future homeowner, Sumintra, and her children, in
building and painting their home in Central Trinidad. This partnership
fulfilled a cherished dream of Sumintra’s - that all three of her children can
live together in a home of their own. Early in 2016, Sagicor staff contributed
175 man-hours to help Sumintra cast the apron surrounding the existing
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foundation. In November, they painted the two-bedroom house in Cashew
Gardens, and then, in conjunction with the Ministry of Housing and Urban
Development, presented the keys to Sumintra and her children. Working
with Habitat for Humanity was a natural fit for Sagicor, as it is committed to
improving the lives of the people in the communities in which the company
operates. The home has afforded Sumintra the opportunity to build a strong
foundation for her family.
ETIENNE CHARLES MUSICAL EDUCATIONAL OUTREACH -
SAGICOR LIFE INC – TRINIDAD AND TOBAGO
Sagicor’s Trinidad and Tobago office was pleased to support Trinidad-
born jazz maestro Etienne Charles and his group, Creole Soul, with the
Caribbean premiere and educational outreach residency of his latest album,
San Jose Suite. Mr Charles’ compositional work explores and highlights the
experiences of indigenous people and African immigrants, with respect to
three San Jose settlements established in Trinidad and Tobago, Costa Rica,
and California, USA.
Sagicor Life Inc recognised the value of Etienne’s work and felt it
necessary to support the educational outreach performances at the
Princess Elizabeth Centre, St Dominic’s Children’s Home and St Mary’s
Children’s Home. Sagicor’s silver sponsorship provided the opportunity
to interact with the younger generation, and introduce them to live
music, while at the same time, sparking their interest in the creative arts.
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ADOPT-A-PROJECT - SAGICOR LIFE INC - TRINIDAD AND
TOBAGO
The staff engaged in their second annual Adopt-A-Project campaign,
completing ten projects, as they partnered with local communities to address
specific needs in the areas of youth development through sport, education
and health. Sagicor staff partnered with various organisations throughout
Trinidad and Tobago, namely, the Cerebral Palsy Society of Trinidad and
Tobago; the St Dominic’s Children’s Home; the Tacarigua Anglican Primary
School; the Credo Sophia House for Girls; the Bon Accord Government
Primary School; the San Fernando Methodist School; the Animals Alive
Sanctuary; St Ursula’s Girls’ Anglican School; the Servol Life Centre in
Diego Martin; the St James Police Youth Centre; and the St Andrew’s Home
for Elderly Women.
13. SLI TT staff members busy at work on a housing project for Habitat For Humanity.
14. Etienne Charles and his band, Creole Soul, at the Musical Educational Outreach
project.
15. SLI TT staff members hard at work at the St Ursula’s Girls’ Anglican School,
refurbishing the library as part of Sagicor’s Adopt-A-Project campaign.
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2016 ANNUAL REPORT
37
RJR SPORTSMAN & SPORTSWOMAN AWARDS - SAGICOR
GROUP JAMAICA LIMITED - JAMAICA
Olympian Shelly-Ann Fraser-Pryce received the Iconic award at the RJR
Sportsman & Sportswoman Awards in 2016. Ms Fraser Price was also
presented with a JAD $200,000 cheque, which she will donate to a charity of
her choice, to be used for that organisation’s continued philanthropic efforts.
SAGICOR EMPLOYEE VOLUNTEER PROGRAMME - SAGICOR
GROUP JAMAICA LIMITED - JAMAICA
The Sagicor Employee Volunteer Programme in Jamaica was officially
launched. A portal was created for all Sagicor staff members interested
in participating in the company’s CSR initiatives. Since its inception in
January 2016, there are now close to 500 volunteers in the Sagicor Employee
Volunteer Programme. Additional volunteers will be added in February 2017.
ST MARY’S FOOD BANK - SAGICOR LIFE INSURANCE
COMPANY - USA
In 2016, fourteen staff members from the west side of metropolitan Phoenix
volunteered at the St Mary’s West Side Food Bank. During a 4-hour shift, the
team was tasked with preparing and labelling pasta bags for hungry families.
On another occasion, a group of SLIC actuaries volunteered their time at the
St Mary’s Food Bank, located in downtown Phoenix, packing food boxes, and
loading and delivering food in grocery carts.
During August, two teams from the Scottsdale office held two ‘50/50’
raffles to raise money for St Mary’s Food Bank. The month-long raffles
raised just under USD $2,000, with 50% of the proceeds going to the St
Mary’s Food Bank, and one lucky recipient receiving the other half. Every
$1.00 donated, provided 8 meals.
Another team in Scottsdale, as part of their fundraising efforts,
sponsored four volunteer opportunities at various St Mary’s Food
Bank locations. The team worked an assembly line, putting together
boxes, filling them with items donated from suppliers and, after quality
checking, they passed them on for sealing. Along with a group of
fifteen middle school children, they worked with employees from other
companies and individual volunteers.
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SAGICOR FINANCIAL CORPORATION LIMITED
In September, another Scottsdale team kicked off their fundraising
efforts by raffling a 1-hour massage and spa gift basket. During the
period of the raffle, massages by a staff member who is also a licensed
massage therapist, were available at a discounted rate. Proceeds from the
raffle went directly to the Food Bank.
During October, staff from the Scottsdale and Mesa Riverview offices
volunteered at some of the St Mary’s Food Banks around the Greater
Phoenix area. The team fulfilled the service-hour requirements, and
were gratified, knowing that some of the food that the volunteers had
prepared, packed and helped to distribute was purchased with money,
which they had donated.
The Scottsdale Office staff were very creative in organising special corn
hole tournaments. The first tournament was for individual players,
and was priced at $5 for one round to see who could land the most bags
and get the highest point total. However, the twist was that they had to
spin the wheel to find out how they were to toss the bags. The second
tournament consisted of teams of two players competing under similar
rules, except that the throwers were blindfolded. The idea was for the
teammate to help the blindfolded thrower find the board.
16. Staff from SLIC’s Arizona office go to work on a Habitat For Humanity site in the
Northwest Valley.
17. A staff member from Team Sagicor took time out to “sign” the interior of a home built
for a Habitat for Humanity project.
HABITAT FOR HUMANITY - SAGICOR LIFE INSURANCE
COMPANY - USA
In February, SLIC staff from the Scottsdale Office and their family members
donated their time and talents at a Habitat for Humanity site in the Northwest
Valley. The main goal was to put a new layer of shingles on the roof. Altogether,
Sagicor had sixteen volunteers on site performing a variety of tasks, including
cutting shingles to the proper size and shape; transporting the shingles to
the people on the roof; placing and nailing down the shingles; sanding and
scraping old paint off the eaves, repainting them, and general cleaning up. The
future homeowners were also on hand to work alongside the staff.
A subsequent visit saw twelve staff and their family members from the
Scottsdale Office donate their time and talents at a Habitat for Humanity
site in the downtown Phoenix area. The volunteers worked for a full day
installing trim and baseboards throughout the house; mounting and
caulking shelves in closets; hanging doors; spackling and cleaning up in
preparation for painting. The future homeowner was on hand, working
beside the Sagicor volunteers.
In November, a team of volunteers from the Tampa office spent several
hours working on another Habitat for Humanity project. The team
installed insulation inside the home; placed roof soffit under the exterior
overhang, and painted a coat of primer on the entire exterior of the
house. Towards the end of the day, Sagicor staff members were invited to
“sign” the interior of the house with messages for the future homeowner,
Miriam, and her family. Besides assisting Miriam, Team Sagicor left the
project with a sense of accomplishment and a few handy skills.
KNIGHTS OF COLUMBUS GOLF FUNDRAISER - SAGICOR
LIFE INSURANCE COMPANY - USA
Sagicor recently sponsored a hole in the Knights of Columbus (KofC) golf
outing and fundraiser. The KofC support many charitable organisations
that assist the less fortunate, and were able to make an immediate USD
$5,000 donation to St Vincent de Paul, a charitable organisation. Sagicor’s
participation helped the event to raise over USD $11,000 that will be
channeled back into the community.
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2016 ANNUAL REPORT
39
SALVATION ARMY WATER DRIVE - SAGICOR LIFE
INSURANCE COMPANY - USA
Staff members from the Scottsdale office spearheaded a project involving
the purchase of cinnamon rolls. The 200 rolls were then purchased by other
staff members, family member, friends or neighbors, and the funds raised
were donated to the Salvation Army Water Drive.
The fundraising for the Salvation Army Funds for Water continued in the
Scottsdale office with an ice cream treat event. Instead of purchasing an
ice cream bar or sandwich for themselves, employees purchased ‘tokens
of appreciation’ to give to other staff members, which could then be
exchanged for a treat during the designated exchange times. 240 tokens
of appreciation were sold.
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RAYS’ JOHN HOPKINS ALL CHILDREN’S HOSPITAL VISIT -
SAGICOR LIFE INSURANCE COMPANY - USA
SLIC has been a proud sponsor of the Tampa Bay Rays since 2009, and as
part of that sponsorship, Sagicor and the Rays conduct a series of visits to
John Hopkins All Children’s Hospital during the baseball season. Annually,
Sagicor staff members, Rays’ players and the team mascot, Raymond,
visit the hospital to brighten the spirits of the young patients and their
families. In June, Rays’ players 1st base, Logan Morrison, and catcher,
Curt Casali, made the rounds with Sagicor staff members. Logan and Curt
visited the children, autographing baseball cards and passing out Sagicor
Rays’ co-branded baseball-shaped pillows. The older children enjoyed the
opportunity to meet a major league ball player and talk baseball, while the
younger kids were more interested in the antics of Raymond.
18. Tampa Bay Ray players, Logan Morrison and Curt Casali visit a young patient at the
John Hopkins All Children’s Hospital.
19. SLIC volunteer with children from the BT Washington Elementary School at Tampa’s
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Lowry Park Zoo
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SAGICOR FINANCIAL CORPORATION LIMITED
99.5 QYK GUITAR PULL - SAGICOR LIFE INSURANCE
COMPANY - USA
Two of Sagicor’s Tampa Career Agents participated in the 2nd Annual 99.5
QYK Guitar Pull in November. The event featured up-and-coming country
singers, who took turns playing their acoustic guitars and singing their hits.
The sold-out Guitar Pull was held at the Mahaffey Theater in downtown St
Petersburg, and included country stars Gary Allan, Tyler Farr, Josh Turner,
Chris Lane, Chase Bryant and Kane Brown. This is the second year that
Sagicor sponsored the Guitar Pull, by providing free parking to those in
attendance. Before the show and at intermission, the Career Agents manned
a Sagicor booth, where guests could register for a chance to win a guitar. At
the event, reality TV celebrity and proprietor of Gas Monkey Garage, Richard
Rawlings, stopped by to register for the guitar, as did hundreds of other
guests, who also requested additional information on Sagicor.
The following month, as part of Kids’ Spirits Day, Sagicor staff members
were joined by the Rays’ pitcher, Chase Whitley; outfielder, Steven Souza
Jr., and Raymond the mascot for a visit to the hospital. The Kids’ Spirits
Day programme began in 2010 as a display of support for children,
families and staff at the hospital.
The season’s third and final John Hopkins All Children’s Hospital Visit
took place in August. Rays’ players’ shortstop, Matt Duffy; outfielder,
Mikie Mahtook, and Raymond, visited the children for approximately two
hours. During the visit, the players and Raymond stopped in the young
patients’ rooms to say hello, and Mikie Mahtook spent some time with
the children who had recently undergone bone marrow transplants.
TASTES FROM AROUND THE WORLD - SAGICOR LIFE
INSURANCE COMPANY - USA
The Tampa office recently held a unique and delicious fundraiser to assist
the Metropolitan Ministries Food Drive. In July, the office hosted its second
event, “A Taste from Around the World Potluck”. A team of staff members
chose a country to represent; usually the country of their birth or ancestry or
because they have some other connection to it. Participants donated money
in exchange for a passport and a map to help them travel to all of the thirteen
exotic locations. At each stop, the travelers got a stamp in their passport and
a chance to enjoy the dishes, desserts and drinks, as well as the atmosphere
from the different countries. Participants also received additional bonuses,
in the form of golden stars hidden along the route that could be redeemed for
Sagicor Treasures.
BT WASHINGTON HOLIDAY PARTY - SAGICOR LIFE
INSURANCE COMPANY - USA
Sagicor’s annual holiday party for the 3rd grade class of B T Washington
Elementary took place in December at Tampa’s Lowry Park Zoo. Staff
members volunteered to help the teachers keep the children organised. They
were treated to lunch, saw the animals and enjoyed rides at the Zoo. At the
end of the event, every child was given a holiday bag filled with presents.
This year the Tampa Bay Rays donated items to be included in the bags.
2016 ANNUAL REPORT
41
SPORT
1
2
NATIONAL SPORTS COUNCIL SUMMER SPORTS CAMP -
SAGICOR LIFE INC - BARBADOS
Sagicor Life Inc continued its strong support of sport and youth development
through sponsorship of the annual National Sports Council Summer Camp.
In addition to sporting activities, the much-needed funding was used to
coordinate workshops which shared helpful “life” tips and provided guidance
for the campers. In 2016, Sagicor youth leader-in-training and Captain of the
West Indies Cricket Team, Jason Holder, addressed the cricket group, while
nutritionist Kimberley Rudder, spoke on nutrition and wellness.
BARBADOS BODY BUILDING CAC CHAMPIONSHIPS -
SAGICOR GENERAL INSURANCE INC - BARBADOS
Sagicor General Insurance sponsored 3 athletes of the 24-member Barbados
contingent who attended the 2016 IFBB /CAC Bodybuilding and Fitness
Championships in the Dominican Republic. At the sponsorship presentation,
first-timer Lynette Thompson, a Body Fitness competitor; Melissa Burrowes,
defending champion in Bikini Fitness, and Marlon Dottin, the 2014 CAC
champion in the Men’s Physique Competition, spoke about their future
ambitions and aspirations, and shared their excitement to be competing in
the region’s premier amateur Bodybuilding Championships. The team left
Barbados for the 44th Central American and Caribbean Championships
(CAC) with high hopes of again capturing the overall team title, one that
Barbados has won on thirty-one occasions.
3
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SAGICOR FINANCIAL CORPORATION LIMITED
1. Captain of the West Indies Cricket Team, Jason Holder, with the cricket group at the
National Sports Council Summer Camp.
2. Nutritionist, Kimberley Rudder, engaging summer camp participants on the benefits of
good nutrition and wellness.
3.
(l to r) Body Builders Marlon Dottin, Melissa Burrowes and Lynette Thompson at the
sponsorship presentation for the CAC Championships with Sagicor General Insurance
Inc’s Roger Spencer
SAGICOR GENERAL INSURANCE T20 - SAGICOR GENERAL
INSURANCE INC - BARBADOS
Sagicor General Insurance hosted the 2016 SGI T20 Competition. The
cricket tournament, organised by the Barbados Cricket Association, was
overhauled in order to generate greater interest in the Twenty/20 form of the
game. In its new structure, the tournament was divided into two phases,
where the island’s ten Division 1 teams were split into two zones of five, and
played each other in a round-robin format, with the top two zone winners
advancing to the second phase of the tournament, where they joined the
ten Elite division teams in the Super 12 phase. This new format is a step
towards generating renewed interest in the game, and showing young
men and women that T20 is the way that cricket has been evolving for the
last few years. Following a commanding 66-run victory over the Barbados
Defence Force Sports Programme (BDFSP), the students from the Cave
Hill Campus of the University of the West Indies celebrated their capture
of the Sagicor General Insurance T20 cricket championship. Sagicor UWI,
who previously won Sagicor T20 cups in 2012, 2013 and 2015, collected the
champion’s cheque of BBD $20 000, while BDFSP took the runners-up cash
prize of BBD $10 000. All players and officials were also presented with
commemorative medals.
SAGICOR JUNIOR TENNIS TOURNAMENT - SAGICOR LIFE
INC - TRINIDAD AND TOBAGO
Sagicor hosted the 14th edition of the Sagicor Junior Tennis Tournament at
the Eddie Taylor Public Courts, Nelson Mandela Park, where 120 contenders
vied for top trophies and cash prizes. An integral part of the event is the Red
Star Under-10 Tournament, an introductory beginners’ Tournament, where
participants’ siblings were given the opportunity to show their skill.
4
.4. Sagicor UWI cricket team enjoying a victorious moment after winning the Sagicor
5
General Insurance T20 tournament
5. Doubles players taking instructions from a match official on the terms of play at the
Sagicor Junior Tennis Tournament.
2016 ANNUAL REPORT
43
ST ANDREWS INVITATIONAL GOLF TOURNAMENT -
SAGICOR LIFE INC – TRINIDAD AND TOBAGO
The Sagicor St Andrews Invitational Golf Tournament, now in its 16th year,
took place in April with over 100 golfers taking to the greens. Former West
Indies cricketer, Brian Lara, and football icon, Russell Latapy, both took part
in the Championship flight, as they had achieved the handicap necessary
to participate. Funds were donated to the Friends of the Blood Bank
Association.
JTA/SAGICOR NATIONAL ATHLETIC CHAMPIONSHIPS -
SAGICOR GROUP JAMAICA LIMITED - JAMAICA
The Sagicor Foundation once again partnered with the Jamaica Teachers’
Association (JTA) to stage the 33rd JTA/Sagicor National Athletic
Championships, from May 20 to 21, 2016 at the National Stadium.
Approximately JAD $6 million was donated towards the staging of the
meet, enabling student athletes an opportunity to put their athletic talent on
display. Additionally, Sagicor has upheld its charitable tradition over the years
by offering two five-year scholarships at the secondary level to the champion
boy and girl of the meet. Over 1,200 primary school athletes participated in
52 track and field events, with the parish of St Andrew emerging the winner.
7
6. A St Andrews Golf Club committee member demonstrates the correct way to hold a
golf club during the “Kids on the Greens” coaching session.
7. The Sagicor High Five Station at the Rays Fan Fest, St Petersburg, Florida.
6
8. Sagicor presenting the University of South Florida’s Homecoming Game.
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SAGICOR FINANCIAL CORPORATION LIMITED
8
RAYS FAN FEST - SAGICOR LIFE INSURANCE COMPANY -
USA
The 20th annual Rays Fan Fest was held at Tropicana Field, located in
downtown St Petersburg, Florida. Representatives from SLIC managed the
Sagicor-branded event tent, distributing Sagicor branded baseball figurines.
Fans visiting the tent could also register for a chance to win official Tampa
Bay Rays’ baseball memorabilia, including an Evan Longoria autographed
bat, a Chris Archer autographed baseball and a Desmond Jennings
autographed jersey.
The Rays Fan Fest signals the start of Spring Training and the pending
kick off to the season opener. The free event offers Rays’ fans the
opportunity to mingle with players, coaches, alumni and broadcasters.
There was also a Rays Charity Yard Sale that featured some unique, game-
used memorabilia, dating back to the club’s inaugural season. All proceeds
from the yard sale were donated to the Rays’ Baseball Foundation.
SLIC sponsored the Coaches Clinic, “Run the Bases”, and the “Kid’s High
Five Station”, where children got the chance to “high five” a Rays Player
after he crossed home plate. Attendance was close to 20,000 at that
event.
RAYS MAJOR LEAGUE BASEBALL - SAGICOR LIFE
INSURANCE COMPANY - USA
The Sagicor-sponsored Tampa Bay Rays was one of the six teams to kick off
the 2016 Major League Baseball Season in April, with a nationally televised
game. The Sagicor brand was well represented by the new format of the
outfield wall signage. Even though they lost their first game, the Rays and
the Toronto Blue Jays tied in the opening series at two games each.
SAGICOR PRESENTS USF FOOTBALL GAME - SAGICOR LIFE
INSURANCE COMPANY - USA
Sagicor Life Insurance Company was the game presenter for the University
of South Florida’s (USF) Homecoming Game. Sagicor received extraordinary
recognition as game presenter, since its logo and branding appeared
throughout the stadium on all of the various digital displays during the
entire game.
2016 ANNUAL REPORT
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9. Runners at the beginning of the Sagicor Lightning Bolt Run.
9
LIGHTNING BOLT RUN - SAGICOR LIFE INSURANCE
COMPANY - USA
Sagicor Life Insurance Company was proud to sponsor and participate in the
Tampa Bay Lightning’s 15th Annual Bolt Run, held in March, in downtown
Tampa. Approximately 3,000 runners came out for the 5k, 5 Mile and 1 Mile
Family Fun Runs. Proceeds from the race went to the Lightning Foundation
and to local charities. Runners enjoyed a post-race party on the arena’s plaza,
and received tickets to the Lightning’s game that night. The Tampa Bay
Lightning advanced to rounds two and three of the National Hockey League’s
2016 Stanley Cup Playoffs. The Lightning team has consistently played to
sold-out crowds throughout the season, following their participation in the
2015 Stanley Cup Finals.
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SAGICOR FINANCIAL CORPORATION LIMITED
HUMAN CAPITAL
REP ORT
Doing better tomorrow starts with being better today.
That is why we are always changing and evolving to continue
to provide the best quality service we can. That is our most
important purpose, and why we strive for excellence every day.
HU MAN CAPITAL REPORT
BUILDING LEADERSHIP CAPACITY
Succession Planning
The Human Resources Committee of the Board of Directors continued its
oversight of the Succession Planning process for management. A select
committee interviewed sixty employees of Sagicor Financial Corporation
Limited (SFCL); Sagicor Life Inc (SLI); Sagicor Group Jamaica (SGJ);
Sagicor Life Insurance Company Inc (SLIC), and Sagicor General Insurance
Inc (SGI), and completed detailed position profiles that included key
responsibilities, skills, experiences, attributes, and competencies. The
Committee also identified potential successor candidates for key roles.
The next phase of the process will see the completion of assessments of
individual leadership and management capabilities to identify potential areas
for further development in 2017.
Regional and International Transfers
Sagicor Life (Eastern Caribbean) Inc (SLI EC) strengthened its management
with certain key appointments and transfers to support the establishment
of the new business entity. Trevor Vigo was appointed to the post of Chief
Operating Officer. Eon Phillips and Shaunita Jordan were both transferred
from the SLI Barbados operations to the post of Assistant Vice President,
Administration, and the post of Legal Counsel respectively. Brenton Hilaire
was appointed to the post of Agency Manager in Dominica. Melinda
McClean, from our Barbados office, was appointed to the post of Quality
Assurance Analyst with SLIC in Scottsdale, Arizona.
ENGAGING EMPLOYEES
Annual Kick-Off Meetings
At the beginning of 2016, Kick-Off - or Blast-Off - meetings were hosted
throughout the Sagicor Group of companies. The meetings were scheduled
in the new year, when there was a high level of optimism and a sense of a
fresh start across the Group. The meetings allowed staff and management
to celebrate and share accomplishments for the past year, as well as reinforce
Sagicor’s core values, company vision and mission. They also encouraged
greater focus on goals and objectives, and on the key initiatives to be
undertaken for the coming year. In an effort to make the meetings as
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2
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SAGICOR FINANCIAL CORPORATION LIMITED
PEOPLE DEVELOPMENT
SLI completed the final phase of training provided under the Competency
Based Training Fund (an Inter-American Development Bank project)
with the Government of Barbados. Employees who successfully complete
the programme will be awarded internationally-recognised National
Vocational Qualification (NVQ) certification. The final assessments are
scheduled to be completed by the end of Q2 in 2017.
3
In SLI Trinidad and Tobago, six hundred and fifteen man-hours were
invested in the training of administrative staff and Sagicor Advisors.
The New Advisor suite of programmes focused on strengthening
the onboarding and development of key skills for new advisors. The
Management suite included critical thinking, decision making and
finance for non-financial managers. The ‘Priority You’ customer care
project launched with a code of practice and customer care charter, and
provided specialised training for supervisors as one of the pillars of the
initiative.
Sagicor Life (Eastern Caribbean) Inc provided a series of workshops on
employee benefits administration, the Sagicor product suite, regulatory
compliance and business continuity management.
4
Sagicor Group Jamaica rolled out mandatory training aligned to the
organisation’s strategic objectives for:
• Product Knowledge
• Exceptional Client Service
• Anti-Money Laundering (AML)/Counter Financing of Terrorism
engaging as possible, a motivational component was added, introducing
world-renowned motivational speakers, or life coaches, who further drove the
overall company messages and objectives.
1. Members of the Sagicor team chanting “Sagicor Strong” during one of the many
moving presentations at the 2016 Sagicor Blast Off held at the Jamaica Conference
(CFT)
• Information Security
Centre.
2.
(L-R) Richard Byles, President & CEO, Sagicor Group Jamaica greets motivational
speaker, Simon T. Bailey who delivered a moving speech to Sagicor team members at
Sagicor Blast Off 2016.
3. Staff at the Trinidad and Tobago Blast-Off meetings.
4. World-renowned speaker, Lisa Nichols, with staff after the Sagicor Life Inc annual Kick-
Off meeting in Barbados.
Sagicor Life Insurance Company provided leadership development
training during 2016. Leadership training videos were incorporated into
the monthly managers’ meetings with a view to enhancing their current
skills in the areas of communication, handling troubled employees,
accountability and performance management.
2016 ANNUAL REPORT
51
INDUSTRY-SPECIFIC TRAINING
Specialist (ACAMS);
• Kareem Prescod - Certificate in Academy Life Underwriting
(AALU)
• Marissa Rudal - Fellow, Life Management Institute (FLMI).
Sagicor Group Jamaica
• Arlene Jarret - Financial Services Certified Professional (FSCP);
• Sophia Morris - Financial Services Certified Professional (FSCP);
• Derrick Lewis - Financial Services Certified Professional (FSCP),
and
• Shelley Ebanks-McGregor - A Doctorate in Organizational
Leadership and Human Resource Management.
Regulatory and Corporate Compliance
The Sagicor Group maintains a rigorous programme of mandatory annual
training and testing of employees on Foreign Account Tax Compliance Act
(FATCA) and Anti-Money Laundering (AML) via an online platform.
Safety and health committee meetings, fire drills, and a review of
business continuity plans were facilitated during the past year.
Compliance with the Company’s Code of Business Conduct and Ethics
was supported by an annual disclosure certification process and
mandatory online training.
Two new Information Security courses were launched in 2016 to
strengthen the company’s Information Technology Policy on information
security.
All new employees to the Sagicor Group companies were required to
complete mandatory programmes provided by LOMA, as part of the
induction process, and to provide a solid understanding of insurance
products. Typical designations included the Associate Customer Service
(ACS); Associate Life Management (ALMI); Associate Reinsurance
Administration (ARA); Associate Insurance Regulatory Compliance
(AIRC), and the rigorous and coveted Fellow of the Life Management
Institute (FLMI). Changes to the regulatory environment and robust
internal control procedures require certification in Anti Money
Laundering (ACAMS), and The Certified Internal Auditor (CIA)
designations.
Notable professional achievements in 2016 included:
Sagicor Life Inc - Barbados
• Alison Clarke - Fellow, Life Management Institute (FLMI);
• Nikita Hazelwood - Certified Equity Professional (CEP);
• Kim Jones - Certified Business Continuity Professional (CBCP);
• Sabrina Murray - Certified Internal Auditor (CIA);
• Nicholas Neckles - Chartered Financial Analyst (CFA);
• Nicole Patrick - Certified Anti-Money Laundering Specialist
(ACAMS), and
• Kaywanah Springer-Martin - a Masters of Laws in International
Finance and Banking Law.
Sagicor Life (Eastern Caribbean) Inc
• Marisia James - Fellow, Life Management Institute (FLMI);
• Beverley Snagg - Fellow, Life Management Institute (FLMI);
• Abigail Thomas - Fellow, Life Management Institute (FLMI), and
• Valda Victorine - Faustine - Fellow, Life Management Institute
(FLMI).
Sagicor Life Inc - Trinidad and Tobago
• Adele Adams-Shand - Certified Internal Auditor (CIA), and
• Nathalia Nasib-Cletus – Certified Anti-Money Laundering
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SAGICOR FINANCIAL CORPORATION LIMITED
NATIONAL AWARDS
Richard Byles, President and CEO of Sagicor Group Jamaica, was
honoured by the University College of the Caribbean (UCC) for his
contributions to the Jamaican business community. Mr Byles was
conferred with the Doctor of Business degree in July 2016, a degree that
is awarded to individuals who have made significant contributions in a
field or activity that merits special recognition.
CELEBRATING OUR TOP PERFORMERS
The Employee Rewards and Recognition Programmes culminate with an
Awards function, celebrating and recognising the Group’s top performers
The prestigious Sagicorian Award is presented in two categories, and
recognises the most outstanding administrative employee and the most
outstanding manager in the Sagicor Group of Companies.
Andre Latchman - The Sagicorian
- Employee of the Year
Andre Latchman is an Assistant Manager, Learning and Development, at
Sagicor Life Jamaica, who distinguished himself as a Client Experience
Specialist, Trainer par excellence and team player. In 2015, he designed a new
Client Experience Programme for Sagicor Group Jamaica. He has been heavily
involved in several civic, social, and service events, including a Beach Clean-Up
campaign, and an initiative to provide relief and assistance to the poor.
Tricia de Gannes - The Sagicorian
– Group Manager of the Year
As Manager of the Advisor Relations Department in Trinidad and Tobago,
Tricia made a significant impact on the company’s operations in 2015,
when she implemented and refined measures to monitor and drive sales
performance, facilitated the outstanding lapse policies project, and assisted
in the development of the Trainee Manager Programme. Tricia is actively
involved in community service, and through her church, has played a key
role in its annual initiative to assist families in Guyana’s interior.
Letisha Brathwaite - Group
Contributor of the Year
Letisha Brathwaite is an Underwriter at Sagicor General Insurance Inc in
Port of Spain, Trinidad and Tobago. During 2015, she made an outstanding
contribution to Sagicor General’s new business growth, resulting in a 92%
increase in premium income in 2015.
2016 ANNUAL REPORT
53
David Lynch – Group Pioneer of
the Year
Jennifer Tross- Clarke -Most
Outstanding Sagicor Advisor –
Sagicor Life (Eastern Caribbean)
Inc
David Lynch is a Supervisor in the Finance Department of Sagicor Life
Inc in Barbados. He was awarded Pioneer of the Year at Sagicor Life Inc,
and the Sagicor Group Pioneer of the Year at the overall Group level. David
built a new general ledger infrastructure to facilitate the amalgamation of
Sagicor Capital Life Inc and Sagicor Life Inc. This complex project involved
migrating over 429,000 transactions into seven business units, for eighteen
territories, in eight different currencies.
SLI EC celebrated the achievements of Mrs Jennifer Tross-Clarke at the
Company’s St Kitts office. Mrs Tross-Clarke, who joined the Sagicor Group
in 2007, qualified for the Sagicor Honour Club Awards for seven years. Her
accomplishments include:
• Leading Advisor – St Kitts and Nevis – 2010, 2014, 2015 and 2016;
• Employee of the Month Award – 8 occasions in 2015 and 9 in 2016;
• Leading advisor for case count Eastern Caribbean Region - 2015
and 2016;
• 100 club member Eastern Caribbean – 2015 and 2016;
• Leading Advisor, Net Annualized Commissions – 2016, and
• President’s Trophy Winner for the Eastern Caribbean – 2015.
Janice Mullin-Sargeant – Most
Outstanding Sagicor Advisor –
Sagicor Life Inc - Barbados
Janice Mullin Sargeant received the President’s Trophy for the most
outstanding performance in Sales for the fourth consecutive year.
Mrs Mullin-Sargeant also took home four other awards for outstanding
personal performance, namely The Honour Club Diamond, The 100 Club,
the Anthony Kennedy, and The D. W. Allan Production Awards.
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SAGICOR FINANCIAL CORPORATION LIMITED
Marlon De Leon – Most
Outstanding Sagicor Advisor –
Sagicor Life Inc – Trinidad and
Tobago
Loeri Robinson - Most
Outstanding Sagicor Advisor -
Sagicor Life Jamaica
Marlon De Leon joined SLI TT in 2009. He has been the recipient of several
production and persistency awards, including the Centurion, Leaders’ Circle
and Top Annual Premium Income (API) awards in 2014. He is a former
national sprinter who raced his way to the finish line, when he copped the
prestigious Advisor of the Year award, having settled 156 applications with
an API of TT $1.2M. He was also the leading Sagicor Advisor in three of the
five Leading Producer awards for Applications, API, and Net Annualised
Commissions (NAC) in 2015.
Loeri Robinson qualified for the Million Dollar Round Table (MDRT) for
the eighth consecutive year, with the last five years as a Court of the Table
Qualifier. As the top female Sagicor Advisor since 2012, and the leading
overall advisor within Sagicor for the past four years, she is the Chairman
of the Company’s Production Club, and President of the Executive Club. In
2016, she retained her record for Most Net Annualised Commissions, one
which she has held since 2010. Ms Robinson is currently the record holder
for the Most Net API.
5. Joanna Biscette, Human Resource Manager (second from left), and Leathon Khan,
6. (l to r) Sherman Casey, Eural Baptiste, Jennifer Tross-Clarke, Marvin Herbert, Ogden
5
6
General Manager, St Lucia (back), with (l to r) Joseph Abraham, Winsbert Marthe,
Browne and Stanley Browne.
Jennifer Ephraim, and Minerva Charles.
2016 ANNUAL REPORT
55
of bank hours and utilisation, overtime, and absence taken over a
period of time for each employee;
• employee access to snapshots of their vacation balances, among
other things.
This platform will be upgraded for current users, and rolled out for use
in Sagicor Life (Eastern Caribbean) Inc in 2017.
ADP Workforce Now
Sagicor Life Insurance Company will be upgrading the ADP Payroll platform
to ADP Workforce Now, adding the new modules of Essential HR and
Essential Benefits. The new modules came with beneficial self-service tools
for management reporting and related administration, and they assist in
improving the open enrollment process and access to benefits and payroll.
Employees will soon have access to all of their benefits information as well as
payroll information on one site.
7
Work Place Flexibility
Sagicor Life Insurance Company initiated a Workplace Flexibility project in
Q3 of 2016, with twenty-one employees in eight departments participating
in the programme. The success of the programme will likely encourage
similar ones, where feasible, in other areas of the Sagicor Group, as modern
workplace arrangements are gradually embraced.
Recognising changes in the working environment, HR Departments
across the Group conducted reviews of several policies and practices,
including the onboarding process, with a view to strengthening elements
of the talent management process.
EMPLOYEE VOLUNTEERISM
Employee volunteerism across the Group created a unique “Sagicor
World” where a diverse mix of cultures came together with a number of
different approaches to address community issues.
7.
(l to r) Brenton Hilaire, Cheryl Rolle, Solange Magloire and Geoffrey Graham.
EMPLOYEE WELLNESS
Increasing awareness of the incidents of chronic lifestyle illness, led
to a number of initiatives designed to encourage employees to engage
in learning, and other, activities to promote healthier lifestyles. These
programmes are varied and adopt several different themes, such as
lunch time learning sessions on diet and exercise; or the many organised
activities and competitions that have significantly enhanced employee
engagement, and encouraged the monitoring of critical indicators, and
the adoption of important lifestyle changes.
IMPROVING SERVICES AND TOOLS
Workforce
Workforce is a web based application, providing the company with the facility
to track and measure time worked, and to record time off. The system is
important for compliance with labour legislation and provides:
• an updated interface with more desktop applications;
• mobile app login;
• employee photos and hired date information;
•
the display of key performance indicator charts showing snapshots
56
SAGICOR FINANCIAL CORPORATION LIMITED
Fundraising Events
Annual events across the Sagicor group of companies filled a range of
interests and appetites for fun and adventure. Super bowl celebrations, corn
toss tournaments, mini hoop shoot outs, Cinco de Mayo challenges, ice
cream socials, Independence Day celebrations, Happy Halloween, zoo trips,
Holiday parties were all highlighted in the 2016 calendar in the USA.
Internal Staff Events
In Jamaica, the 2016 Olympic games in Rio, dominated by the international
Jamaican sports personality, Usain Bolt, clearly influenced the SGJ’s Sagicor
Olympics 2016. This event culminated in an exciting celebration at the
National Stadium Complex in Kingston, Jamaica.
In December, staff participated in the “To Da Beat” dance competition,
which saw a team from the Group Client Contact Centre emerge as the
winners. “The CC Hot Steppaz” danced their way to the number one spot
and received their award and prize cheque of JMD $50,000.00.
The Stars week, with a Corporate Church Service, Gospel Concert, and
other performances at “Performing with the Stars”, was also a major
event on the SGJ Corporate Calendar.
In celebration of Barbados’ 50th Anniversary of Independence, the Sagicor
Sports Club in Barbados, in conjunction with the Human Resources
Department, hosted the keenly contested decoration competition. Staff
were invited to decorate their departments following the theme of
independence. The competition resulted in a victory to Sagicor Asset
Management’s department, followed by the Pensions Department, while
the Finance and Group Departments tied for third place.
8
9
8.
“The CC Hot Steppaz” represented by (l to r) Orette Beckford; Lori-Ann Gordon; Justin
Fletcher; Jody-Ann Hayden; Rory Dinham and Peta-Gae Soltau, accepting their award
and prize cheque from Mr. Karl Williams, Senior Vice President, Group Human Resources,
Sagicor Group Jamaica Limited.
9. Members of the Sagicor Chorale lead the crowd into worship at the 2016 STARS Week
Annual Gospel Concert at The Emancipation Park in Kingston Jamaica.
10 Sagicor Asset Management reception area decorated in Barbados Independence colours.
10
2016 ANNUAL REPORT
57
OPERATING &
FINANCIAL RE VIEW
We are always looking to the future, and as we continue to grow
stronger and wiser, we want our customers to do the same. By always ensuring
that we are doing our best, we make sure everyone else does too.
OPERATING &
FI NANCIAL RE VI EW
We are always looking to the future, and as we continue to grow
stronger and wiser, we want our customers to do the same. By always ensuring
that we are doing our best, we make sure everyone else does too.
OPERATING AND FINANCIA L RE V IEW
OVERVIEW
The Sagicor Group is a leading provider of insurance products and related
services in the Caribbean region. It also provides insurance products in the
United States of America (USA) and banking services in Jamaica.
The main business lines are life, critical illness and health insurance,
annuities and pension management, asset management, together with
property and casualty insurance. The customer base is predominately
individuals but certain lines are marketed to employers to provide
employee benefits, and to commercial enterprises to provide property and
casualty coverage.
EXTERNAL ENVIRONMENT
The external environment impacts the operating and financial performance
of the Sagicor Group.
Economic factors such as economic growth, employment levels and
disposable income impact the levels of both new business and renewal of
life insurance and annuity products offered by the Group. Interest rates
and investment yields affect the level of savings and investment returns
offered for life insurance, annuities and banking products, and ultimately
the profit margins that the Group can generate from these product lines.
experienced modest growth during the year. In the USA, GDP growth of
1.6% was estimated for 2016 while the economies of Europe and Japan
experienced incremental growth of 1.7% and 1.2%, respectively. The USA
continued to tighten monetary policy as short term interest rates were
increased in December to the range 0.50% to 0.75%, while Europe and Japan
prolonged their accommodative fiscal and monetary policies throughout
2016. Emerging markets generally advanced during much of 2016 but
declined during the fourth quarter following Donald Trump’s presidential
victory as investors were concerned that the trade policies of the new
administration would negatively impact developing economies. The Chinese
economy advanced 6.7% year-on-year. In light of slower than expected
growth in emerging markets such as China, Brazil and the Middle East
and the uncertainty associated with the future of the European Union, the
International Monetary Fund estimated global growth of 3.1% for 2016.
In the USA, economic indicators were positive. Consumer spending
increased during the fourth quarter of 2016 while the unemployment
rate continued to trend down to 4.7% in December. The US dollar
strengthened against the currencies of all major trading partners during
the year which led to a decline in exports, while the Federal Reserve
raised the Fed funds rate by 25 basis points in December 2016. Inflation
trended towards the target level of 2.0% and ended the year at 2.1%.
The health and mortality of insured customers and beneficiaries impact
the levels of death, disability and health benefits the Group is required to
meet.
Property and casualty insurance products offer policyholders financial
protection against accidents, loss or damage to property, and liability to
third parties.
The Group’s operating units are all regulated by insurance, banking and
securities regulations. The Group therefore has to meet statutory and
reporting requirements to governments and government agencies.
International Economic Environment
Global growth remained anemic for 2016 as key developed economies
The Eurozone’s economy demonstrated remarkable resilience to
geopolitical uncertainties in 2016 and defied earlier expectations of a
slower recovery. GDP advanced by 1.7% for 2016. The unemployment
level in 2016 was 9.6% which is lower than that in 2015. The European
Central Bank (ECB) further decreased the already negative interest rates
to an unprecedentedly low level of negative 0.4%.
Regional Economic Environment
Regionally, economic growth across the majority of Caribbean countries
trended positively with the exception of Trinidad and Tobago where the
economy contracted. However, the protracted economic challenges of
burdensome fiscal deficits, increasing debt levels as well as dwindling
foreign direct investment remained hindrances to the economic stability of
the region.
60
SAGICOR FINANCIAL CORPORATION LIMITED
The Barbados economy showed moderate improvement during 2016
with estimated GDP growth of 1.6% buoyed by expansion in key sectors
such as tourism and construction as well as business and other services.
Unemployment trended downward and was estimated at 10.0% for
the year ended September 2016 while inflation remained subdued and
was reported at negative 0.9%. However, major headwinds remained
persistent and continued to threaten the country’s economic stability.
International reserves remained worrisomely low and decreased to $0.7
billion which represented 10.3 weeks of import cover. The fiscal deficit for
the fiscal year 2016/2017 was projected to have widened to 8.1% of GDP.
The real GDP growth for Jamaica was estimated at 1.4% for the year
2016. The positive growth in the economy was primarily due to
improvements in both net external demand and domestic demand.
During 2016, Jamaica’s credit rating was upgraded to B3 with a stable
outlook by Moody’s rating agency. Jamaica continues to make significant
efforts to reduce its debt to GDP ratio, improve its current account
balance and increase its foreign exchange reserve levels. The economic
expansion in Jamaica did not translate to gains in the currency market as
the Jamaican dollar depreciated by an annualised rate of 6.7% relative to
the U.S dollar.
The country’s debt burden remained high with the gross government
debt, including borrowings from Central Bank reported at 108% of GDP.
Additionally, the proportion of foreign currency debt was 31% of GDP
and the cost of servicing that debt was 8% of earnings from goods and
services.
During 2016, Barbados’ sovereign rating was downgraded to B- and Caa1
by Standard and Poor’s and Moody’s rating agency, respectively. During
the first quarter of 2017, Barbados’ sovereign rating remained under
pressure and was further downgraded to Caa3 and CCC+ by Moody’s
rating agency and Standard and Poor’s respectively.
Trinidad and Tobago’s economy was estimated to have contracted by
2.9% for 2016 by the Central Statistical Office. During the year, the price
of oil remained under pressure as evidenced by lower real economic
activity in the Petroleum sector which contracted by 9.6%. This led to the
downward revision in the budgeted average oil price to the unprecedented
low level of US$35 per barrel of crude. The performance of the non-
petroleum sector remained constrained and contracted by 1.8% for the
year. During 2016, Standard and Poor’s lowered the sovereign credit
rating for Trinidad and Tobago to A- with a negative outlook. In terms
of the key domestic benchmark interest rate and currency, the Repo
rate in Trinidad and Tobago remained unchanged since December 2015
and stood at 4.75% as at December 31 2016 while the Trinidadian dollar
depreciated by an annualised 4.7% relative to the U.S dollar.
Regulation
Insurance Regulation
The Private Pension Act, Act #4 of 2016 and the Private Pension Regulations,
Statutory Instrument #2 of 2017 of Belize came into effect on 1st January
2017. The Act provides for the registration and supervision of private pension
plans to offer better protection to members and pensioners of such plans.
The Act applies to all pension plans that are established by an employer for
persons employed in Belize or in respect of which an employer is making
contribution for his or her employees. The Act excludes certain statutory
entities, pension plans for government officials and certain public officers
and social security pensioners.
The following revisions to insurance legislation have also been initiated
and are contemplated in the near future:
• A new Insurance Act together with regulations to replace the
existing legislation in Trinidad has been delayed until 2017.
• A Draft Harmonised Insurance Act in the Eastern Caribbean to
repeal existing legislation in the eight EC territories is pending
further industry consultation.
• In January 2016, the Barbados Financial Services Commission
(FSC) issued a circular reminding registered insurance companies
and brokers of the requirements of its Guideline No. 8 of
2016 ANNUAL REPORT
61
March 2015, concerning the necessity and minimum content
of insurance broker agreements and the timely remittance by
brokers of premiums received. The FSC also issued a Working
Paper in January 2016 on The Purpose of Supervisory Colleges for
Insurance Groups and an Introductory Paper on Risk Based Capital
for Domestic Insurance Companies in June 2016. In October 2016,
the Commission advised that the introduction of risk based capital
requirements was not imminent and that a phased approach was
being considered.
• In the USA the Department of Labour (DOL) issued its final
rules regarding the establishment of a “fiduciary” standard for
financial institutions and their agents who participate in the sale of
financial products, including any type of annuity, for the purpose
of establishing an IRA (or a tax qualified retirement plan). The
rules are scheduled to become applicable on April 10, 2017 but the
DOL is considering a minimum 60-day delay so that it can further
assess the impact of the rules and whether any changes in its
requirements are necessary.
GROUP RESULTS
Revenues from continuing operations in 2016 reached US $1,134 million and
were US $30 million higher than the prior year amount of US $1,104 million.
Revenues were impacted by lower net premium income of US $10 million
due to lower annuity business written in our USA segment, together with
the impact of the depreciation of the Jamaica Dollar to the US dollar on
translated premiums. This was off offset by higher investment income of
US $31 million. Investment income benefited from significant realised gains.
Fees and other revenue also improved by US $8 million during the year.
by higher income taxes experienced in 2016 compared to 2015 largely in
the Jamaica Segment, where taxable income was higher in 2016 when
compared to 2015 due to strong business growth and significant realised
gains on financial assets.
Total comprehensive income from continuing operations was
US $94 million in 2016 compared to US $21 million in 2015.
CONSOLIDATED INCOME 1 - $ millions
Revenue
Benefits
Expenses & taxes
Net income
COMPREHENSIVE INCOME
Other comprehensive (loss)
Total comprehensive income
1 from continuing operations
2016
1,134
(561)
(466)
107
2016
(13)
94
2015
1,104
(553)
(453)
98
2015
(77)
21
Other comprehensive income was a loss of US $13 million compared to a
loss of US $77 million in 2015. The main contributor to the improvement
in comprehensive income was an underlying improvement in net gains
on financial assets of US $ 142 million. Included in comprehensive
income were net gains for the year on financial assets of US $39 million
resulting from mark-to-market gains on financial assets associated with
our international portfolios.
Insurance and other benefits closed the year at a total of US $561 million
compared to a total of US $553 million in 2015 an increase of
US $8 million as the company experienced higher claims paid on its
health insurance line of business.
The Jamaica dollar declined against the US dollar by 6.7%, while the
Trinidad dollar declined against the US dollar by 4.7% resulting in
retranslation losses of US $28 million.
Expenses and taxes closed the year at US $466 million in 2016 compared
to a total of US $453 million in 2015. Expenses and taxes were impacted
In December 2012, the Board and Management decided to dispose
of Sagicor Europe, which owns the Sagicor at Lloyd’s operations. In
62
SAGICOR FINANCIAL CORPORATION LIMITED
accordance with International Financial Reporting Standards, the results
of Sagicor Europe have been separated from the Group’s continuing
operations and presented as a discontinued operation. Sagicor Europe
was sold on December 23, 2013. The results of the Group’s continuing
operations are further analysed under the next several sub-headings. The
results of the discontinued operation are discussed and analysed in the
Operating Segments section.
Shareholder Returns
The Group’s net income and comprehensive income are allocated to the
equity owners of the respective Group companies in accordance with their
results. As some Group companies have minority shareholders, particularly
in the Sagicor Jamaica operating segment, the Group’s net income is
allocated accordingly between holders of Sagicor’s common shares and the
minority interest shareholders. There is also an allocation to Sagicor Life
Inc policyholders who hold participating policies, an arrangement which
was established at the demutualisation of Barbados Mutual Life Assurance
Society (now Sagicor Life Inc).
For the 2016 financial year US $60 million of net income from
continuing operations was allocated to the holders of common shares of
Sagicor Financial Corporation Limited, which corresponded to earnings
per share of US 19.5 cents. The comparative amounts for 2015 were
US $56 million of net income and earnings per share of US 18.2 cents.
The respective annual returns on shareholders’ equity were 12.3% for
2016 and 11.7% for 2015.
Dividends declared to common shareholders in respect of 2016 totalled
US $14 million and represented US 4.5 cents per share. Dividends of US
4 cents per share were declared for 2015.
COMMON SHAREHOLDER RETURNS 1
2016
2015
Net income - $ millions
Dividends - $ millions
Earnings per share - cents
Dividends per share - cents
Return on equity - %
60
14
19.5
4.5
12.3
56
12
18.2
4.0
11.7
1 from continuing operations except for dividends.
Revenue
The sources of the Group’s revenue are insurance premiums from
customers, investment income, fee income and other revenues. The
following table summarises the main items of revenue.
REVENUE - $ millions
2016
2015
Net insurance premiums:
Life and annuity
Health
Property & casualty
Net investment income
Fees and other revenues
Gain arising on acquisition
496
150
18
664
353
117
-
506
150
18
674
322
109
(1)
1,134
1,104
Premium revenue from life insurance and annuity was US $496 million
and represented 75% of total premium revenue. The comparative
amounts for 2015 were US $506 million and 75%. The Group markets a
range of life and annuity products, most of which are long-term contracts
for which a monthly premium is paid by the customer.
2016 ANNUAL REPORT
63
For some long-term contracts, however, a single premium (usually a
lump sum) is paid at the beginning of the contract. There are also annual
renewable contracts which are marketed largely to employers to provide
coverage to their employees on a group basis.
Premium revenue was lower by US $10 million when compared to the
prior year due to lower annuity business written in our USA segment,
together with the impact of the depreciation of the Jamaica Dollar to the
US dollar on translated premiums.
The Group also markets annual renewable health insurance contracts to
employers and associations. These provide benefits against medical costs
incurred by insured persons. Premium revenue from health insurance
totalled US $150 million, and stood at the same level as the prior year.
The Group also markets property and casualty insurance contracts in the
Caribbean region. These are marketed to individuals and commercial
enterprises. Premium revenue from these classes of insurance totalled
US $18 million and was in line with the prior year comparative amount.
Income is generated from the investments made by the Group. Net
investment income closed the year at US$ 353 million compared to US$
322 million in 2015 an improvement of US $31 million. Investment
income benefited from significant realized gains. The annual yields
achieved on financial investments were as follows.
INTEREST YIELDS
Debt securities
Mortgage loans
Policy loans
Finance loans & finance leases
Securities purchased for resale
Deposits
2016
6.2%
6.1%
6.9%
2015
6.4%
6.5%
7.3%
12.6%
12.7%
9.2%
1.0%
2.4%
0.9%
Income from fees and other revenues totalled US $117 million compared
to US $109 million in the prior year, an improvement of US $8 million.
Benefits
The table below summarises the expense incurred by the Group in providing
benefits.
BENEFITS - $ millions
2016
2015
Net insurance benefits:
Life and annuity
Health
Property and casualty
Interest expense
376
116
8
500
61
561
373
111
10
494
59
553
Insurance benefits comprise amounts payable to policyholders and
beneficiaries in accordance with the contract terms of insurance policies
issued or assumed by the Group. Interest payable to investment contract-
holders or financial institutions which have placed funds with the Group
are treated as interest benefits. Current life insurance and annuity
benefits are recognised on the notification of death, disability or critical
illness of an insured person; on the maturity or surrender of a policy; on
the declaration of a policy bonus or dividend; or an annuity payment date.
Future life insurance and annuity benefits are recognised in the financial
statements on in-force long-term insurance contracts based on reserving
methodologies adopted by the Group in accordance with established
Canadian accepted actuarial standards.
Life and annuity benefits totalled US $376 million in 2016, of which
US $331 million related to current benefits and US $45 million related
to future benefits. The corresponding amounts for 2015 were a total of
64
SAGICOR FINANCIAL CORPORATION LIMITED
US $373 million, of which US $346 million were for current benefits and
US $27 million were in respect of future benefits.
Expenses and taxes
EXPENSES & TAXES - $ millions
2016
2015
The amount of future benefits recorded in the statement of income is a
function of the policy contracts in-force and of the appropriate actuarial
assumptions which are made to value them.
Administrative expenses
Commissions
Health, property and casualty insurance benefits are recognised either
or on the notification or settlement (for short notification periods) of a
claim from policyholders. In addition, incurred but not reported (IBNR)
benefits are recognised in accordance with established or expected trends
for claims incurred.
Finance costs, depreciation and amortisation
Premium, asset and income taxes
255
99
60
52
466
252
105
56
40
453
Total health insurance benefits were US $116 million representing an
overall claims to premium ratio of 77%. The comparative 2015 amounts
were US $111 million and an overall claims to premium ratio of 74%.
Expenses and taxes totalled US $466 million for 2016 up from
US $453 million for 2015.
Property and casualty claims amounted to US $8 million in 2016, a
reduction of US $2 million from the 2015 comparative result.
Expenses of administration represent the largest expense category and
totalled US $255 million in 2016 compared to US $252 million in 2015 an
increase of US $3 million.
The interest returns the Group has provided to investment contract-
holders and financial institutions which have advanced funds are
summarised in the following table.
There was a reduction of US $6 million for Commissions when
compared to the prior year and this result is commensurate with the
lower premium revenue experienced.
INTEREST YIELDS
Investment contracts
Other funding instruments
Customer deposits
Securities sold for repurchase
2016
6.1%
1.9%
2.1%
4.5%
2015
5.2%
2.2%
1.9%
3.7%
The Group is subject to a variety of direct taxes, with premium and
income taxes comprising the main types of tax. Taxes are incurred in the
jurisdiction in which the income is generated. Premium tax is customarily
a percentage of gross premium revenue, while income tax is usually either
a percentage of investment income or a percentage of profits.
Premium, asset and income taxes were US $52 million compared to
US $40 million in the prior year and was impacted by higher income
taxes experienced in 2016 compared to 2015 largely in the Jamaica
Segment where taxable income was higher in 2016 when compared to
2015 due to strong business growth and significant realised gains on
financial assets. This was offset by lower premium and asset taxes in in
2016 when compared to 2015.
2016 ANNUAL REPORT
65
Comprehensive income
Gains and losses recorded within other comprehensive income arise
primarily from fair value changes of certain classes of assets and from the
retranslation of foreign currency operations.
Other comprehensive income was a loss of US $13 million compared to a
loss of US $77 million in 2015. The main contributor to the improvement
in comprehensive income was an underlying improvement in net gains
on financial assets of US $142 million. Included in comprehensive
income were net gains for the year on financial assets of US $39 million
resulting from mark-to-market gains on financial assets associated with
our international portfolios.
The Jamaica dollar declined against the US dollar by 6.7%, while the
Trinidad dollar declined against the US dollar by 4.7% resulting in
retranslation losses of US $28 million.
STATEMENT OF FINANCIAL POSITION - $
millions
2016
2015
Assets
Liabilities arising from operations
Borrowings
Equity
6,532
5,342
395
795
6,400
5,185
476
739
6,532
6,400
Assets
Invested assets and cash balances as of December 31 are summarised in the
table below.
INVESTMENTS & CASH - $ millions
Net income and other comprehensive income together result in total
comprehensive income. Summarising the Group’s results from
continuing operations, total comprehensive income was US $94 million
for 2016 compared to US $21 million for 2015.
Debt securities
Mortgage loans
Policy loans
Finance loans and finance leases
Securities purchased for re-sale
Deposits
Cash
Investment property and other items
2016
3,441
2015
3,418
332
138
509
5
139
279
417
341
132
436
8
261
250
394
5,260
5,240
Debt securities are the largest class of invested assets, and represented
65% of total investments and cash as of December 31, 2016 (66% as of
December 31, 2015). These securities are very suitable instruments to
back long-term insurance liabilities because of their medium to long
GROUP FINANCIAL POSITION
Sagicor’s activities of issuing insurance contracts; of accepting funds from
depositors; of banking and securities dealing; result in the Group receiving
significant funds which are held as liabilities and are invested in a variety of
assets.
The Group’s sources of capital are equity contributions from
shareholders, retained earnings and reserves, together with external
borrowings.
The table below summarises the consolidated financial position of
Sagicor as of December 31, 2016 and 2015.
66
SAGICOR FINANCIAL CORPORATION LIMITED
term duration, the regular interest payments received, and the relatively
low credit risk.
property and casualty.
Debt instruments are issued primarily by Governments, state sponsored
agencies and corporate entities. The Group acquires and holds these
instruments usually in the country where the funding arose. The Group
also invests in debt instruments of short duration as a way of earning
investment returns with minimal risk, and of providing opportunities for
investment contract-holders to earn safe returns.
Other invested assets are spread across various asset classes such as
mortgages, loans, deposits and property.
Liabilities arising from operations
The Group issues life insurance and annuity contracts either to individuals
or to employers in respect of their employees. Insurance liabilities are
summarised in the following table.
INSURANCE LIABILITIES
- $ millions
2016
2015
Future benefits - individual contracts
2,349
2,207
Future benefits - group contracts
Current benefits and other payables
428
245
426
245
3,022
2,878
Future benefits represent amounts recognised at the date of the financial
statements for liabilities not yet due. These liabilities may become due
in the near, medium or long-term and are estimated using established
actuarial techniques.
Current benefits and other payables represent amounts which are
currently due and are in the course of settlement. These include benefits
in respect of all classes of insurance written - life, annuity, health,
The Group’s liabilities which arise from issuing investment contracts,
accepting deposits and funding are as follows.
FINANCIAL LIABILITIES
- $ millions
Investment contracts
Securities sold for re-purchase
Customer deposits
Other funding instruments and other items
2016
2015
378
321
915
353
369
520
670
383
1,967
1,942
Investment contracts may be issued to pension funds to hold pension
plan assets or to individual customers as savings vehicles. Securities
sold for re-purchase provide specific security to depositors who place
funds with the Group for investment return. Deposits and other funding
provide monies to the Group to invest in loans and related securities.
Other liabilities include general provisions, accruals and payables which
arise in the ordinary course of business.
The discontinued operation (Sagicor at Lloyds) was sold on December 23,
2013. At the end of 2016 there were no amounts outstanding with respect
to the discontinued operation.
Capital
The Group has issued equity and debt instruments to provide capital for its
operations. The amounts recognised in the statement of financial position in
respect of these instruments are summarised below.
2016 ANNUAL REPORT
67
Effective December 20, 2016, the notes were extended at an annual rate
of interest of 4.85% with a maturity date of August 14, 2019. Financial
covenants in respect of these notes are summarised in Note 46.3 (b).
On July 18, 2016, the Company redeemed the 6.5% convertible
redeemable preference shares due 2016.
Participating accounts were established by a subsidiary to provide
additional policyholder protection on participating policies which pay
policy bonuses and dividends.
A measure of financial stability is the debt (borrowings) to capital ratio
which for the Sagicor Group was 33.2%, down from 39.2% for the prior
year. This resulted from the fact that the Company redeemed all its
outstanding convertible redeemable preference shares amounting to
US $120 million during the year.
A measure used to determine the capital adequacy of a life insurance
business, which is the predominant activity within the Sagicor Group, is
the Canadian Minimum Continuing Capital and Surplus Requirement
(MCCSR). The consolidated MCCSR ratio for the Sagicor Group was
291% as of December 31, 2016 compared to 301%, at December 31, 2015,
both of which are significantly in excess of the minimum recommended
ratio of 150%. These ratios include risk factors for insurance risk (lapses,
mortality, morbidity) and credit risk of all fixed income assets including
those issued by Caribbean governments.
EQUITY & BORROWINGS
- $ millions
Common shareholders’ equity
Preference shareholders’ balances
Minority interest shareholders’ balances
8.875% senior notes due 2022
4.85%/5% notes due 2019
Participating accounts & other
Classified as:
Equity
Borrowings
2016
2015
536
-
258
315
75
6
502
120
232
314
45
2
1,190
1,215
795
395
1,190
739
476
1,215
304,494,131 common shares of Sagicor Financial Corporation Limited
are outstanding and are tradable on the Barbados, Trinidad & Tobago and
London stock exchanges.
Common shares of certain subsidiaries are held by minority interests
primarily in Jamaica where those shares are tradable on the local stock
exchange.
On August 11, 2015, the Group issued seven year senior notes in the
amount of $320 million which are repayable in 2022. The notes carry a
fixed annual rate of interest of 8.875% payable semi-annually. Financial
covenants in respect of these notes are summarised in Note 46.3 (a).
On March 22, 2016, the Company repaid, before maturity, the
$43 million of short term debt. On March 21, 2016, the Company issued
a tranche of fourteen month notes with par value of $75 million which
were repayable in 2017 and carried a 5.0% annual rate of interest.
68
SAGICOR FINANCIAL CORPORATION LIMITED
SAGICOR GROUP
SUMMARY ORGANISATIONAL CHART
SAGICOR FINANCIAL CORPORATION
- HOLDING COMPANY & GROUP FINANCING
SAGICOR LIFE
- LIFE & HEALTH
INSURANCE
SAGICOR JAMAICA
SAGICOR
USA
OTHER
SAGICOR
EUROPE
OPERATING COMPANIES
(discontinued
operation)
BARBADOS,
TRINIDAD AND TOBAGO
EASTERN CARIBBEAN
& DUTCH ISLANDS,
CENTRAL AMERICA
SAGICOR LIFE
SAGICOR
JAMAICA -
BANK
LIFE &
JAMAICA -
HEALTH
COMMERCIAL
INSURANCE
BANKING
SAGICOR
INVESTMENTS
JAMAICA
- INVESTMENTS
SAGICOR LIFE
- LIFE
INSURANCE
SAGICOR
INVESTMENT,
SAGICOR AT
GENERAL
FINANCE &
- P&C
REAL ESTATE
LLOYD’S
- P&C
INSURANCE
ENTITIES
INSURANCE
JAMAICA &
CAYMAN
ISLANDS
JAMAICA
JAMAICA
USA
TOBAGO,
EASTERN
TOBAGO,
EASTERN
WORLDWIDE
BARBADOS,
BARBADOS,
TRINIDAD &
TRINIDAD &
U.K.
&
CARIBBEAN
CARIBBEAN
2016 ANNUAL REPORT
69
OPERATING SEGMENTS
The Group’s principal reportable operating segments, as defined by
International Financial Reporting Standards, are Sagicor Life Inc, Sagicor
Jamaica, Sagicor USA, and Sagicor Europe. The Sagicor Europe Segment was
sold on December 23, 2013 under terms that retained some obligations for
the Group. The performance of these segments in 2016 is discussed under
the following sub-headings.
Sagicor Life Inc Segment
The Sagicor Life Inc segment consists of the life insurance entities that
conduct business in Barbados, Trinidad and Tobago, the Eastern and Dutch
Caribbean islands, Belize, Bahamas and Panama. The main activities of
this segment are the provision of life, critical illness and health insurance,
annuities, pension investment and pension administration services.
In 2016, this segment generated revenues of US $411 million an increase
of US $31 million over the previous year. During 2015, Sagicor Life
USA entered into a reinsurance agreement with Sagicor Life in 2015,
this transaction resulted in the following intersegment transactions:
the intersegment revenue was US $91 million in 2015. Intersegment
expenses amounted to US $5 million in 2016 and US $82 million in
2015. The main revenue component was premium income which totalled
US $300 million. Investment income totalled US $77 million while other
items totalled US $34 million.
Benefits totalled US $213 million, and were higher than the prior year by
US $14 million. Current insurance benefits were US $210 million while
amounts recognised for future insurance benefits totalled a reduction of
US $3 million.
Total expenses and taxes in 2016 closed the year at US $129 million
compared to US $119 million in 2015. The increase in expenses and taxes
was largely driven by higher commissions on new business written.
SAGICOR LIFE INC
INCOME - $ millions
2016
2015
Revenue
Inter-segment reinsurance revenue
Benefits
Expenses and taxes
Inter-segment reinsurance expense
Segment income
Segment income attributable to shareholders
FINANCIAL POSITION - $ millions
Assets
Liabilities
Net assets
411
-
(213)
(129)
(5)
64
64
380
91
(199)
(119)
(82)
71
69
2016
1,928
2015
1,904
(1,399)
(1,388)
529
516
Net segment income for the year was US $64 million compared to US
$71 million for the prior year. After accounting for income allocated to
policyholders, the net income attributable to shareholders for the segment
totalled US $64 million in 2016, compared to US $69 million in 2015.
Financial investments comprised 72% of segment assets and policy
liabilities comprised 91% of segment liabilities at the end of 2016.
Sagicor Jamaica Segment
This segment comprises subsidiaries in Jamaica, Cayman Islands, and Costa
Rica. The principal activities of the segment are the provision of life, critical
illness and health insurance, annuities, pensions administration, investment
management, securities dealing and commercial banking.
This segment generated revenue of US $524 million in 2016, an increase
of US $13 million over the 2015 total. The main revenue component
was premium income which totalled US $268 million compared to
70
SAGICOR FINANCIAL CORPORATION LIMITED
US $278 million in 2015 and was impacted by the depreciation of the
Jamaica Dollar to the US dollar on translated premiums.
Investment income totalled US $201 million compared to US $181 million
in the prior year and benefited from significant realised gains.
Benefits totalled US $249 million and was at the same level as in 2015.
Expenses and taxes incurred totalled US $185 million in 2016, increasing
by US $3 million over the prior year.
SAGICOR JAMAICA
Sagicor USA Segment
This segment consists of the USA operations of Sagicor which market life
insurance and annuity products to individuals.
Segment revenue totalled US $149 million in 2016 compared to
US $160 million in 2015. During 2015, Sagicor Life USA entered into a
reinsurance agreement with Sagicor Life; inter-segment revenues in 2015
were US $82 million and inter-segment expenses were US $5 million in
2016 and US $82 million in 2015. Premium revenue recorded in 2016
was US $74 million compared to US $81 million in the prior year and
was impacted by lower annuity premiums written in the segment in
2016. Investment income for 2016 totalled US $58 million compared to
the prior year amount of US $60 million.
INCOME - $ millions
Revenue
Benefits
Expenses and taxes
Segment income
Segment income attributable to shareholders
FINANCIAL POSITION - $ millions
Assets
Liabilities
Net assets
2016
524
(249)
(185)
90
44
2016
2,674
2015
511
(249)
(182)
80
39
2015
2,513
SAGICOR USA
INCOME - $ millions
Revenue
Inter-segment reinsurance revenue
Benefits
Expenses and taxes
Inter-segment reinsurance expense
(2,223)
(2,116)
Segment income
451
397
Segment income attributable to shareholders
FINANCIAL POSITION - $ millions
Net segment income for the year was US $90 million, compared to a total
of US $80 million recorded for 2015. As the Sagicor Jamaica segment
is owned 49% by the Group, the resulting net income attributable to
shareholders was US $44 million in 2016. (US $39 million in 2015).
Assets
Liabilities
Net assets
2016
149
-
(86)
(57)
5
11
11
2016
1,901
2015
160
(82)
(88)
(65)
82
7
7
2015
1,783
(1,682)
(1,578)
219
205
Financial investments comprised 83% of the segment’s assets at the end
of 2016. The liabilities of this segment were distributed 30% to policy
liabilities and 69% to deposit and security liabilities at the end 2016.
Total benefits amounted to US $86 million in 2016 compared to
US $88 million in 2015. Current insurance benefits were US $82 million
2016 ANNUAL REPORT
71
while the expense for future insurance benefits in 2016 was
US $4 million.
to further underwriting, investment and foreign currency
adjustments constrained by the limit as the experience develops.
Expenses and taxes totalled US $57 million in 2016 compared to
US $65 million in 2015, and was commensurate with the lower premium
revenue which resulted in lower distribution costs.
Net income of the segment for 2016 was US $11 million, compared to the
US $7 million recorded for 2015.
As of December 31, 2016, financial investments comprised 56% of the
segment assets and policy liabilities comprised 85% of the segment
liabilities.
DISCONTINUED OPERATION
The discontinued operation comprises the Sagicor at Lloyd’s business and
consists primarily of property and casualty insurance business written
through Lloyd’s of London Syndicate 1206. The Lloyd’s of London franchise
enables the syndicate to write international business outside of the United
Kingdom.
As stated in a foregoing section, the Group disposed of this business on
December 23, 2013. In accordance with International Financial Reporting
Standards, the Sagicor at Lloyd’s operation is defined as a discontinued
operation.
The terms of the sale included:
• Future price adjustments to the sale consideration representing the
run-off of the 2011, 2012 and 2013 underwriting years. The three
years closed at the end of 2015.
• The future price adjustments were subject to a limit denominated
in sterling. A provision was made up to the limit at the end of 2015
and the amount was paid in 2016.
• During the financial period 2016 to 2018, the results are subject
DISCONTINUED OPERATION
INCOME - $ millions
2016
2015
Movement in price adjustment
Net income/(loss)
1
1
(23)
(23)
FINANCIAL POSITION - $ millions
2016
2015
Assets
Liabilities
Net assets
-
-
-
-
(46)
(46)
LOOKING FORWARD
The global economy is expected to pick up pace in 2017 following the
fragile economic climate in 2016. The increase in economic activity will be
generally seen among emerging and developing economies. However, this
outcome is heavily dependent on the outcome of the Trump administration’s
new policies and their global ramifications. In the US, although the Federal
Reserve has indicated their intention to raise interest rates during 2017, this
outlook will be influenced by the new administration’s stimulus programs.
Following estimated global growth of 3.1% for 2016, the IMF projected a
moderate improvement in global growth of 3.4% for 2017.
Regionally, economic conditions are expected to continue to show signs
of improvement led by the moderate expansion in tourism services and
construction projects. However, sustained recovery in the region hinges
on the economic conditions in developed markets such as the USA and
United Kingdom, which remain the region’s main source markets for
tourism. Within the region, commodity exporters will benefit from
somewhat higher commodity prices, particularly of oil. However, the
region continues to face several risks including the high degree of policy
uncertainty in the United States as well as the uncertainty surrounding
Britain leaving the European Union, BREXIT.
72
SAGICOR FINANCIAL CORPORATION LIMITED
In 2017 the company will continue to focus on its corporate
reorganisation and process improvement projects which should prove
beneficial to our cost of capital and our financial performance. We
will adapt our strategies as required to deliver quality products to our
customers and competitive returns to our shareholders.
2016 ANNUAL REPORT
73
BOAR D OF DIR ECTORS
Each and every one of us has the potential to become a great leader.
As we look ahead to the future, we will lead the way to a better
tomorrow by not only aspiring towards greatness, but also taking
the necessary actions to achieve it. That is how we will become
better leaders, and lead others to do better as well.
BOARD OF D IRECTOR S
Each and every one of us has the potential to become a great leader.
As we look ahead to the future, we will lead the way to a better
tomorrow by not only aspiring towards greatness, but also taking
the necessary actions to achieve it. That is how we will become
better leaders, and lead others to do better as well.
BOARD OF DIR ECTOR S
STEPHEN MCNAMARA, 66, was appointed Non-Executive
Chairman on January 1, 2010, having formerly served as
Vice-Chairman since June 2007. He has been an independent
Director since December 2002, and is a citizen of St Lucia and
Ireland. He is a British-trained Attorney-at-law, and is the Senior
Partner of McNamara & Company, Attorneys-at-Law of St Lucia.
Mr McNamara was elected to the Board of Sagicor Life Inc in
1997. He is Chairman of the Group’s main operating subsidiary,
Sagicor Life Inc, Sagicor USA, and Sagicor Finance Inc. He
serves as a Director of Sagicor Group Jamaica Limited, and a
number of other subsidiaries within the Group.
ANDREW ALEONG, 56, has been an independent Director
since June 2005, and is a citizen of Trinidad and Tobago. He
holds an MBA from the Richard Ivey School of Business,
University of Western Ontario, Canada. Mr Aleong is Group
Managing Director of the Albrosco Group of Companies,
Trinidad and Tobago, and has served the Trinidad and
Tobago manufacturing industry for over 25 years. He is a
former President of the Trinidad and Tobago Manufacturers’
Association. Mr Aleong also serves as a Director of a number of
private companies. He was elected a Director of Sagicor Life Inc
in 2005, and is also a Director of a number of other subsidiaries
within the Group.
PROFESSOR SIR HILARY BECKLES, K.A, 61, has been
an independent Director since June 2005, and is a citizen of
Barbados. Sir Hilary earned his PhD from Hull University,
United Kingdom, and received an Honorary Doctorate of Letters
from the same University in 2003. He is the Vice Chancellor
of the University of the West Indies, and has previously
served as the Head of the History Department and Dean of
the Faculty of Humanities. In 1998, he was appointed Pro-
Vice-Chancellor for Undergraduate Studies and, in 2002, the
Principal of Cave Hill Campus. Sir Hilary has published widely
on Caribbean economic history, cricket history and culture and
higher education, and serves on the Editorial Boards of several
academic journals. He has lectured in Africa, Asia, Europe and
the Americas. He was elected a Director of Sagicor Life Inc
in 2005. He is a member of the Secretary General of the UN,
Advisory Board on Science and Sustainable Development, and
Vice President of the Commonwealth Ministers’ Advisory Board
on Sport.
76
76
SAGICOR
SAGICOR FINANCIAL CORPORATION LIMITED
PETER CLARKE, 62, has been an independent Director since
June 2010, and is a citizen of Trinidad and Tobago. He obtained
a Bachelor of Arts degree from Yale University and a Law degree
from Downing College, Cambridge University. He was called to
the Bar as a member of Grays Inn, London, in 1979 and to the
Bar of Trinidad and Tobago in 1980. Mr Clarke is a Financial
Consultant, who formerly practised as a Barrister-at-Law before
embarking on a 22-year career in stockbroking. From 1984
to 2000, he was the Managing Director of Money Managers
Limited, and Chief Executive of West Indies Stockbrokers
Limited from 2001 until his retirement in 2005.
Mr Clarke, is a Director of a number of companies in Trinidad
and Tobago, including the Trinidad and Tobago Stock Exchange.
He is also a member of the University of the West Indies
Development and Endowment Fund, and the Finance Council
of the Roman Catholic Archdiocese of Port of Spain. From 2002
to 2005, he was a Director of the Trinidad and Tobago Chamber
of Industry and Commerce. Mr Clarke also serves as a Director
of Sagicor Life Inc, Sagicor Group Jamaica Limited and Sagicor
Life Jamaica Limited.
DR JEANNINE COMMA, 66, has been an independent
Director since June 2007, and is Chairman of the Human
Resources Committee. She is a citizen of Trinidad and Tobago
and Barbados. She holds a PhD from George Washington
University, Washington, DC, USA, and is also a graduate of the
University of the Virgin Islands. Dr Comma is CEO/Director of
the Sagicor Cave Hill School of Business and Management Inc.
of The University of the West Indies, Cave Hill Campus.
Dr Comma has extensive experience in Leadership
Development, Organisation Development, Strategic Planning,
Transformation Management and Corporate Governance.
She has made significant contributions to the development of
human capital within the regional business community, as well
as engaged in several consulting assignments with Caribbean
Governments and public sector agencies throughout the region.
She is an Executive, an Academic, a Consultant, a Leadership
Development Expert and a Certified Executive Coach.
She serves on the Boards of the Barbados Tourism Investment
Inc., the National Initiative for Service Excellence, the Barbados
Entrepreneurship Foundation as well as the Commonwealth
Association of Public Administration and Management
(CAPAM). Dr Comma was elected a Director of Sagicor Life Inc.
in 2006.
MONISH DUTT, 58, has been an independent Director
since 2012 and is a citizen of India and a permanent resident
of the United States of America. He holds an MBA with
a concentration in Finance from the London Business
School, London University, and a BA in Economics from the
University of Delhi. He is a Fellow of the Institute of Chartered
Accountants, London, England. Currently a Consultant
on Emerging Markets, Mr Dutt is a seasoned investment
professional who, for the 25 years preceding 2011, was employed
with International Finance Corporation (IFC), a member of the
World Bank Group.
While at IFC, he held various positions, the most recent of
which was Chief Credit Officer for Global Financial Institutions
& Private Equity Funds. He was formerly the Head of IFC’s
Private Equity Advisory Group; the Head of the Baltics, Central
Europe, Turkey and Balkans Group; Principal Investment
Officer for Asia; Senior Investment Officer for Central & Eastern
Europe, and an Investment Officer for Africa, Latin America and
Asia. Mr Dutt has extensive experience evaluating investment
proposals in financial institutions and private equity funds
globally, structuring investments, tracking global investment
portfolios, and providing quality control guidance to private
equity fund investments. Mr Dutt has also represented IFC on
boards of investee companies. Mr Dutt serves as a Director of
Sagicor Bank Jamaica Limited.
2016 ANNUAL REPORT
2016 ANNUAL REPORT
77
77
DR MARJORIE FYFFE-CAMPBELL, 65, has been an
independent Director since June 2005, and is a citizen of
Jamaica. Dr Fyffe-Campbell recently completed her Doctorate
in Business Administration from the Mona School of Business
and Management, University of the West Indies. She is a
Management Consultant, and holds an MSc in Accounting from
the University of the West Indies, is a Fellow of the Institute
of Chartered Accountants of Jamaica and a member of the
Hospitality, Financial and Technology Professionals. She is
a former President and Chief Executive Officer of the Urban
Development Corporation, Jamaica.
RICHARD KELLMAN, 65, was elected as a Director in June
2009, and in November 2009 was appointed Group Chief
Operating Officer.
Mr. Kellman is a citizen of Guyana, holds a BSc degree in
Statistics from University College, London University, and
retired from fellowship of the Institute of Actuaries during
2016. He has wide regional experience in the areas of finance,
pensions and insurance, and has held senior actuarial and
management positions in the industry, as well as served on
several regional Boards.
WILLIAM LUCIE-SMITH, 65, has been an independent
Director since June 2005, and is a citizen of Trinidad and
Tobago. He holds an MA from Oxford University and is
a Chartered Accountant. He is a retired Senior Partner of
PricewaterhouseCoopers, Trinidad and Tobago, where he
headed the Corporate Finance and Recoveries Divisions,
specialising in all aspects of business valuations, privatisation,
mergers and acquisitions and corporate taxation.
Mr Lucie-Smith was elected a Director of Sagicor Life Inc in
2005, and is also a Director of Sagicor USA, and a number of
other subsidiaries within the Group.
Dr Fyffe-Campbell is an Adjunct Lecturer in Enterprise Risk
Management Governance at the Mona School of Business and
Management. She was elected a Director of Sagicor Life Jamaica
in 2002, and is also a Director of other subsidiaries within the
Group.
78
78
SAGICOR
SAGICOR FINANCIAL CORPORATION LIMITED
DODRIDGE MILLER, 59, was appointed Group President and
Chief Executive Officer in July 2002, and has been a Director
since December 2002. A citizen of Barbados, Mr Miller is a
Fellow of the Association of Chartered Certified Accountants
(ACCA), and obtained his MBA from the University of
Wales and Manchester Business School. He holds an LLM in
Corporate and Commercial Law from the University of the
West Indies and, in October 2008, he was conferred with an
Honorary Doctor of Laws degree by the University of the West
Indies. He has more than 30 years’ experience in the banking,
insurance and financial services industries.
Prior to his appointment as Group President and Chief
Executive Officer, he held the positions of Treasurer and Vice
President – Finance and Investments, Deputy Chief Executive
Officer and Chief Operating Officer. Mr Miller joined the Group
in 1989. He is a Director of Sagicor Life Inc, Sagicor USA,
Sagicor Group Jamaica Limited, Sagicor Life Jamaica, Sagicor
Investments Jamaica Limited (formerly Pan Caribbean Financial
Services) and a number of other subsidiaries within the Group.
JOHN SHETTLE, JR, 62, has been an independent Director
since June 2008, and is a citizen of the United States of
America. He received his undergraduate degree from
Washington & Lee University, and holds an MBA from the
Sellinger School of Business at Loyola College, Maryland.
Mr Shettle is an Operating Partner of Stone Point Capital, a
private equity firm in the global financial services industry. He
has over 35 years’ experience in senior management positions
in the property/casualty, health and insurance-related services
industry.
More recently, he served as Senior Advisor to Lightyear Capital,
a private equity firm, and President and Chief Executive Officer
of the Victor O Schinnerer Company. Prior to that, he was the
Chief Executive Officer of Tred Avon Capital Advisors, Inc,
a firm providing advisory services to companies and private
equity firms focused on the insurance sector. He has held senior
management positions at Securitas Capital, Swiss Reinsurance
Company and Frederick, the Maryland-based AVEMCO
Corporation (NYSE). Mr Shettle is also a Director of Sagicor
USA and a number of subsidiaries within the Group.
RICHARD P YOUNG, 67, a citizen of Trinidad and Tobago,
was appointed an independent Director of the Company in
January, 2014. He is a Chartered Accountant by profession,
and has had a distinguished career in accounting, auditing,
insurance and banking. He has over forty years’ experience in
the regional financial services sector, the last seventeen of which
he spent as the Managing Director of Scotiabank Trinidad &
Tobago Limited and a Senior Vice President of The Bank of
Nova Scotia, before retiring in 2012.
Prior to joining Scotiabank, he was the Managing Director of
NEM (West Indies) Insurance Ltd. (NEMWIL). Mr Young also
served as Chairman and Deputy Chairman of other Scotia
Group subsidiaries, as well as Deputy Chairman of the National
Housing Authority. He is a former President of the Council of
the Institute of Chartered Accountants of Trinidad and Tobago;
President of the Bankers Association of Trinidad and Tobago;
Chairman of the Trinidad & Tobago Stock Exchange and
Committee Member of the Association of Insurance Companies
of Trinidad & Tobago. He is Chairman of the Trinidad and
Tobago International Financial Centre.
2016 ANNUAL REPORT
2016 ANNUAL REPORT
79
79
COR PORAT E GOVERNANCE
As a company, our responsibility lies in making today better
than yesterday, and tomorrow even better than today.
Through wise financial planning, our customers can reach their
potential, and embrace anything the future holds.
CORPORATE GOVER NANCE
DIRECTORS’ INTERESTS
Directors’ interests as at December 31, 2016, and as at the record date, March 16, 2017, are as follows:
Shares as at 31-Dec-16 Shares as at 16-Mar-17
Common Shares
Common Shares
Beneficial
Non-
Beneficial
Beneficial
Non-
Beneficial
Stephen McNamara
Andrew Aleong
Professor Sir Hilary Beckles
Peter Clarke
Dr Jeannine Comma
Monish Dutt
Marjorie Fyffe-Campbell
Richard Kellman
William Lucie-Smith
23,993
533,358
9,579
25,000
22,300
1,000
50,850
421,576
121,547
Dodridge Miller
1,707,967
John Shettle, Jr
Richard P. Young
1,000
34,266
0
0
0
0
0
0
0
0
0
0
0
0
23,993
533,358
9,579
25,000
22,300
1,000
50,850
421,576
130,338
1,707,967
1,000
34,266
0
0
0
0
0
0
0
0
0
0
0
0
Restricted Stock Grants
As at 31-Dec-16*
Stock options
As at 31-Dec-16*
Vested
Unvested
Vested
Exercised
Expired
Unvested
Richard Kellman
704,106
108,429
482,029
Dodridge Miller
2,301,497
1,955,898
2,922,096
0
0
0
576,647
159,817
2,632,271
* These remained unchanged at March 16, 2017
82
SAGICOR FINANCIAL CORPORATION LIMITED
BOARD COMPOSITION AND STRUCTURE
1
The maximum number of Directors permitted by the Bye-Laws is 12, and the
minimum is 7. The Board of Directors presently consists of 12 Members, 10
of whom are independent Non-Executive Directors. The remaining 2 are the
Group President and Chief Executive Officer, and the former Group Chief
Operating Officer. Biographical information on the Directors and details of
their interests in the Company as at December 31, 2016 and as at the record
date March 16, 2017 are set out earlier in this Report.
The Board of Directors considers that the quality, skills and experience
of Directors enhance the Board’s effectiveness, and the collective Board
is required to have the core set of skills identified in the Board Core
Competency Matrix on the following page.
2016 ANNUAL REPORT
83
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i
R
Directors’ Skills and Experience
General Management
International Business
Finance/Accounting
Corporate Finance, Mergers & Acquisitions
Strategic Marketing
Corporate Law
Banking
Asset Management
Insurance
Human Resource Management
Property Management and Development
Regulatory
Risk Management
Information Technology
Corporate Governance
Other: Education
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SAGICOR FINANCIAL CORPORATION LIMITED
In addition, individual Directors must also possess specific knowledge and
experience commensurate with the business requirements of the Company
and are also expected to have a style of operation which comprises:
a. high personal standards consistent with the Company’s Code of
Business Conduct and Ethics;
b. commitment to business leadership;
c. courage to express and defend a position;
d. decisiveness and willingness to be held accountable;
e. effective intervention and decision-making style;
f. willingness to contribute to team synergy, and a
g. mature and thoughtful perspective on business.
The Company is also mindful that the Board must reflect the business,
social, economic and cultural jurisdictions from which the Company
draws customer patronage, and that Directors must have sufficient
time available to devote to the performance of their Board duties.
Finally, Directors are required to undergo an annual self-assessment.
This assessment is designed to ensure that appropriate standards of
independence and objectivity are maintained. All non-executive Directors
have satisfied the 2016 independence self-assessment.
2
ROTATION AND RE-ELECTION OF DIRECTORS
The Company’s Bye-laws provide that at least one-third, or the number
nearest thereto, of the directors must retire every year, but a Director shall
not be required to retire unless he/she has been in office for three years.
Consequent upon the Company’s continuance in Bermuda, new
Bye-Laws were adopted, which require that the directors be divided into
three classes, designated as Class I, Class II and Class III.
Andrew Aleong, Professor Sir Hilary Beckles, John Shettle, Jr and
Richard P Young, having been designated as Class I directors, will retire
at the fourteenth Annual Meeting, and all being qualified, have offered
themselves for re-election. Profiles of the nominees are contained in the
Management Proxy Circular accompanying the Notice of the Meeting.
The Board recommends that all the nominees be re-elected. In making
this recommendation, the Board has been guided by the nomination
process overseen by the Corporate Governance and Ethics Committee,
which requires a review of the core competency requirements of the
Board as a whole; the skills and experience of the nominees; their
independence as defined by our Corporate Governance Policy; and their
performance, including their willingness and ability to devote the time
necessary to fulfil their role as Directors. It is intended that Directors who
have served on the Board for nine or more years be subject to enhanced
due diligence by the Corporate Governance and Ethics Committee to
ensure that their performance over the period of their tenure is such as
to justify the Committee’s recommendation to the Board that they be
nominated for re-election. Further consideration is being given to the
form of enhanced review as part of the comprehensive update to the
Corporate Governance Manual which will be completed in 2017.
NEW DIRECTOR ORIENTATION
3
The Company’s Corporate Governance Manual expressly recognises the
importance of an efficient and effective on-boarding process for new
Directors. To this end, the Manual establishes a New Director Orientation
Programme to assist in developing a high level of institutional, boardroom
and interpersonal comfort in order to expedite his/her effectiveness as
a director. The Company has established an online Board Portal for the
distribution and housing of Board Meeting materials and other corporate
information. All Directors therefore have immediate and constant access to
all necessary company materials and documents.
4 ON-GOING DIRECTOR EDUCATION
During the year, on-going Director education included sessions on rating
agencies’ methodologies and changes in international accounting standards.
The Board is committed to continuing these education sessions to ensure
Director effectiveness is optimised by enhancing Director knowledge.
5
BOARD RESPONSIBILITIES
5.1 BOARD OF DIRECTORS
The Board of Directors is collectively responsible for providing
entrepreneurial leadership, guidance and oversight to the Company,
2016 ANNUAL REPORT
85
within a framework of prudent and effective controls. This framework
enables risk to be assessed and managed, with a view to maximising
shareholder wealth within the bounds of law and community
standards of ethical behaviour.
The Board’s six main responsibilities, which it executes through
decision-making and oversight, are strategic planning; enterprise
risk management; executive succession planning and performance
evaluation; shareholder communications and public disclosures;
internal controls and corporate governance.
The respective roles of the Chairman of the Board, the Board,
Committee Chairmen, Committees and Management are
clearly defined. Position descriptions explaining the roles,
responsibilities and desired competencies have been developed
for the Chairman of the Board, the Chairmen of each Board
Committee, as well as the President & CEO. The Group CEO and
the Executive Committee (ExCom) are responsible for the day-
to-day management of the Group. Their role is to formulate and
implement strategy, operational plans, policies, procedures and
budgets; monitor operating and financial performance; assess
and control risk; prioritise and allocate resources and monitor
competitive and environmental forces in each area of operation.
The roles of functional Group Executives, who form part of ExCom,
are also specifically defined.
5.2 BOARD COMMITTEES
The four Standing Committees of the Board - Audit; Corporate
Governance and Ethics; Human Resources and Investment and Risk
- play an integral role in the governance process, in that they assist
the Board with the proper discharge of its functions by providing
an opportunity for more in-depth discussions on areas not reserved
specifically for the Board. The mandates of all the Committees comply
with best practice.
External Auditors. The Committee is also required to review the
annual audit plan, interim and audited financial statements, and
International Financial Reporting Standards having a significant
impact on the financial statements. It also reviews actuarial reports
and recommendations.
The Committee oversees the Internal Audit function, reviewing
Internal Audit’s assessment of the adequacy and effectiveness of the
Group’s internal controls, compliance with legal, statutory, regulatory
and other requirements, and management of risk. The Committee’s
composition meets the independence and skill requirements of the
Group’s Corporate Governance Policy. The Members are financially
literate, and three Members, William Lucie-Smith, Monish Dutt and
Marjorie Fyffe- Campbell, all Chartered Accountants, have relevant
accounting expertise.
The current Members are:
• William Lucie-Smith (appointed a Member on August 24,
2005 and Chairman on June 28, 2006);
• Marjorie Fyffe- Campbell (appointed September 11, 2008);
• Dr Jeannine Comma (appointed September 11, 2008);
• Monish Dutt (appointed March 18, 2014), and
• Peter Clarke (appointed March 21, 2014).
The role of the Corporate Governance and Ethics Committee is
principally to develop and recommend to the Board policies and
procedures to establish and maintain best practice standards of
Corporate Governance and Corporate Ethics. It also manages the
process for Director succession, Director performance, the operation
of the President, the composition of Board and Committees,
shareholder communications, and corporate image. The Committee’s
composition meets the independence requirements of the Group’s
Corporate Governance Policy.
The current Members are:
The mandate of the Audit Committee is to oversee the external
audit process, and manage all aspects of the relationship with the
• Stephen McNamara (appointed a Member on March 9, 2004
and Chairman on February 17, 2010);
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SAGICOR FINANCIAL CORPORATION LIMITED
• Professor Sir Hilary Beckles (appointed March 18, 2009);
• Marjorie Fyffe-Campbell (appointed March 18, 2009);
• John Shettle, Jr (appointed August 18, 2010), and
• Richard P. Young (appointed March 18, 2014).
The mandate of the Human Resources Committee is to advise the
Board with respect to compensation policies, programmes and plans;
human resources policies and practices to attain the Company’s
strategic goals; executive management recruitment; succession
plans; performance evaluation and compensation. The Committee’s
composition meets the independence requirements of the Group’s
Corporate Governance Policy.
The current Members are:
• Dr Jeannine Comma (appointed a Member on September 18,
2007, and Chairman on August 24, 2011);
• Stephen McNamara (appointed August 18, 2010);
• Andrew Aleong (appointed March 23, 2012), and
• Monish Dutt (appointed March 18, 2014).
The Investment and Risk Committee is charged with ensuring
generally that the Group manages risk within its defined philosophy
and appetite, and in compliance with policy risk parameters. Its
specific mandate is to ensure that an appropriate enterprise risk
management framework is implemented throughout the Group,
approve risk policies and risk undertakings and exposures reserved
for Board decision. It continually monitors exposures relating to
certain risks. Committee Members are required to understand the
enterprise’s significant inherent risks and the policies and controls
used by Management to assess, manage and report these risks. The
Committee regularly reviews the Group’s risk profile, and assesses
Management’s plans for ensuring financial stability and capital
soundness. The Committee’s composition meets the independence
requirements of the Group’s Corporate Governance Policy.
The current Members are:
• Stephen McNamara (appointed a Member on November 26,
2003 and Chairman on February 17, 2010);
• Andrew Aleong (appointed March 18, 2009);
• John Shettle, Jr (appointed March 18, 2009;
• Peter Clarke (appointed August 18, 2010);
• Richard P. Young (appointed March 18, 2014), and
• William Lucie-Smith (appointed March 21, 2014).
BOARD EVALUATION
6
The Board undertook its annual performance evaluation to assess the
effectiveness of the Board’s performance as a whole. The evaluation took the
form of a self-assessment and peer-review questionnaire, and an evaluation
of the Corporate Governance system as a whole. Findings continue to reveal
ongoing opportunities for the enhancement of our Corporate Governance
practices. The Corporate Governance and Ethics Committee continues to
manage Director independence and potential conflicts of interest, and the
Committee concluded that Directors continued to meet the independence
requirements under our Corporate Governance Policy.
INTERLOCKING DIRECTORSHIPS
7
The Corporate Governance Recommendations of the Barbados Stock
Exchange require that the Company makes certain disclosures relating
to Directors’ interlocks. In addition to their service on the Board of the
Company and the Boards of various Group subsidiaries, the following
Company Directors also serve together on the Board of the publicly-listed
company appearing next to their names:
Directors
Company
Richard P Young
William Lucie-Smith
Massy Holdings Ltd
2016 ANNUAL REPORT
87
BOARD OPERATIONS
8
During 2016, Management engaged the Board of Directors (BOD) 22
times, either in formal meetings or by requests for round-robin decisions
in between meetings. In relation to the engagement of the Standing
Committees of the Board, the Audit Committee (AC) met 5 times; the
Corporate Governance and Ethics Committee (CGC) met 3 times; the
Human Resources Committee (HRC) met 4 times; and the Investment and
Risk Committee (IRC) met 3 times. Directors’ record of attendance was as
follows:
Stephen McNamara
Andrew Aleong
Prof Sir Hilary Beckles
Peter Clarke
Dr Jeannine Comma
Monish Dutt
BOD
22 of 22
20 of 22
19 of 22
21 of 22
20 of 22
22 of 22
Marjorie Fyffe-Campbell
20 of 22
Richard Kellman
William Lucie-Smith
Dodridge Miller
John Shettle, Jr
Richard P Young
21 of 22
19 of 22
21 of 22
21 of 22
21 of 22
AC
5 of 5
5 of 5
5 of 5
4 of 5
4 of 5
CGC
3 of 3
3 of 3
3 of 3
2 of 3
3 of 3
The Board manages an annual schedule of critical agenda items designed
to ensure that it fulfils its recurring obligations, and that Board-reserved
items are routinely considered. The principal business at Board meetings
in 2016 was to:
88
SAGICOR FINANCIAL CORPORATION LIMITED
HRC
4 of 4
4 of 4
4 of 4
4 of 4
IRC
2 of 3
2 of 3
3 of 3
3 of 3
3 of 3
3 of 3
Total
31 of 32
26 of 29
22 of 25
29 of 30
29 of 31
31 of 31
27 of 30
21 of 22
26 of 30
21 of 22
26 of 28
27 of 28
%
97
90
88
97
94
100
90
95
87
95
93
96
• consider and approve the Group strategic plan, capital plan and
projections for the period 2017 to 2019;
• consider the terms of the US$75 million fixed-rate, short-term
notes issued by the Company;
• consider acquisition opportunities;
• receive reports on the Process Review and Optimisation initiative;
• consider and approve the proposed re-domiciliation of the
Company to Bermuda;
• receive reports on proposed corporate reorganisation
• review periodically the Group capital and liquidity plan, strategic
and business development initiatives forming part of the Strategic
Plan, and other key initiatives;
• receive and consider periodic reports and presentations from
Management on the performance of various subsidiaries within
the Group and the Group, on a consolidated basis;
• review and approve unaudited interim and audited annual
consolidated financial statements;
• approve interim and final dividends;
• approve the redemption of the redeemable convertible preference
shares;
• review and approve actuarial reports of the Appointed Actuary, and
• receive reports on work being carried out by Board Committees,
and consider and approve their recommendations as required.
• reviewing actuarial reports of the Appointed Actuary;
• reviewing reports of the External Auditors on key audit issues;
• reviewing the financial performance of the Group and key
subsidiaries;
• examining the implications of changes to International Financial
Reporting Standards;
• approving the 2016 Internal Audit Plan, reviewing Internal Audit
reports and monitoring Management action on open Internal
Audit items;
• reviewing compliance with various financial covenants;
• reviewing reports on pending material litigation and claims, and
pending regulatory issues;
• reviewing regulatory compliance and other compliance reports;
• assessing the adequacy of the Committee’s mandate, and
• evaluating its effectiveness in fulfilling same.
CORPORATE GOVERNANCE AND ETHICS COMMITTEE
REPORT:
The Committee’s principal business during 2016 included:
• reviewing Board and Director core competencies and identifying
gaps to inform the nomination process;
• overseeing Director nominations, Board Committee, subsidiary
and outside Board appointments;
• overseeing the management of independence requirements and
9
COMMITTEE OPERATIONS
conflicts of interest;
AUDIT COMMITTEE REPORT:
The 2016 activities of the Audit Committee included:
• reviewing and approving the external audit plan and timetable;
• evaluating the performance of the External Auditors for Group
entities and approving their audit fees;
• overseeing the Director self and peer performance evaluation
process;
• monitoring Director attendance;
• reviewing Corporate Governance structure of subsidiaries;
• reviewing Insider Trading Policy;
• conducting its annual review of the adequacy of the Code of
• reviewing the External Auditors’ 2015 Management Letter and
Business Conduct and Ethics;
Report on the 2015 audit;
• generally monitoring the operation of Corporate Governance
• approving the 2016 Audit Engagement Letter;
• reviewing and recommending for approval by the Board interim
and annual audited financial statements;
• making dividend recommendations to the Board;
policies and practices and
• assessing the adequacy of the Committee’s mandate, and
evaluating its effectiveness in fulfilling same.
2016 ANNUAL REPORT
89
HUMAN RESOURCES COMMITTEE REPORT:
During 2016, the Human Resources Committee:
• reviewed executive performance, compensation and terms of
engagement;
and rewarded for team as well as individual performances. Factors such as
market competition; supply and demand of critical skills and competencies;
and strategic issues are all considered in determining a position’s
competitive market value.
Base salaries are reviewed annually for all staff and, in determining
whether to approve salary increases, the Board of Directors considers
various factors, including: the ability to pay; local labour market statistics
e.g. cost of living and compensation trend data; merit budget; and the
performance of the Company and business units. All employees must
meet a minimum performance standard each year to be considered for a
salary increase.
The quantum of annual cash incentive compensation, once earned, is
calculated using a methodology called the Balance Score Card. This
methodology takes into account financial as well as non-financial
measures, including revenue, profitability, efficiency and customer
satisfaction. In addition, compensation includes a non-cash component
(long-term incentive) which is performance based and takes into
consideration an externally calculated cost of equity. For the financial
year under review, compensation paid in cash to the top 5 members of the
Executive Management team of the Company, amounted in aggregate to
US$5,465,000. The table immediately below shows a breakdown of the
non-cash component of the compensation of the top 5 members of the
Executive Management team.
• monitored succession planning and leadership and development
plans at the executive level;
• considered succession planning needs across the Group for senior
employees below the executive level;
• granted awards to qualified participants under the annual cash
incentive, long-term incentive plan (LTI) and employee share
ownership plan (ESOP) based on performance against established
benchmarks;
• reviewed aspects of the rules of the Company’s annual long-term
incentive plans;
• reviewed ESOP financial statements, and
• assessed the adequacy of the Committee’s mandate and evaluated
its effectiveness in fulfilling same.
INVESTMENT AND RISK COMMITTEE REPORT:
In 2016, the Investment and Risk Committee’s work included monitoring
key risks to which the Group is exposed. These included:
• reviewing in detail interest rate, credit, liquidity and foreign
exchange risk dashboards for the Company as a whole, and for its
major subsidiaries;
• monitoring of risk exposures and reviewing mitigation strategies
designed to manage risk, and generally overseeing the enterprise
risk management process, and
• reviewing investment performance.
10 SAGICOR’S COMPENSATION PHILOSOPHY
The Sagicor Group’s compensation strategy for all employees, including
Executive Management, aims to achieve an efficient and competitive position
for the Company as an employer of choice in the markets we serve; while
supporting our efforts to attract, motivate and retain the best candidates for
all positions across the Group. The compensation strategy seeks to strike a
balance between the needs of the employee and the strategic objectives of
the Company, while ensuring that all employees are treated fairly, recognised
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SAGICOR FINANCIAL CORPORATION LIMITED
Restricted Stock Grants
Stock options
For the financial year ended 31-Dec-16 For the financial year ended 31-Dec-16
Top 5 Members of the Group Executive
Management Team
Vested
929,422
Vested
1,150,158
BOARD OF DIRECTORS
The Company’s compensation philosophy for the Board of Directors has
objectives akin to that for employees. It is designed to attract, retain and
motivate Directors of the quality required to ensure the efficient oversight of
the Company’s business. In 2006, the Board commissioned the independent
firm of Ernst & Young of Atlanta to review Directors’ compensation and
make compensation recommendations. After examination of international
best practice in the area, and consideration of various factors, including
the level of responsibility, potential liability, and the time and commitment
required for the role, Ernst & Young made certain recommendations to the
Board regarding the levels and structure of compensation for Directors.
These recommendations were approved by shareholders at the 2007 Annual
Meeting, and remain unaltered to-date. In 2016, the Company accepted an
invitation to participate in a directors’ compensation survey being initiated
by another entity but this exercise was aborted. In 2017, the Company will be
reviewing its level of compensation for Directors.
Non-Executive Directors do not participate in any performance-based
incentive plans, and their remuneration consists solely of cash. The Board
Chairman and Directors are paid fees, and Committee Chairmen and
Members are paid an additional fee for each Committee on which they
serve. Non-Executive Directors’ fees for the financial year under review
amounted in aggregate to US $590,000.
Directors receive no additional benefits, but are reimbursed reasonable
and customary out-of-pocket expenses associated with their attendance at
meetings, and the performance of their role as Directors. Executives who
are Directors are not paid fees.
2016 ANNUAL REPORT
91
FEES PAID TO EXTERNAL AUDITORS
11
PricewaterhouseCoopers is the Group’s external auditor. Following is a
statement of the fees paid to the external auditors for audit and non-audit
services during 2015 and 2016:
Services
Fees Paid US$ ‘000
Audit
Non-Audit
Statutory Returns
Other
Total
2015
3,420
254
912
1,956
*6,542
2016
2,950
273
944
454
4,621
* This amount included fees of US$1,476,000 incurred by Sagicor Finance
(2015) Ltd for the US$320 million Corporate Bond raised in 2015.
12 ENTERPRISE RISK MANAGEMENT
The Group’s enterprise risk management framework comprises articulation
of risk philosophy and appetite; risk structures and processes; risk policies
and a regime of monitoring risk exposures, both at the enterprise and
subsidiary levels. The Group’s activities of issuing insurance contracts,
accepting funds from depositors, and investing insurance premium and
deposit receipts in a variety of financial and other assets expose the Group
to various financial, operational and business risks. Financial risks include
insurance credit, liquidity, and market risks. Operational risks include
fraud; damage to physical assets; improper business practices; improper
employment practices; business interruption and system failures, and
execution and process errors. Business risks include legal and regulatory,
strategic and reputational risks. Exposure and sensitivity to financial risks
are disclosed in Notes 41 to 43 to the 2016 audited financial statements
contained in this Annual Report.
INTERNAL AUDIT
13
The role of Group Internal Audit is to provide independent, objective
assurance and consulting services, designed to add value and improve
the organisation’s operations by utilising an appropriate risk-based audit
methodology across the Group. It helps the organisation to accomplish
its objectives by bringing a systematic, disciplined approach to the
evaluation and improvement of risk management, control and governance
processes. The scope of work of Internal Audit is to determine whether
the organisation’s network of risk management controls, and governance
processes, as designed and represented by Management, is adequate and
functioning in a manner to ensure, among other things, that risks are
appropriately identified and managed and that employees’ actions are
in compliance with policies, standards, procedures, applicable laws and
regulations. The work of Internal Audit also seeks to give assurance that
resources are acquired economically, used efficiently, and adequately
protected, and that quality and continuous improvement are fostered in
the organisation’s control process. The work also ensures that significant
legislative or regulatory issues impacting the organisation are recognised and
addressed appropriately.
14 COMPLIANCE
Sagicor continues to strengthen and streamline its compliance function,
in response to the increasing complexity of regulatory and other risks,
with the Audit Committee continuing to exercise oversight of all aspects of
compliance.
The Group Compliance Committee also contributes to compliance
management. Its role includes ensuring that compliance is governed by
appropriate policies and is implemented and administered in accordance
with such policies, ensuring that risk management practices are
developed, implemented and administered for identifying, assessing,
managing, reporting and monitoring compliance risk. The role also
lends value-added support for the administration of, and compliance
with, Sagicor’s Code of Business Conduct and Ethics. The Committee’s
membership includes the Group Chief Compliance Officer as Chair, and
the Chief Compliance Officer of each major operating subsidiary, the
Group Chief Risk Officer, and Group General Counsel.
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SAGICOR FINANCIAL CORPORATION LIMITED
15 CODE OF BUSINESS CONDUCT AND ETHICS
Sagicor’s Code of Business Conduct and Ethics (which codifies our
corporate value system embracing legal, moral and ethical conduct,
accountability, corporate social responsibility and leadership) requires
Directors, Management, Staff and Advisors to acknowledge, on an annual
basis, that they have read the Code and to indicate whether or not they are in
compliance. Mechanisms through which code violations can be reported and
channelled to the appropriate parties operated satisfactorily, including widely
available anonymous whistle-blowing facilities. These enabled Management
to take timely corrective action. The Corporate Governance and Ethics
Committee carried out its annual review of the Code to ensure its adequacy.
INVESTOR RELATIONS AND COMMUNICATIONS
16
During 2016, the Company continued to execute its investor relations
communications programme with periodic briefings to the Media, Analysts
and Brokers. The Company continues to ensure that price-sensitive
information is released across markets at the same time, and to manage its
Insider Trading Policy as an integral part of the Code of Business Conduct
and Ethics. The annual Shareholders’ Briefing was held in Trinidad, where
the majority of Shareholders reside, for the benefit of Shareholders who were
unable to travel to Barbados for the Annual Meeting of Shareholders.
By Order of the Board of Directors.
Althea C. Hazzard
Corporate Secretary
March 31, 2017
2016 ANNUAL REPORT
93
EXECUTIVE M ANAGEMENT
We will always be there for our customers
and guide them with sage advice today, so they may fulfill their goals tomorrow.
Together, we have the power to make each day better than the last.
EXECUTIVE MA NAGEMENT
Dodridge D Miller FCCA, MBA, LLM, LLD (Hon)
Group President and Chief Executive Officer
•
•
•
•
•
•
Appointed Group President and Chief Executive Officer in 2002, and has been a Director since December 2002.
Fellow of the Association of Chartered Certified Accountants (FCCA), and obtained his MBA from the University of Wales and Manchester
Business School.
Holds an LLM in Corporate and Commercial Law from the University of the West Indies and, in October 2008, he was conferred with an
Honorary Doctor of Laws degree by the University of the West Indies.
More than 30 years’ experience in the banking, insurance and financial services industries.
Prior to his appointment as Group President and Chief Executive Officer, he held the positions of Treasurer and Executive Vice President –
Finance and Investments, Deputy Chief Executive Officer and Chief Operating Officer.
Joined the Group in 1989. He is a Director of Sagicor Life Inc, Sagicor USA, Sagicor Group Jamaica Limited, Sagicor Life Jamaica Limited,
Sagicor Investments Jamaica Limited and other subsidiaries within the Group.
Richard M Kellman BSc
Group Chief Operating Officer, with responsibility for Sagicor Life Inc, Southern Caribbean
•
•
•
•
Elected a Director in June 2009, and was appointed Group Chief Operating Officer in 2009.
Holds a BSc in Statistics from University College, London University, and retired from fellowship of the Institute of Actuaries during 2016.
More than 30 years’ experience in the pensions, insurance and financial services industries.
Held senior actuarial and management positions, and served on several regional Boards.
Dr. M Patricia Downes-Grant CBE, MA, MBA, DBA, LLD (Hon)
Executive Director, Corporate
•
•
•
•
•
•
Appointed President and Chief Executive Officer of Sagicor Life Inc in 2006, having served as Group Chief Operating Officer since 2002.
Joined Sagicor in 1991, and held several senior positions, including those of Vice President, Investments and Treasurer and Executive Vice
President (Finance and Investments) before being appointed Chief Executive Officer.
Holds an MBA in Finance, an MA in Economics, a Doctorate in Business Administration (Finance) and an Honorary Doctor of Laws degree
from the University of the West Indies.
Prior to joining Sagicor, Dr. Downes-Grant was a Senior Manager with PricewaterhouseCoopers.
More than 20 years of experience in insurance, banking and asset management.
Former Chairman of the Barbados Stock Exchange and Barbados Central Securities Depository, and a Director of several companies within
the Sagicor Group and private companies.
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SAGICOR FINANCIAL CORPORATION LIMITED
Anthony O Chandler CPA, CGA, MBA
Group Chief Financial Controller
•
•
•
•
•
•
•
Appointed Group Chief Financial Controller in 2013.
Member of the Certified General Accountants Association of Canada, and holds an MBA from the University of Manchester.
Prior to this, he served as Executive Vice President and Chief Financial Officer of Sagicor Life Inc from 2011.
Joined Sagicor in 1995 as Financial Accountant, and was transferred to the Group subsidiary, Island Life Insurance Company Ltd in 2000.
Has over 20 years of experience in the insurance industry.
In 2003 he joined the management of Life of Jamaica as Head of its Internal Audit function, before returning to Barbados in the position of
Vice President, Finance, of Sagicor Life Inc later in the same year.
In 2006 he was promoted to Vice President and Chief Financial Officer of Sagicor Life Inc.
Althea C Hazzard LLM (Cantab), FCIS, MICA
Executive Vice President, General Counsel and Corporate Secretary
•
•
•
•
Appointed Executive Vice President, General Counsel and Corporate Secretary of Sagicor Financial Corporation in 2014, having previously
served in the positions of Vice President, Legal and Compliance of Sagicor Life Inc and Corporate Secretary of Life of Barbados Limited.
An Attorney-at-Law, Chartered Secretary and Compliance Professional, Mrs. Hazzard joined the Group in 1997 after an eight-year attachment
to a leading corporate law firm in Barbados, specialising in international business.
Holds a Bachelor of Laws Honors Degree from the University of the West Indies and a Certificate in Legal Education from the Hugh
Wooding Law School in Trinidad, and was called to the Bar in Barbados and Trinidad and Tobago in 1989. She obtained her Master of
Laws degree from the University of Cambridge, United Kingdom, and also holds International Diplomas in Compliance and Anti-money
Laundering from the International Compliance Association in the United Kingdom and the Executive Diploma in Management from the
Sagicor Cave Hill School of Business and Management.
Professional member of the International Compliance Association and a Fellow of the Institute of Chartered Secretaries and Administrators
in Canada.
Ravi C Rambarran BSc, MSc, FIA
Executive Vice President Corporate Strategy & Investor Relations
•
•
•
•
•
•
•
In January 2017 he assumed responsibility for group strategy, mergers and acquisitions, investor relations with rating agencies.
Appointed President and Chief Executive Officer of Sagicor International in 2007.
Joined the Group in 1997.
Awarded an Open Mathematics Scholarship by the Government of Trinidad and Tobago, has a BSc (Hons) in Actuarial Science from City
University, London, an MSc in Finance from the University of London, and is a Fellow of the Institute of Actuaries.
More than 20 years of experience, both regionally and internationally, in the pension, insurance and asset management industries.
Director of Sagicor USA and Sagicor General.
Member of the Executive of the Caribbean Actuarial Association and represents the Caribbean on the International Actuarial Association
Insurance Committee.
2016 ANNUAL REPORT
97
Ronald B. Blitstein BA, MBA
Group Chief Information Officer
•
•
•
•
•
•
Joined Sagicor Financial Corporation in 2013.
Holds a BA in Political Science, MBA in Finance from Syracuse University.
IT professional, with knowledge in all areas of information technology and its application to driving improved business outcomes.
Previously served as Director, Business Technology and Strategies Practice for a global advisory firm, supporting Fortune 500 clients, national
governments and United Nations agencies.
Held key executive leadership positions at Revlon, Pitney Bowes, BOC Group, and Xerox Corporation.
Served as a Six Sigma Champion for firms pursuing enterprise operational excellence.
J. Andrew Gallagher FSA, FCIA, CERA
Chief Risk Officer
•
•
•
•
•
Appointed Chief Risk Officer for the Group in 2007.
Joined Sagicor in 1997 as Resident Actuary.
Holds a Bachelor of Mathematics degree from the University of Waterloo.
Fellow of Canadian Institute of Actuaries, Fellow of the Society of Actuaries and a Chartered Enterprises Risk Analyst.
More than 20 years in the insurance industry.
Donald S Austin BSc, MBA, FCCA
President & CEO, Sagicor Life (Eastern Caribbean) lnc
•
•
•
•
Appointed Chief Executive Officer, Sagicor Life (Eastern Caribbean) Inc. in 2015.
Board Member of Sagicor Funds Incorporated and Sagicor Asset Management Inc.
Former Chairman of the Board of Directors of LIME Grenada and LIME Dominica and Current Board Member of LIME Barbados.
Holds a Bachelor of Science (Honours) in Electronic Engineering from the University of Bristol, a Master of Business Administration from
Manchester Business School and he is a Fellow of the Association of Chartered Certified Accountants.
Richard O Byles BSc, MSc
President and Chief Executive Officer, Sagicor Group Jamaica Limited
•
•
•
•
•
•
Appointed President and CEO of Sagicor Life Jamaica Limited in 2004.
In February 2016 he reached retirement age and is now employed on a short term contract until the new Chief Executive Officer assumes the
position on May 1, 2017.
Holds a BSc in Economics from the University of the West Indies and an MSc in National Development from the University of Bradford, England.
Chairman of the Board of Sagicor Bank Jamaica Limited, Sagicor Property Services Limited, Sagicor Reinsurance Limited (Cayman), Sagicor
Insurance Managers (Cayman), Red Stripe Limited and Pan-Jamaican Investment Trust Ltd.
Former Co-chair of the Economic Programme Oversight Committee (EPOC), a private/public sector committee established to oversee the
Implementation of the IMF Programme in Jamaica.
More than 30 years of experience in insurance, banking and asset management.
98
SAGICOR FINANCIAL CORPORATION LIMITED
Bart F Catmull BSc, CPA
President and Chief Operating Officer, Sagicor USA Inc
•
•
•
•
•
Appointed President and Chief Operating Officer of Sagicor USA in 2013.
Certified Public Accountant (CPA), and obtained his Bachelor of Science degree in Accounting from Brigham Young University.
More than 20 years’ experience in the insurance industry.
Prior to his appointment as President, he held the positions of Chief Operating Officer, Chief Financial Officer, Treasurer and Chief
Accounting Officer in the company.
Joined the Group in 2005, with the predecessor Company since 1999.
J. Edward Clarke FCCA, CIA
Executive Vice President and General Manager, Barbados
•
•
•
•
•
•
Appointed Chief Operating Officer, Sagicor Life Inc and General Manager, Barbados in 2010.
Prior to 2010, he held the position of Group Internal Auditor.
Fellow of the Association of Chartered Certified Accountants and is a Certified Internal Auditor.
More than 30 years’ experience in auditing and finance in Barbados, Nigeria and the USA.
Prior to joining Sagicor, Chief Financial Officer of a major conglomerate in Barbados.
Director of Sagicor General Insurance Inc, Sagicor Funds Inc, Barbados Farms Limited, Globe Finance, the Insurance Association of the
Caribbean and a Vice President of the Barbados Chamber of Commerce and Industry.
Keston D Howell BSc, (Hon), MBA
Executive Vice President and General Manager, Dutch Caribbean & Central America
•
•
•
•
•
Joined Sagicor in July 2006 as Executive Vice-President - Merchant Banking, responsible for the establishment of Sagicor Merchant Bank and
overall Banking Strategy of the Group.
In 2008, assumed the position of Executive Vice President - Sagicor Asset Management Limited.
Holds an MBA from the University of London.
More than 18 years in the insurance and banking industry.
Assumed executive responsibility for Dutch Caribbean and Central America operations and Sagicor Life Aruba N.V. and has executive
oversight of Sagicor Life’s Mortgage Department and Mortgage Recovery Unit.
Robert J L Trestrail BA
Executive Vice President and General Manager, Trinidad & Tobago
•
•
•
•
•
Appointed Executive Vice President and General Manager Trinidad and Tobago in 2007.
Joined the Group in 2001 as an Assistant Vice President – Administration.
Holds a BA – Economics from the University of Toronto.
More than 20 years in the insurance and banking industry.
Promoted to Vice President – Administration in 2004, and became Executive Vice President and General Manager Designate in 2006.
2016 ANNUAL REPORT
99
IN DEX OF
FINANCIAL STATEMENTS
As we look ahead to the future of our company, we will continue
to operate with honesty and transparency. Our word is our bond
and we will never break it. So when people look to
Sagicor for service and advice, they will always know that we will
be there to lead them on the path to success.
IN DEX OF
FINA NCIAL STATEMENTS
As we look ahead to the future of our company, we will continue
to operate with honesty and transparency. Our word is our bond
and we will never break it. So when people look to
Sagicor for service and advice, they will always know that we will
be there to lead them on the path to success.
IN DEX TO THE FINANCIAL STATE ME NTS AND N OTES
Page
Page
Independent Auditor’s Report
104
10 Reinsurance Assets
Appointed Actuary’s Report
109
11
Income Tax Assets
Consolidated Financial Statements:
12 Miscellaneous Assets and Receivables
Statement of Financial Position
110
13 Actuarial Liabilities
Statement of Income
Statement of Comprehensive Income
Statement of Changes in Equity
Statement of Cash Flows
1
Incorporation and Principal Activities
2 Accounting Policies
111
112
113
114
115
115
14 Other Insurance Liabilities
15
Investment Contract Liabilities
16 Notes and Loans Payable
17 Deposit and Security Liabilities
18 Provisions
19
Income Tax Liabilities
3 Critical Accounting Estimates and Judgements
137
20 Accounts Payable and Accrued Liabilities
4 Segments
139
21 Common and Preference Shares
5
Investment Property
149
22 Reserves
6 Associates and Joint Ventures
150
23 Participating Accounts
7 Property, Plant and Equipment
154
24 Premium Revenue
8
Intangible Assets
155
25 Net Investment Income
9 Financial Investments
158
26 Fees and Other Revenue
160
160
160
161
164
165
165
166
166
166
166
167
169
170
170
171
172
102
SAGICOR FINANCIAL CORPORATION LIMITED
27 Policy Benefits & Change in Actuarial Liabilities
28 Interest Expense
29 Employee Costs
30 Equity Compensation Benefits
Page
172
172
173
173
44 Fiduciary Risk
45 Statutory Restrictions on Assets
46 Capital Management
47 Related Party Transactions
31 Employee Retirement Benefits
176
48 Events after December 31, 2016
Page
221
221
222
225
225
32 Income Taxes
33 Deferred Income Taxes
34 Earnings per Common Share
35 Other Comprehensive Income
36 Cash Flows
37 Subsidiary Acquisition and Ownership Changes
38 Discontinued Operation
39 Contingent Liabilities
40 Fair Value of Property
41 Financial Risk
42 Insurance Risk - Property & Casualty Contracts
43 Insurance Risk - Life, Annuity & Health Contracts
180
181
185
186
187
188
188
190
191
192
214
216
2016 ANNUAL REPORT
103
AUDITOR’S REPORT
104
SAGICOR FINANCIAL CORPORATION LIMITED
2016 ANNUAL REPORT
105
106
SAGICOR FINANCIAL CORPORATION LIMITED
2016 ANNUAL REPORT
107
108
SAGICOR FINANCIAL CORPORATION LIMITED
AC TUARY’S REPORT
2016 ANNUAL REPORT
109
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As of December 31, 2016
Sagicor Financial Corporation Limited
Amounts expressed in US $000
Note
2016
2015
Note
2016
2015
ASSETS
Investment property
Property, plant and equipment
Associates and joint ventures
Intangible assets
Financial investments
Reinsurance assets
Income tax assets
Miscellaneous assets and receivables
Cash resources
Total assets
5
7
6
8
9
10
11
12
80,662
167,723
87,293
83,487
79,172
170,249
84,530
88,183
LIABILITIES
Actuarial liabilities
Other insurance liabilities
Investment contract liabilities
Total policy liabilities
4,813,748
4,826,621
Notes and loans payable
777,344
59,575
183,018
279,070
665,819
66,342
168,480
250,489
Deposit and security liabilities
Provisions
Income tax liabilities
Accounts payable and accrued liabilities
6,531,920
6,399,885
Liabilities of discontinued operation
These financial statements have been approved for issue by the Board of Directors on March 31, 2017.
………………………………………………
Director
………………………………………………
Director
Total liabilities
EQUITY
Share capital
Share premium
Reserves
Retained earnings
Total shareholders’ equity
Participating accounts
Non-controlling interest in subsidiaries
Total equity
13
14
15
16
17
18
19
20
38
21
21
22
23
2,776,362
2,632,387
207,122
377,576
3,361,060
395,213
1,623,325
101,292
50,641
204,975
-
205,891
368,596
3,206,874
475,517
1,607,611
88,206
34,765
201,722
46,026
5,736,506
5,660,721
3,029
297,050
(64,795)
300,865
536,149
1,291
257,974
795,414
299,320
-
(59,688)
266,414
506,046
1,383
231,735
739,164
Total liabilities and equity
6,531,920
6,399,885
110
SAGICOR FINANCIAL CORPORATION LIMITED
2
CONSOLIDATED STATEMENT OF INCOME
Year ended December 31, 2016
Sagicor Financial Corporation Limited
Amounts expressed in US $000
Note
2016
2015
Note
2016
2015
REVENUE
Premium revenue
Reinsurance premium expense
Net premium revenue
Net investment income
Fees and other revenue
Gain/(loss) arising on acquisition
Total revenue
BENEFITS
Policy benefits and change in actuarial liabilities
Policy benefits and change in actuarial liabilities reinsured
Net policy benefits and change in actuarial liabilities
Interest expense
Total benefits
EXPENSES
Administrative expenses
Commissions and related compensation
Premium and asset taxes
Finance costs
Depreciation and amortisation
Total expenses
INCOME BEFORE TAXES
Income taxes
NET INCOME FROM CONTINUING OPERATIONS
3
24
24
25
26
37
27
27
28
32
Net income from continuing operations
Net income/(loss) from discontinued operation
38
NET INCOME FOR THE YEAR
107,897
1,412
109,309
833,918
(169,962)
663,956
353,352
116,839
-
969,522
(295,597)
673,925
322,229
109,090
(1,025)
Net income/(loss) is attributable to:
Common shareholders:
From continuing operations
1,134,147
1,104,219
From discontinued operation
Participating policyholders
Non-controlling interests
Basic earnings /(loss) per common share:
34
From continuing operations
From discontinued operation
Fully diluted earnings /(loss) per common
share:
From continuing operations
From discontinued operation
34
693,173
(194,262)
498,911
61,448
560,359
255,326
98,570
10,679
38,333
21,283
424,191
149,597
(41,700)
107,897
692,937
(198,801)
494,136
58,807
552,943
251,892
105,093
14,808
37,234
18,687
427,714
123,562
(25,119)
98,443
98,443
(21,648)
76,795
56,327
(21,648)
34,679
1,285
40,831
76,795
18.2 cents
(7.2) cents
11.0 cents
17.3 cents
(6.6) cents
10.7 cents
60,259
1,412
61,671
110
47,528
109,309
19.5 cents
0.5 cents
20.0 cents
18.7 cents
0.4 cents
19.1 cents
2016 ANNUAL REPORT
111
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended December 31, 2016
Sagicor Financial Corporation Limited
Amounts expressed in US $000
OTHER COMPREHENSIVE INCOME
Note
2016
2015
TOTAL COMPREHENSIVE INCOME
2016
2015
Items net of tax that may be reclassified subsequently
to income:
35
Available for sale assets:
Gains / (losses) on revaluation
Losses / (gains) transferred to income
Net change in actuarial liabilities
Retranslation of foreign currency operations
Items net of tax that will not be reclassified
subsequently to income:
35
Gains / (losses) on revaluation of owner-occupied property
Losses on defined benefit plans
Other items
Net income
Other comprehensive loss
TOTAL COMPREHENSIVE INCOME / (LOSS) FOR THE
YEAR
Total comprehensive income / (loss) is attributable to:
Common shareholders:
From continuing operations
From discontinued operation
Participating policyholders
Non-controlling interests
109,309
(12,571)
96,738
45,811
1,412
47,223
132
49,383
96,738
76,795
(77,392)
(597)
14,461
(21,648)
(7,187)
1,249
5,341
(597)
39,183
2,675
(17,090)
(28,481)
(3,713)
5,145
(13,875)
(128)
(8,858)
(103,101)
(1,175)
48,346
(15,686)
(71,616)
(345)
(5,431)
-
(5,776)
OTHER COMPREHENSIVE LOSS FROM CONTINUING
OPERATIONS
(12,571)
(77,392)
112
SAGICOR FINANCIAL CORPORATION LIMITED
4
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Year ended December 31, 2016
Sagicor Financial Corporation Limited
Amounts expressed in US $000
Share Capital
(note 21)
Share Premium
(note 21)
Reserves
(note 22)
Retained
Earnings
Total
Shareholders’
Equity
Participating
Accounts
(note 23)
Non-controlling
Interests
Total
Equity
2016
Balance, beginning of year
Total comprehensive income from continuing operations
Total comprehensive income from discontinued operation
299,320
-
-
-
-
-
Redomiciliation adjustment net of treasury shares
(296,296)
296,296
Transactions with holders of equity instruments:
Movements in treasury shares
Changes in reserve for equity compensation benefits
Dividends declared (note 21.3)
Transfers and other movements
Balance, end of year
2015
Balance, beginning of year
Total comprehensive income from continuing operations
Total comprehensive income from discontinued operation
Transactions with holders of equity instruments:
Allotment of common shares
Movements in treasury shares
Changes in reserve for equity compensation benefits
Dividends declared (note 21.3)
Transfers and other movements
Balance, end of year
(59,688)
266,414
(4,319)
-
-
-
2,132
50,130
1,412
-
-
-
-
(18,880)
(2,920)
1,789
5
-
-
-
754
-
-
-
3,029
297,050
(64,795)
300,865
295,989
-
-
556
2,775
-
-
-
299,320
-
-
-
-
-
-
-
-
-
(8,765)
244,474
(38,419)
-
-
-
(1,650)
52,880
(21,648)
-
-
-
-
(19,842)
(10,854)
(59,688)
10,550
266,414
506,046
45,811
1,412
-
759
2,132
(18,880)
(1,131)
536,149
531,698
14,461
(21,648)
556
2,775
(1,650)
(19,842)
(304)
506,046
1,383
132
231,735
49,383
-
-
-
-
-
(224)
1,291
364
1,249
-
-
-
-
-
(230)
1,383
-
-
-
(50)
(17,684)
(5,410)
257,974
241,480
5,341
-
-
-
(313)
(14,835)
62
231,735
739,164
95,326
1,412
-
759
2,082
(36,564)
(6,765)
795,414
773,542
21,051
(21,648)
556
2,775
(1,963)
(34,677)
(472)
739,164
5
2016 ANNUAL REPORT
113
CONSOLIDATED STATEMENT OF CASH FLOWS
Year ended December 31, 2016
Sagicor Financial Corporation Limited
Amounts expressed in US $000
OPERATING ACTIVITIES
Income before taxes
149,597
123,562
Movement in treasury shares
(98)
(896)
FINANCING ACTIVITIES
Note
2016
2015
Note
2016
2015
Adjustments for non-cash items, interest and dividends
36.1
(188,098)
(200,783)
Interest and dividends received
Interest paid
Income taxes paid
299,968
(93,620)
(24,948)
299,482
(76,276)
(27,444)
Net increase in investments and operating assets
Net increase in operating liabilities
Net cash flows - operating activities
36.1
36.1
(100,362)
(269,081)
83,793
126,330
58,514
(92,026)
INVESTING ACTIVITIES
Property, plant and equipment, net
36.2
(17,996)
Associates and joint ventures
Intangible assets
Net cash flows - investing activities
(188)
(4,272)
(22,456)
(16,586)
(28,986)
(15,198)
(60,770)
Redemption of SFCL preference shares
Shares issued to non-controlling interest
Other notes and loans payable, net
36.3
Dividends received from associates
Dividends paid to common shareholders
Dividends paid to preference shareholders
Dividends paid to non-controlling interests
Net cash flows - financing activities
(119,991)
(6,634)
34,008
1,788
(13,381)
(5,256)
(17,824)
(127,388)
-
-
156,458
480
(11,842)
(7,800)
(14,600)
121,800
Effects of exchange rate changes
(4,645)
(3,900)
NET CHANGE IN CASH AND CASH EQUIVALENTS -
CONTINUING OPERATIONS
Net change in cash and cash equivalents - discontinued
operation
Cash and cash equivalents, beginning of year
CASH AND CASH EQUIVALENTS, END OF YEAR
36.4
(28,159)
(34,896)
(44,614)
(21,419)
384,879
312,106
441,194
384,879
114
SAGICOR FINANCIAL CORPORATION LIMITED
6
1 INCORPORATION AND PRINCIPAL ACTIVITIES
2 ACCOUNTING POLICIES
On July 20, 2016, Sagicor Financial Corporation continued as an exempted company under the laws of
Bermuda under the name Sagicor Financial Corporation Limited and registered as an external company
under the Companies Act of Barbados on July 20, 2016. Bermuda law does not contemplate companies
with no par value shares, as a consequence on continuance the excess of the par value of $0.01 has
been credited to share premium (note 21).
The Company was originally incorporated on December 6, 2002 under the Companies Act of Barbados
as a public limited liability holding company. On December 6, 2002, Sagicor Life Inc was formed
following its conversion from The Barbados Mutual Life Assurance Society (The Society). On December
30, 2002, the Company allotted common shares to the eligible policyholders of The Society and became
the holding company of Sagicor Life Inc.
Sagicor and its subsidiaries ‘the Group’ operate across the Caribbean and in the United States of
America (USA). There is a discontinued operation in the United Kingdom. Details of the Sagicor’s
holdings and operations are set out in notes 4 and 38.
The principal activities of the Sagicor Group are as follows:
•
•
•
•
Life and health insurance
Annuities and pension administration services
Property and casualty insurance
Banking, investment management and other financial services
For ease of reference, when the term “insurer” is used in the following notes, it refers to either one
or more Group subsidiaries that engages in insurance activities.
The principal accounting policies adopted in the preparation of these consolidated financial statements
are set out below. These policies have been consistently applied to the years presented, unless
otherwise stated.
2.1 Basis of preparation
These consolidated financial statements are prepared in accordance with and comply with International
Financial Reporting Standards (IFRS).
The Group has adopted accounting policies for the computation of actuarial liabilities of life insurance
and annuity contracts using approaches consistent with Canadian accepted actuarial standards. As no
specific guidance is provided by IFRS for computing actuarial liabilities, management has judged that
Canadian accepted actuarial standards should continue to be applied. The adoption of IFRS 4 –
Insurance Contracts, permits the Group to continue with this accounting policy, with the modification
required by IFRS 4 that rights under reinsurance contracts are measured separately.
The consolidated financial statements are prepared under the historical cost convention except as
modified by the revaluation of investment property, owner-occupied property, available for sale
investment securities, financial assets and liabilities held at fair value through income, actuarial liabilities
and associated reinsurance assets.
The preparation of financial statements in conformity with IFRS requires the use of certain critical
accounting estimates. It also requires management to exercise its judgement in the process of applying
the Company’s accounting policies. The areas involving a higher degree of judgement or complexity,
or areas when assumptions and estimates are significant to the consolidated financial statements, are
disclosed in note 3.
These consolidated financial statements for the year ended December 31, 2016 have been approved
by the Board of Directors on March 31, 2017. Neither the entity’s owners nor others have the power to
amend the financial statements after issue.
All amounts in these financial statements are shown in thousands of United States dollars, unless
otherwise stated.
7
2016 ANNUAL REPORT
115
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000
2.1 Basis of preparation (continued)
2.2 Basis of consolidation (continued)
Amendments to IFRS
A number of new standards and amendments to standards and interpretations are effective for annual
periods beginning after January 1, 2016, and have not been applied in preparing these consolidated
financial statements (see note 2.25). There are no new standards, amendments to standards and
interpretations effective for this financial year that have a significant effect on the consolidated financial
statements.
2.2 Basis of consolidation
(a) Subsidiaries
Subsidiaries are entities over which the Group has control. The Group has control over an entity when
the Group is exposed to the variable returns from its ownership interest in the entity and when the Group
has the ability to affect those returns through its power over the entity. Subsidiaries are consolidated
from the date on which control is transferred to the Group, and are de-consolidated from the date on
which control ceases.
All material intra-group balances, transactions and gains are eliminated on consolidation. Accounting
policies of subsidiaries have been changed where necessary to ensure consistency with the accounting
policies adopted by the Group.
The Group uses the acquisition method of accounting when control over entities and insurance
businesses is obtained by the Group. The cost of an acquisition is measured as the fair value of the
identifiable assets given, the equity instruments issued and the liabilities incurred or assumed at the
date of exchange. Identifiable assets acquired and liabilities and contingent liabilities assumed in a
business combination are measured initially at their fair values at the acquisition date irrespective of
the extent of any non-controlling interest. Acquisition-related costs are expensed as incurred.
The excess of the cost of the acquisition, the non-controlling interest recognised and the fair value of
any previously held equity interest in the acquiree, over the fair value of the net identifiable assets
acquired is recorded as goodwill. If there is no excess and there is a shortfall, the Group reassesses
the net identifiable assets acquired. If after reassessment, a shortfall remains, the acquisition is deemed
to be a bargain purchase and the shortfall is recognised in income as a gain on acquisition.
Subsequent ownership changes in a subsidiary, without loss of control, are accounted for as
transactions between owners in the statement of changes in equity.
Non-controlling interest balances represent the equity in a subsidiary not attributable to Sagicor’s
interests.
On an acquisition by acquisition basis, the Group recognises at the date of acquisition the components
of any non-controlling interest in the acquiree either at fair value or at the proportionate share of the
acquiree’s net identifiable assets. The latter option is only available if the non-controlling interest
component is entitled to a proportionate share of net identifiable assets of the acquiree in the event of
liquidation. For certain components of non-controlling interests, other IFRS may override the fair value
option.
Non-controlling interest balances are subsequently re-measured by the non-controlling’s proportionate
share of changes in equity after the date of acquisition.
116
SAGICOR FINANCIAL CORPORATION LIMITED
8
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000 2.2 Basis of consolidation (continued)
2.2 Basis of consolidation (continued)
(b) Discontinued operation
In December 2012, the Group agreed to sell Sagicor Europe Limited, its subsidiary Sagicor at Lloyd's
Limited and its interest in Lloyd's of London syndicate 1206. The decision to sell resulted in the closure
of the Sagicor Europe operating segment and therefore met the criteria of a discontinued operation. The
sale was concluded in December 2013.
As of December 31, 2016, the future price adjustments relating to the discontinued operation are
disclosed in the statement of financial position at their estimated undiscounted value.
Investments in associate and joint venture companies are originally recorded at cost and include
intangible assets identified on acquisition. Accounting policies have been changed where necessary
to ensure consistency with the accounting policies adopted by the Group.
The Group recognises in income its share of associates and joint venture companies’ post acquisition
income and its share of the amortisation and impairment of intangible assets which were identified on
acquisition. Unrealised gains or losses on transactions between the Group and its associates and joint
ventures are eliminated to the extent of the Group’s interest. The Group recognises in other
comprehensive income, its share of post acquisition other comprehensive income.
(c) Sale of subsidiaries
(e) Pension and investment funds
On the sale of or loss of control of a subsidiary, the Group de-recognises the related assets, liabilities,
non-controlling interest and associated goodwill of the subsidiary. The Group reclassifies its share of
balances of the subsidiary previously recognised in other comprehensive income either to income or to
retained earnings as appropriate. The gain (or loss) on sale recorded in income is the excess (or
shortfall) of the fair value of the consideration received over the de-recognised and reclassified
balances.
(d) Associates and joint venture
The investments in associated companies, which are not majority-owned or controlled but where
significant influence exists, are included in these consolidated financial statements under the equity
method of accounting.
Insurers have issued deposit administration and unit linked contracts in which the full return of the
assets supporting these contracts accrue directly to the contract-holders. As these contracts are not
operated under separate legal trusts, they have been consolidated in these financial statements.
The Group manages a number of segregated pension funds, mutual funds and unit trusts. These funds
are segregated and investment returns on these funds accrue directly to unit-holders. Consequently
the assets, liabilities and activity of these funds are not included in these consolidated financial
statements unless the Group has a significant holding in the fund. Where a significant holding exists,
the Group either consolidates the assets, liabilities and activity of the fund and accounts for any non-
controlling interest as a financial liability or accounts for the fund as an associate.
(f) Employees share ownership plan (ESOP)
The Company has established an ESOP Trust which either acquires Company shares on the open
market, or is allotted new shares by the Company. The Trust holds the shares on behalf of employees
until the employees’ retirement or termination from the Group. Until distribution to employees, shares
held by the Trust are accounted for as treasury shares. All dividends received by the Trust are applied
towards the future purchase of Company shares.
9
2016 ANNUAL REPORT
117
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000
2.3 Foreign currency translation
2.3 Foreign currency translation (continued)
(a) Functional and presentational currency
Items included in the financial statements of each reporting unit of the Group are measured using the
currency of the primary economic environment in which the entity operates (the functional currency). A
reporting unit may be an individual subsidiary, a branch of a subsidiary or an intermediate holding
company group of subsidiaries.
On consolidation, exchange differences arising from the translation of the net investment in foreign
entities are recorded in other comprehensive income. On the disposal or loss of control of a foreign
entity, such exchange differences are transferred to income.
Goodwill and other intangible assets recognised on the acquisition of a foreign entity are treated as
assets and liabilities of the foreign entity, and are translated at the rate ruling on December 31.
The consolidated financial statements are presented in thousands of United States dollars, which is the
Group’s presentational currency.
(c) Transactions and balances
(b) Reporting units
The results and financial position of reporting units that have a functional currency other than the
Group’s presentational currency are translated as follows:
(i)
Income, other comprehensive income, movements in equity and cash flows are translated
at average exchange rates for the year.
(ii) Assets and liabilities are translated at the exchange rates ruling on December 31.
(iii) Resulting exchange differences are recognised in other comprehensive income.
Currencies which are pegged to the United States dollar are converted at the pegged rates. Currencies
which float are converted to the United States dollar by reference to the average of buying and selling
rates quoted by the respective central banks or in the case of pounds sterling, according to prevailing
market rates. Exchange rates of the other principal operating currencies to the United States dollar
were as follows:
Foreign currency transactions are translated into the functional currency at the exchange rates
prevailing at the dates of the transactions. Foreign exchange gains and losses, which result from the
settlement of foreign currency transactions and from the re-translation of monetary assets and liabilities
denominated in foreign currencies, are recognised in the income statement. Non-monetary assets and
liabilities, primarily deferred policy acquisition costs and unearned premiums, are maintained at the
transaction rates of exchange.
The foregoing exchange gains and losses which are recognised in the income statement are included
in other revenue.
Exchange differences on the re-translation of the fair value of non-monetary items such as equities held
at fair value through income are reported as part of the fair value gain or loss. Exchange differences
on the re-translation of the fair value of non-monetary items such as equities held as available for sale
are reported as part of the fair value gain or loss in other comprehensive income.
2016 closing
2016 average
2015 closing
2015 average
2.4 Segments
Barbados dollar
Eastern Caribbean dollar
2.0000
2.7000
2.0000
2.7000
2.0000
2.7000
2.0000
2.7000
Jamaica dollar
127.9824
124.7554
119.9758
116.7122
Trinidad & Tobago dollar
6.7458
Pound sterling
0.81280
6.6190
0.73444
6.4196
0.67480
6.3412
0.65276
Reportable operating segments have been defined on the basis of performance and resource allocation
decisions of the Group’s Chief Executive Officer.
118
SAGICOR FINANCIAL CORPORATION LIMITED
10
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000 2.5 Investment property
2.6 Property, plant and equipment (continued)
Investment property consists of freehold lands and freehold properties which are held for rental income
and/or capital appreciation. Investment property is recorded initially at cost. In subsequent financial
years, investment property is recorded at fair values as determined by independent valuation, with the
appreciation or depreciation in value being taken to investment income. Fair value represents the price
(or estimates thereof) that would be agreed upon in an orderly transaction between market participants
at valuation date.
Investment property includes property partially owned by the Group and held under joint operations with
third parties for which the Group recognises its share of the joint operation's assets, liabilities, revenues,
expenses and cash flows.
Transfers to or from investment property are recorded when there is a change in use of the property.
Transfers to owner-occupied property or to real estate developed for resale are recorded at the fair
value at the date of change in use. Transfers from owner-occupied property are recorded at their fair
value and any difference with carrying value at the date of change in use is dealt with in accordance
with note 2.6.
Investment property may include property of which a portion is held for rental to third parties and the
other portion is occupied by the Group. In such circumstances, the property is accounted for as an
investment property if the Group’s occupancy level is not significant in relation to the total available
occupancy. Otherwise, it is accounted for as an owner-occupied property.
Rental income is recognised on an accrual basis.
2.6 Property, plant and equipment
Property, plant and equipment are recorded initially at cost. Subsequent expenditure is capitalised when
it will result in future economic benefits to the Group.
Owner-occupied property is re-valued at least every three years to its fair value as determined by
independent valuation. Fair value represents the price (or estimates thereof) that would be agreed upon
in an orderly transaction between market participants at valuation date. Revaluation of a property may
be conducted more frequently if circumstances indicate that a significant change in fair value has
occurred. Movements in fair value are reported in other comprehensive income, unless there is a
cumulative depreciation in respect of an individual property, which is then recorded in income.
Accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of
the asset.
Owner-occupied property includes property held under joint operations with third parties for which the
Group recognises its share of the joint operation's assets, liabilities, revenues, expenses and cash flows.
On the disposal of owner-occupied property, the amount included in the fair value reserve is transferred
to retained earnings.
The Group, as lessor, enters into operating leases with third parties to lease assets. Operating leases
are leases in which the Group maintains substantially the risks of ownership and the associated assets
are recorded as property, plant and equipment. Income from operating leases is recognised on the
straight-line basis over the term of the lease.
Depreciation is calculated on the straight-line method to write down the cost or fair value of property, plant
and equipment to residual value over the estimated useful life. Estimated useful lives are reviewed
annually and are as follows.
Asset
Buildings
Estimated useful life
40 to 50 years
Furnishings and leasehold improvements
10 years or lease term
Computer and office equipment
Vehicles
Leased equipment and vehicles
3 to 10 years
4 to 5 years
5 to 6 years
Lands are not depreciated.
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2016 ANNUAL REPORT
119
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000
120
SAGICOR FINANCIAL CORPORATION LIMITED
12
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000 2.8 Financial assets
(a) Classification
The Group classifies its financial assets into four categories:
•
•
•
•
held to maturity financial assets;
available for sale financial assets;
financial assets at fair value through income;
loans and receivables.
Management determines the appropriate classification of these assets on initial recognition.
Held to maturity financial assets are non-derivative financial instruments with fixed or determinable
payments and fixed maturities that management has both the intent and ability to hold to maturity.
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are
not quoted in an active market.
Financial assets in the category at fair value through income comprise designated assets or held for
trading assets. These are set out below.
•
Assets designated by management on acquisition form part of managed portfolios whose
performance is evaluated on a fair value basis in accordance with documented investment
strategies. They comprise investment portfolios backing deposit administration and unit linked
policy contracts for which the full return on the portfolios accrue to the contract-holders.
• Held for trading securities are acquired principally for the purpose of selling in the short-term or if
they form part of a portfolio of financial assets in which there is evidence of short-term profit taking.
Derivatives are also classified as held for trading unless designated as hedges.
Available for sale financial assets are non-derivative financial instruments intended to be held for an
indefinite period of time and which may be sold in response to liquidity needs or changes in interest
rates, exchange rates and equity prices.
2.8 Financial assets (continued)
(b) Recognition and measurement
Purchases and sales of financial investments are recognised on the trade date. Interest income arising
on investments is accrued using the effective yield method. Dividends are recorded in revenue when
due.
Held to maturity assets, loans and receivables are carried at amortised cost less provision for
impairment.
Financial assets in the category at fair value through income are measured initially at fair value and are
subsequently re-measured at their fair value based on quoted prices or internal valuation techniques.
Realised and unrealised gains and losses are recorded as net gains in investment income. Interest and
dividend income are recorded under their respective heads in investment income. Interest income on
financial assets at fair value through income is calculated using the effective interest rate method.
Financial assets in the available for sale category are measured initially at fair value and are
subsequently re-measured at their fair value based on quoted prices or internal valuation techniques.
Unrealised gains and losses, net of deferred income taxes, are reported in other comprehensive
income. Either on the disposal of the asset or if the asset is determined to be impaired, the previously
recorded unrealised gain or loss is transferred to investment income. Discounts and premiums on
available for sale securities are amortised using the effective yield method.
(c) Fair value
Fair value amounts represent the price (or estimates thereof) that would be agreed upon in an orderly
transaction between market participants at valuation date.
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Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000
2.8 Financial assets (continued)
(d) Impaired financial assets
2.8 Financial assets (continued)
(e) Securities purchased for resale
A financial asset is considered impaired if its carrying amount exceeds its estimated recoverable
amount.
Securities purchased for resale are treated as collateralised financing transactions and are recorded at
the amount at which they are acquired. The difference between the purchase and resale price is treated
as interest and is accrued over the life of the agreements using the effective yield method.
An impairment loss for assets carried at amortised cost is calculated as the difference between the
carrying amount and the present value of expected future cash flows discounted at the original effective
interest rate. The carrying value of impaired financial assets is reduced by impairment losses.
(f) Finance leases
The recoverable amount for an available for sale security is its fair value.
For an available for sale equity security or investment in an associated company, an impairment loss is
recognised in income if there has been a significant or prolonged decline in its fair value below its cost.
Determination of what is significant or prolonged requires judgement which includes consideration of
the volatility of the fair value, and the financial condition and financial viability of the investee. In this
context, management considers a 40% decline in fair value below cost to be significant and a decline
that has persisted for more than twelve months to be prolonged. Any subsequent increase in fair value
occurring after the recognition of an impairment loss is reported in other comprehensive income.
For an available for sale security other than an equity security, if the Group assesses that there is
objective evidence that the security is impaired, an impairment loss is recognised for the amount by
which the instrument’s amortised cost exceeds its fair value. If in a subsequent period the impairment
loss decreases and the decrease can be related objectively to an event occurring after the impairment
was recognised, the previously recognised impairment loss is reversed, and the amount of the reversal
is recognised in revenue.
The Group, as lessor, enters into finance leases with third parties to lease assets. Finance leases are
leases in which the Group has transferred substantially the risks of ownership to the lessee. The finance
lease, net of unearned finance income, is recorded as a receivable and the finance income is recognised
over the term of the lease using the effective yield method.
(g) Embedded derivatives
The Group holds certain bonds and preferred equity securities that contain options to convert into
common shares of the issuer. These options are considered embedded derivatives.
If the measurement of an embedded derivative can be separated from its host contract, the embedded
derivative is carried at current market value and is presented with its related host contract. Unrealised
gains and losses are recorded as investment income.
If the measurement of an embedded derivative cannot be separated from its host contract, the full
contract is accounted for as a financial asset at fair value through income.
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SAGICOR FINANCIAL CORPORATION LIMITED
14
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000 2.9 Real estate developed or held for resale
2.10 Policy contracts (continued)
Lands being made ready for resale along with the cost of infrastructural works are classified as real
estate held for resale and are stated at the lower of carrying value and fair value less costs to sell.
A number of insurance contracts contain a discretionary participation feature. A discretionary
participation feature entitles the holder to receive, supplementary to the main benefit, additional benefits
or bonuses:
Real estate acquired through foreclosure is classified as real estate held for resale and is stated at the
lower of carrying value and fair value less costs to sell.
Gains and losses realised on the sale of real estate are included in revenue at the time of sale.
2.10 Policy contracts
(a) Classification
The Group issues policy contracts that transfer insurance risk and / or financial risk from the
policyholder.
•
•
•
that are likely to be a significant portion of the total contractual benefits;
whose amount or timing is contractually at the discretion of management; and
that are contractually based on
the performance of a specified pool of contracts;
investment returns on a specified pool of assets held by the insurer; or
the profit or loss of a fund or insurer issuing the contract.
o
o
o
Policy bonuses and policy dividends constitute discretionary participation features which the Group
classifies as liabilities.
Residual gains in the participating accounts constitute discretionary participation features which the
Group classifies as equity (see also note 2.20).
The Group defines insurance risk as an insured event that could cause an insurer to pay significant
additional benefits in a scenario that has a discernible effect on the economics of the transaction.
(b) Recognition and measurement
Insurance contracts transfer insurance risk and may also transfer financial risk. Once a contract has
been classified as an insurance contract, it remains an insurance contract for its duration, even if the
insurance risk reduces significantly over time. Investment contracts transfer financial risk and no
significant insurance risk. Financial risk includes credit risk, liquidity risk and market risk.
A reinsurance contract is an insurance contract in which an insurance entity cedes assumed risks to
another insurance entity.
(i)
Property and casualty insurance contracts
Property and casualty insurance contracts are generally one year renewable contracts issued by the
insurer covering insurance risks over property, motor, accident and liability.
Property insurance contracts provide coverage for the risk of property damage or of loss of property.
Commercial property, homeowners’ property, motor and certain marine property are common types of
risks covered. For commercial policyholders insurance may include coverage for loss of earnings
arising from the inability to use property which has been damaged or lost.
Casualty insurance contracts provide coverage for the risk of causing physical harm or financial loss to
third parties. Personal accident, employers’ liability, public liability, product liability and professional
indemnity are common types of casualty insurance.
15
2016 ANNUAL REPORT
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Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000
2.10 Policy contracts (continued)
Premium revenue is recognised as earned on a pro-rated basis over the term of the respective policy
coverage. If alternative insurance risk exposure patterns have been established over the term of the
policy coverage, then premium revenue is recognised in accordance with the risk exposure. The
provision for unearned premiums represents the portion of premiums written relating to the unexpired
terms of coverage.
Claims and loss adjustment expenses are recorded as incurred. Claim reserves are established for
both reported and un-reported claims. Claim reserves represent estimates of future payments of claims
and related expenses less anticipated recoveries with respect to insured events that have occurred up
to the date of the financial statements.
An insurer may obtain reinsurance coverage for its property and casualty insurance risks. The
reinsurance ceded premium is expensed on a pro-rata basis over the term of the respective policy
coverage or of the reinsurance contract as appropriate. Reinsurance claim recoveries are established
at the time of the recording of the claim liability and are computed on a basis which is consistent with
the computation of the claim liability. Profit sharing commission due to the Group is accrued as
commission income when there is reasonable certainty of earned profit.
Commissions and premium taxes payable are recognised on the same basis as premiums earned. At
the date of the financial statements, commissions and premium taxes attributable to unearned premiums
are recorded as deferred policy acquisition costs. Profit sharing commission payable by the Group
arises from contracts between an insurer and a broker; it is accrued on an individual contract basis and
recognised when the reinsurance premium is recorded.
2.10 Policy contracts (continued)
(ii) Health insurance contracts
Health insurance contracts are generally one year renewable contracts issued by the insurer covering
insurance risks for medical expenses of insured persons.
Premium revenue is accrued when due for contracts where the premium is billed monthly. For contracts
where the premium is billed annually or semi-annually, premium revenue is recognised as earned on a
pro-rata basis over the term of the respective policy coverage. The provision for unearned premiums
represents the portion of premiums written relating to the unexpired terms of coverage.
Claims are recorded on settlement. Reserves are recorded as described in note 2.11.
An insurer may obtain reinsurance coverage for its health insurance risks. The reinsurance ceded
premium is expensed on a pro-rata basis over the term of the respective policy coverage or of the
reinsurance contract as appropriate.
Commissions and premium taxes payable are recognised on the same basis as premiums earned.
(iii) Long-term traditional insurance contracts
Long-term traditional insurance contracts are generally issued for fixed terms of five years or more, or
for the remaining life of the insured. Benefits are typically a death, disability or critical illness benefit, a
cash value on termination and/or a monthly annuity. Annuities are generally payable until the death of
the beneficiaries with a proviso for a minimum number of payments. Some of these contracts have a
discretionary participation feature in the form of regular bonuses or dividends. Other benefits such as
disability and waiver of premium on disability may also be included in these contracts. Some contracts
may allow for the advance of policy loans to the policyholder and may also allow for dividend withdrawals
by the policyholder during the life of the contract.
Premium revenue is recognised when due. Typically, premiums are fixed and are required to be paid
within the due period for payment. If premiums are unpaid, either the contract may terminate, an
automatic premium loan may settle the premium, or the contract may continue at a reduced value.
124
SAGICOR FINANCIAL CORPORATION LIMITED
16
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000 2.10 Policy contracts (continued)
2.10 Policy contracts (continued)
Policy benefits are recognised on the notification of death, disability or critical illness, on the termination
or maturity date of the contract, on the declaration of a cash bonus or dividend or on the annuity payment
date. Policy loans advanced are recorded as loans and receivables in the financial statements and are
secured by the cash values of the respective policies. Policy bonuses may be “non-cash” and utilised
to purchase additional amounts of insurance coverage. Accumulated cash bonuses and dividends are
recorded as interest bearing policy balances.
Reserves for future policy liabilities are recorded as described in note 2.11.
An insurer may obtain reinsurance coverage for death benefit insurance risks. Typically, coverage is
obtained for individual coverage exceeding prescribed limits. The reinsurance premium is expensed
when due, which generally coincides with when the policy premium is due. Reinsurance claim
recoveries are established at the time of claim notification.
Premium revenue is recognised when received and consists of all monies received from the
policyholders. Typically, premiums are fixed at the inception of the contract or periodically thereafter but
additional non-recurring premiums may be paid.
Policy benefits are recognised on the notification of death, disability or critical illness, on the receipt of
a withdrawal request, on the termination or maturity date of the contract, or on the annuity payment
date. Reserves for future policy liabilities are recorded as described in note 2.11.
An insurer may obtain reinsurance coverage for death benefit insurance risks. Typically, coverage is
obtained for individual coverage exceeding prescribed limits. The reinsurance premium is expensed
when due, which generally coincides with when the policy premium is due. Reinsurance claims
recoveries are established at the time of claim notification.
Commissions and premium taxes payable are recognised on the same basis as earned premiums.
Commissions and premium taxes payable are generally recognised only on settlement of premiums.
(iv) Long-term universal life and unit linked insurance contracts
(v) Reinsurance contracts assumed
Universal life and unit linked insurance contracts are generally issued for fixed terms or for the remaining
life of the insured. Benefits are typically a death, disability or critical illness benefit, a cash value on
termination and/or a monthly annuity. Annuities are generally payable until the death of the beneficiaries
with a proviso for a minimum number of payments. Benefits may include amounts for disability or waiver
of premium on disability.
Universal life and unit linked contracts have either an interest bearing investment account or unit linked
investment accounts. Either gross premiums or gross premiums net of allowances are deposited to the
investment accounts. Investment returns are credited to the investment accounts and expenses, not
included in the aforementioned allowances, are debited to the investment accounts. Interest bearing
investment accounts may include provisions for minimum guaranteed returns or returns based on
specified investment indices. Allowances and expense charges are in respect of applicable
commissions, cost of insurance, administrative expenses and premium taxes. Fund withdrawals may
be permitted.
Reinsurance contracts assumed by an insurer are accounted for in a similar manner as if the insurer
has assumed the risk direct from a policyholder.
Reinsurance contracts assumed include blocks of life and annuity policies assumed from third party
insurers. In some instances, the Group also administers these policies.
(vi) Reinsurance contracts held
As noted in sections (i) to (iv) above, an insurer may obtain reinsurance coverage for insurance risks
underwritten. The Group cedes insurance premiums and risk in the normal course of business in order
to limit the potential for losses arising from its exposures. Reinsurance does not relieve the originating
insurer of its liability.
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2016 ANNUAL REPORT
125
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000
2.10 Policy contracts (continued)
2.10 Policy contracts (continued)
Reinsurance contracts held by an insurer are recognised and measured in a similar manner to the
originating insurance contracts and in accordance with the contract terms. Reinsurance premium ceded
and reinsurance recoveries on claims are offset against premium revenue and policy benefits in the
income statement.
The benefits to which an insurer is entitled under its reinsurance contracts held are recognised as
reinsurance assets or receivables. Reinsurance assets and receivables are assessed for impairment.
If there is evidence that the asset or receivable is impaired, the impairment is recorded in the statement
of income. The obligations of an insurer under reinsurance contracts held are included in accounts
payable and accrued liabilities and in actuarial liabilities.
Reinsurance balances are measured consistently with the insurance liabilities to which they relate.
Other investment contracts are recognised initially at fair value and are subsequently stated at amortised
cost and are accounted for in the same manner as deposit administration contracts which are similarly
classified.
(c) Embedded derivatives
Certain insurance contracts contain embedded derivatives which are options whose value may vary in
response to changes in interest rates or other market variables.
The Group does not separately measure embedded derivatives that are closely related to the host
insurance contract or that meet the definition of an insurance contract. Options to surrender an
insurance contract for a fixed amount are also not measured separately. In these cases, the entire
contract liability is measured as set out in note 2.11.
(vii) Deposit administration and other investment contracts
(d) Liability adequacy tests
Deposit administration contracts are issued by an insurer to registered pension schemes for the deposit
of pension plan assets with the insurer.
Deposit administration liabilities are recognised initially at fair value and are subsequently stated at:
amortised cost where the insurer is obligated to provide investment returns to the pension
scheme in the form of interest;
•
•
fair value through income where the insurer is obligated to provide investment returns to
2.11 Actuarial liabilities
the pension scheme in direct proportion to the investment returns on specified blocks of
assets.
(a) Life insurance and annuity contracts
At the date of the financial statements, liability adequacy tests are performed by each insurer to ensure
the adequacy of insurance contract liabilities, using current estimates of the related expected future
cash flows. If a test indicates that the carrying value of insurance contract liabilities is inadequate, then
the liabilities are adjusted to correct the deficiency. The deficiency is included in the income statement
under benefits.
Deposit administration contributions are recorded directly as liabilities. Withdrawals are deducted
directly from the liability. The interest or investment return provided is recorded as an interest expense.
In addition, the Group may provide pension administration services to the pension schemes. The Group
earns fee income for both pension administration and investment services, it is accrued monthly.
The determination of actuarial liabilities of long-term insurance contracts has been done using
approaches consistent with Canadian accepted actuarial standards. These liabilities consist of the
amounts that, together with future premiums and investment income, are required to provide for future
policy benefits, expenses and taxes on insurance and annuity contracts. Canadian standards may
change from time to time, but infrequently.
126
SAGICOR FINANCIAL CORPORATION LIMITED
18
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000 2.11 Actuarial liabilities (continued)
2.11 Actuarial liabilities (continued)
The process of calculating life insurance and annuity actuarial liabilities for future policy benefits
necessarily involves the use of estimates concerning such factors as mortality and morbidity rates,
future investment yields, future expense levels and persistency, including reasonable margins for
adverse deviations. As experience unfolds, these resulting provisions for adverse deviations will be
included in future income to the extent they are released when they are no longer required to cover
adverse experience. Assumptions used to project benefits, expenses and taxes are based on insurer
and industry experience and are updated annually.
Net insurance contract liabilities represent the amount which, together with estimated future premiums
and net investment income, will be sufficient to pay projected future benefits, policyholder dividends and
refunds, taxes (other than income taxes) and expenses on policies in-force net of reinsurance premiums
and recoveries. The determination of net insurance liabilities is based on an explicit projection of cash
flows using current assumptions plus a margin for adverse deviation for each material cash flow
item. Investment returns are projected using the current asset portfolios and projected reinvestment
yields. The period used for the projection of cash flows is the policy lifetime for most individual insurance
contracts.
The Company segments assets to support liabilities by major product segment and geographic market
and establishes investment strategies for each liability segment. Projected net cash flows from these
assets and the policy liabilities being supported by these assets are combined with projected cash flows
from future asset purchases to determine expected rates of return on these assets for future
years. Investment strategies are based on the target investment policies for each segment and the
reinvestment returns are derived from current and projected market rates for fixed income
investments. Investment return assumptions for each asset class make provision for expected future
asset credit losses, expected investment management expenses and a margin for adverse deviation.
Under this methodology, assets of each insurer are selected to back its actuarial liabilities. Changes in
the carrying value of these assets may generate corresponding changes in the carrying amount of the
associated actuarial liabilities. These assets include available for sale securities, whose unrealised
gains or losses in fair value are recorded in other comprehensive income. The fair value reserve for
actuarial liabilities has been established in the statement of equity for the accumulation of changes in
actuarial liabilities which are recorded in other comprehensive income and which arise from recognised
unrealised gains or losses in fair value of available for sale securities.
Certain life insurance policies issued by the insurer contain equity linked policy side funds. The
investment returns on these unitised funds accrue directly to the policies with the insurer assuming no
credit risk. Investments held in these side funds are accounted for as financial assets at fair value
through income and unit values of each fund are determined by dividing the value of the assets in the
fund at the date of the financial statements by the number of units in the fund. The resulting liability is
included in actuarial liabilities.
(b) Health insurance contracts
The actuarial liabilities of health insurance policies are estimated in respect of claims that have been
incurred but not yet reported or settled.
2.12 Financial liabilities
During the ordinary course of business, the Group issues investment contracts or otherwise assumes
financial liabilities that expose the Group to financial risk. The recognition and measurement of the
Group’s principal types of financial liabilities are disclosed in note 2.10(b) (vii) and in the following
paragraphs.
(a) Securities sold for re-purchase
Securities sold for re-purchase are treated as collateralised financing transactions and are recorded at
the amount at which the securities were sold. Securities sold subject to repurchase are not
derecognised but are treated as pledged assets when the transferee has the right by contract or custom
to sell or re-pledge the collateral. The difference between the sale and re-purchase price is treated as
interest and is accrued over the life of the agreements using the effective yield method.
The liability is extinguished when the obligation specified in the contract is discharged, assigned,
cancelled or has expired.
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2016 ANNUAL REPORT
127
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000
2.12 Financial liabilities (continued)
(b) Deposit liabilities
Deposits are recognised initially at fair value and are subsequently stated at amortised cost using the
effective yield method.
(c) Loans and other debt obligations
Loans and other debt obligations are recognised initially at fair value, being their issue proceeds, net of
transaction costs incurred. Subsequently, obligations are stated at amortised cost and any difference
between net proceeds and the redemption value is recognised in the income statement over the period
of the loan obligations using the effective yield method.
Obligations undertaken for the purposes of financing operations and capital support are classified as
notes or loans payable and the associated cost is classified as finance costs. Loan obligations
undertaken for the purposes of providing funds for on-lending, leasing or portfolio investments are
classified as deposit and security liabilities and the associated cost is included in interest expense.
(d ) Fair value
2.14 Derivative financial instruments and hedging activities (continued)
Derivative financial instruments are initially recognised at fair value on the date a derivative contract is
entered into, and subsequently are re-measured at their fair value at each financial statement date.
The method of recognising the resulting gain or loss depends on whether the derivative is designated
as a hedging instrument, and if so, the nature of the item being hedged. Fair values are obtained from
quoted market prices, discounted cash flow models and option pricing models as appropriate.
The Group documents at the inception of the transaction the relationship between hedging instruments
and hedged items, as well as risk management objectives and strategies for undertaking various
hedging transactions. The Group also documents its assessments, both at hedge inception and on an
ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in
offsetting changes in fair values or cash flows of hedged items.
For cash flow hedges, gains and losses relating to the effective portion of changes in the fair value of
derivatives are initially recognised in other comprehensive income, and are transferred to the statement
of income when the forecast cash flows affect income. The gain or loss relating to the ineffective portion
is recognised immediately in the statement of income.
Fair value amounts represent the price (or estimates thereof) that would be agreed upon in an orderly
transaction between market participants at valuation date.
Gains and losses from changes in the fair value of derivatives that do not qualify for hedge accounting
are included in net investment income or interest expense.
2.13 Provisions
2.15 Offsetting financial instruments
Provisions are recognised when the Group has a legal or constructive obligation, as a result of past
events, if it is probable that an outflow of resources will be required to settle the obligation, and a reliable
estimate of the amount can be made.
Financial assets and liabilities are offset and the net amount is reported in the statement of financial
position when there is a legally enforceable right to offset and there is an intention to settle on a net
basis or to realise the asset and settle the liability simultaneously.
2.14 Derivative financial instruments and hedging activities
Derivatives are financial instruments that derive their value from the price of underlying items such as
equities, bonds, interest rates, foreign exchange, credit spreads, commodities or other indices.
Derivatives enable users to increase, reduce or alter exposure to credit or market risk. The Group
transacts derivatives for three primary purposes: to create risk management solutions for customers,
for proprietary trading purposes, and to manage its own exposure to credit and market risk.
2.16 Presentation of current and non-current assets and liabilities
In note 41.2, the maturity profiles of financial and insurance assets and liabilities are identified. For
other assets and liabilities, balances presented in notes 5 to 8, 10 to 12, 14, 18, 19 and 33 are non-
current unless otherwise stated in those notes.
128
SAGICOR FINANCIAL CORPORATION LIMITED
20
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000 2.17 Employee benefits
(a) Pension benefits
2.17 Employee benefits (continued)
(c) Profit sharing and bonus plans
Group companies have various pension schemes in place for their employees. Some schemes are
defined benefit plans and others are defined contribution plans.
The Group recognises a liability and an expense for bonuses and profit sharing, based on various profit
and other objectives of the Group as a whole or of individual subsidiaries. An accrual is recognised
where there are contractual obligations or where past practice has created a constructive obligation.
The liability in respect of defined benefit plans is the present value of the defined benefit obligation at
December 31 less the fair value of plan assets. The defined benefit obligation is computed using the
projected unit credit method. The present value of the defined benefit obligation is determined by the
estimated future cash outflows using appropriate interest rates on government bonds for the maturity
dates and currency of the related liability.
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions
are charged or credited to the other comprehensive income and retained earnings or non-controlling
interest in the period in which they arise. Past service costs are charged to income in the period in which
they arise.
For defined contribution plans, the Group pays contributions to the pension schemes on a mandatory
or contractual basis. Once paid, the Group has no further payment obligations. Contributions are
recognised in income in the period in which they are due.
(b) Other retirement benefits
Certain Group subsidiaries provide supplementary health and life insurance benefits to qualifying
employees upon retirement. The entitlement to these benefits is usually based on the employee
remaining in service up to retirement age and the completion of a minimum service period. The expected
costs of these benefits are accrued over the period of employment, using an accounting methodology
similar to that for defined benefit pension plans. Actuarial gains and losses arising from experience
adjustments and changes in actuarial assumptions are charged or credited to the other comprehensive
income and retained earnings or non-controlling interest in the period in which they arise.
(d) Equity compensation benefits
The Group has a number of share-based compensation plans in place for administrative, sales and
managerial staff.
(i) Equity-settled share-based transactions with staff
The services received in an equity-settled transaction with staff are measured at the fair value of the
equity instruments granted. The fair value of those equity instruments is measured at grant date.
If the equity instruments granted vest immediately and the individual is not required to complete a further
period of service before becoming entitled to those instruments, the services received are recognised
in full on grant date in the income statement for the period, with a corresponding increase in equity.
Where the equity instruments do not vest until the individual has completed a further period of service,
the services received are expensed in the income statement during the vesting period, with a
corresponding increase in the reserve for equity compensation benefits or in non-controlling interest.
Non-market vesting conditions are included in assumptions about the number of instruments that are
expected to vest. At each reporting financial statement date, the Group revises its estimates of the
number of instruments that are expected to vest based on the non-marketing vesting conditions and
adjusts the expense accordingly.
Amounts held in the reserve for equity compensation benefits are transferred to share capital or non-
controlling interest either on the distribution of share grants or on the exercise of share options.
21
2016 ANNUAL REPORT
129
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000
2.17 Employee benefits (continued)
The grant by the Company of its equity instruments to employees of Group subsidiaries is treated as a
capital contribution in the financial statements of the subsidiary. The full expense relating to the grant is
recorded in the subsidiary’s income statement.
(ii) Cash-settled share-based transactions with staff
The services received in a cash-settled transaction with staff and the liability to pay for those services,
are recognised at fair value as the individual renders services. Until the liability is settled, the fair value
of the liability is re-measured at the date of the financial statements and at the date of settlement, with
any changes in fair value recognised in income during that period.
(iii) Measurement of the fair value of equity instruments granted
The equity instruments granted consist either of grants of, or options to purchase, common shares of
listed entities within the Group. For common shares granted, the listed price prevailing on the grant date
determines the fair value. For options granted, the fair value is determined by reference to the Black-
Scholes valuation model, which incorporates factors and assumptions that knowledgeable, willing
market participants would consider in setting the price of the equity instruments.
(e) Termination benefits
Termination benefits are payable whenever an employee’s employment is terminated before the normal
retirement date or whenever an employee accepts voluntary redundancy in exchange for these benefits.
The Group recognises termination benefits when it is demonstrably committed to either terminate the
employment of current employees according to a detailed formal plan without the possibility of
withdrawal or to provide termination benefits as a result of an offer made to encourage voluntary
redundancy. Benefits falling due more than twelve months after the date of the financial statements are
discounted to present value.
2.18 Taxes
(a) Premium taxes
Insurers are subject to tax on premium revenues generated in certain jurisdictions. The principal rates of
tax are summarised in the following table.
Premium tax rates
Barbados
Jamaica
Trinidad and Tobago
Life insurance and
non-registered
annuities
Health
insurance
3% - 6%
Nil
Nil
4%
Nil
Nil
Nil
Property and
casualty
insurance
3% - 5%
Nil
Nil
Nil
United States of America
0.75% - 3.5%
Premium tax is recognised gross in the statement of income.
(b) Asset tax
The Group is subject to an asset tax in Jamaica and Barbados. In Jamaica, the asset tax is levied on
insurance, securities dealers and deposit taking institutions, and is 0.25% of adjusted assets held at the
end of the year. In Barbados, the asset tax is levied on insurance, deposit taking institutions and credit
unions and is 0.20% of adjusted assets held at the end of a period. Taxes are accrued monthly.
(c)
Income taxes
The Group is subject to taxes on income in the jurisdictions in which business operations are conducted.
Rates of taxation in the principal jurisdictions for the current year are set out in the next table.
130
SAGICOR FINANCIAL CORPORATION LIMITED
22
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000 2.18 Taxes (continued)
2.19 Common and preference shares
Income tax rates
Barbados
Jamaica
Trinidad and
Tobago
United States of
America
Life insurance and
non-registered
annuities
5% of gross
investment income
25% of
profit before tax
15% (deductions granted only in
respect of expenses pertaining to long-
term business investment income)
35% of net income
Registered
annuities
Other lines of
business
Nil
Nil
Nil
Nil
25% of
net income
25% - 33.33 % of
profit before tax
25%
of net income
35%
of net income
(i) Current income taxes
Current tax is the expected tax payable on the taxable income for the year, using the tax rates in effect
for the year. Adjustments to tax payable from prior years are also included in current tax.
(ii) Deferred income taxes
Deferred income tax is recognised, using the liability method, on temporary differences arising between
the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred
income taxes are computed at tax rates that are enacted or substantially enacted by the end of the
reporting period. Deferred tax assets are only recognised when it is probable that taxable profits will be
available against which the asset may be utilised.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to do so
and once they relate to the same entity. Deferred tax, related to fair value re-measurement of available
for sale investments and cash flow hedges which are recorded in other comprehensive income, is
recorded in other comprehensive income and is subsequently recognised in income together with the
deferred gain or loss.
(a) Common shares
In exchange for consideration received, the Company has issued common shares that are classified as
equity. Incremental costs directly attributable to the issue of common shares are recorded in share
capital as a deduction from the share issue proceeds.
Where a Group entity purchases the Company’s common shares, the consideration paid, including any
directly attributable cost, is deducted from share capital and is recorded as treasury shares. Where such
shares are subsequently sold to a third party, the deduction from share capital is reversed, and any
difference with net consideration received is recorded in retained earnings.
(b) Preference shares
On July 18, 2011, the Company issued convertible redeemable preference shares that are accounted
for as a compound financial instrument. The shares were redeemed on July 18, 2016.
The redemption value is recognised as a contractual liability, and is measured initially at its discounted
fair value. The discount rate reflects as of July 18, 2011: (i) the rate of interest applicable to a similar
liability with a contractual dividend rate, and (ii) the interest premium required by the shareholder for an
instrument with a non-contractual dividend. The liability component is disclosed in note 16.
The preference shareholders’ rights to receive dividends is recognised within shareholders’ equity, and
is measured initially as the residual fair value of the preference shares in their totality after deducting
the liability for the redemptive value. The equity component is initially recorded as a preference share
reserve in note 22.
Incremental costs directly attributable to the issue of the preference shares are allocated between the
liability for the redemption value and the equity reserve in proportion to their initial carrying amounts.
After initial recognition, the liability component is accreted to its ultimate redemption value using the
effective interest yield method, with the accretion being recorded as a finance cost in the statement of
income. After initial recognition, the preference share reserve is transferred to retained earnings pro-
rata to the dividends declared over the period to redemption.
23
2016 ANNUAL REPORT
131
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000
2.19 Common and preference shares (continued)
2.20 Participating accounts (continued)
On the initial recognition of the preference shares, the conversion feature of the instrument was deemed
to have no value. Subsequently, when a number of preference shares are converted to common shares,
the associated liability for redemption will be extinguished and consequently will be transferred to the
share capital account for common shares. Additionally at conversion, the proportion of the preference
share reserve attributable to the converted number of preference shares will also be transferred to the
share capital account for common shares. In summary, the total transfer to the share capital account
for common shares will approximate the original consideration for the converted number of preference
shares less attributable issue costs.
(c) Dividends
On the declaration by the Company’s directors of common or preference share dividends payable, the
total value of the dividend is recorded as an appropriation of retained earnings.
2.20 Participating accounts
(a) “Closed” participating account
For participating policies of Sagicor Life Inc in force at de-mutualisation, Sagicor Life Inc established a
closed participating account in order to protect the guaranteed benefits and future policy dividends,
bonuses and other non-guaranteed benefits of the afore-mentioned policies. The rules of this account
require that premiums, benefits, actuarial reserve movements, investment returns, expenses and taxes,
attributable to the said policies, are recorded in a closed participating fund. Policy dividends and
bonuses of the said policies are paid from the participating fund on a basis substantially the same as
prior to de-mutualisation.
Distributable profits of the closed participating account are distributed to the participating policies in the
form of declared bonuses and dividends. Undistributed profits remain in the participating account for the
benefit of participating policyholders.
The participating account also includes an ancillary fund comprising the required provisions for adverse
deviations as determined in the computation of actuarial liabilities of the said policies. Changes in the
ancillary fund are not recorded in the participating account, but are borne by the general operations of
Sagicor Life Inc.
(b) “Open” participating account
Sagicor Life Inc also established an open participating account for participating policies it issues after
de-mutualisation. The rules of this account require that premiums, benefits, actuarial reserve
movements, investment returns, expenses and taxes, attributable to the said policies are recorded in
an open participating account.
The open participating account was established at de-mutualisation. On February 1, 2005, Sagicor
Life Inc amalgamated with Life of Barbados Limited, and participating policies of the latter were
transferred to the open participating account. Accordingly, the liabilities of these participating policies
and matching assets were transferred to the open participating account. The liabilities transferred
included an ancillary fund comprising the provisions for adverse deviations on the transferred policies.
Changes in the ancillary fund are not recorded in the participating account, but are borne by the general
operations of Sagicor Life Inc.
Additional assets to support the profit distribution to shareholders (see below) were also transferred to
the account.
Distributable profits of the open participating account are shared between participating policies and
shareholders in a ratio of 90:10. Profits are distributed to the participating policies in the form of declared
bonuses and dividends. Profits which are distributed to shareholders are included in the allocation of
Group net income to shareholders. Undistributed profits / (losses) remain in the participating account in
equity.
132
SAGICOR FINANCIAL CORPORATION LIMITED
24
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000 2.20 Participating accounts (continued)
(c)
Financial statement presentation
The assets and liabilities of the participating accounts are included but not presented separately in the
financial statements. The revenues, benefits and expenses of the participating accounts are also
included but not presented separately in the financial statements. However, the overall surplus of assets
held in the participating funds over the associated liabilities is presented in equity as the participating
accounts. The overall net income and other comprehensive income that are attributable to the
participating funds are disclosed as allocations.
2.23 Fees and other revenue
Fees and non-insurance commission income are recognised on an accrual basis when the service has
been provided. Fees and commissions arising from negotiating or participating in the negotiation of a
transaction for a third party are recognised on completion of the underlying transaction. Portfolio and
other management advisory and service fees are recognised based on the applicable service contracts,
usually on a time-apportionate basis. Asset management fees related to investment funds are
recognised rateably over the period in which the service is provided. Performance linked fees or fee
components are recognised when the performance criteria are fulfilled. Other revenue is recognised on
an accrual basis when the related service has been provided.
The initial allocation of additional assets to the participating funds is recognised in equity as a transfer
from retained earnings to the participating accounts. Returns of additional assets from the participating
funds are accounted for similarly.
2.24 Cash flows
2.21 Statutory reserves
Statutory reserves are established when regulatory accounting requirements result in lower distributable
profits or when an appropriation of retained earnings is required or permitted by law to protect
policyholders, insurance beneficiaries or depositors.
2.22 Interest income and expenses
Interest income and expenses are recognised in the income statement for all interest bearing
instruments on an accrual basis using the effective yield method based on the initial transaction price.
Interest includes coupon interest and accrued discount and premium on financial instruments.
The following classifications apply to the cash flow statement.
Cash flows from operating activities consist of cash flows arising from revenues, benefits, expenses,
taxes, operating assets and operating liabilities. Cash flows from investing activities consist of cash
flows arising from long-term tangible and intangible assets to be utilised in the business and in
respect of changes in subsidiary holdings, insurance businesses, and associated company and joint
venture investments. Cash flows from financing activities consist of cash flows arising from the issue,
redemption and exchange of equity instruments and notes and loans payable and from equity
dividends payable to holders of such instruments.
Cash and cash equivalents comprise:
•
•
•
•
•
cash balances,
call deposits,
other liquid balances with maturities of three months or less from the acquisition date,
less bank overdrafts which are repayable on demand,
less other borrowings from financial institutions made for the purpose of meeting cash
commitments and which have maturities of three months or less from origination.
Cash equivalents are subject to an insignificant risk of change in value.
25
2016 ANNUAL REPORT
133
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000
2.25 Future accounting developments and reporting changes
IFRS (Effective Date)
Subject / Comments
In September 2016, the IASB issued Applying IFRS 9 'Financial
Instruments' with IFRS 4 'Insurance Contracts' (Amendments to IFRS
4) to address concerns by preparers on implementing IFRS 9 before the
new insurance standard, IFRS 17, is released. The amended IFRS 4 will
provide all companies that issue insurance contracts the option to
recognise in other comprehensive income, rather than profit or loss, the
volatility that could arise when IFRS 9 is applied before IFRS 17 is issued
(known as the overlay approach), and also give companies whose
activities are predominantly connected with insurance an optional
temporary exemption from applying IFRS 9 until 2021 (known as the
deferral approach). Entities deferring application of IFRS 9 will continue
to apply the IAS 39.
The Group is yet to assess IFRS 9’s full impact.
Certain new standards and amendments to existing standards have been issued but are not effective
for the periods covered by these financial statements. The changes in standards and interpretations
which may have a significant effect on future presentation, measurement or disclosure of the Group’s
financial statements are summarised in the following tables.
IFRS 9 –
Financial Instruments
(January 1, 2018)
(continued)
IFRS (Effective Date)
Subject / Comments
IFRS 9 –
Financial Instruments
(January 1, 2018)
IFRS 9, addresses the classification, measurement and recognition of
financial assets and financial liabilities. IFRS 9 retains but simplifies the
mixed measurement model and establishes three primary measurement
categories for financial assets: amortised cost, fair value through OCI and
fair value through P&L. The basis of classification depends on the entity’s
business model and the contractual cash flow characteristics of the
financial asset. Investments in equity instruments are required to be
measured at fair value through profit or loss with the irrevocable option
at inception to present changes in fair value in OCI not recycling. There
is now a new expected credit losses model that replaces the incurred loss
impairment model used in IAS 39.
For financial liabilities there were no changes to classification and
measurement except for the recognition of changes in own credit risk in
other comprehensive income, for liabilities designated at fair value
through profit or loss.
IFRS 9 relaxes the requirements for hedge effectiveness by replacing the
bright line hedge effectiveness tests. It requires an economic relationship
between the hedged item and hedging instrument and for the ‘hedged
ratio’ to be the same as the one management actually use for risk
management purposes.
134
SAGICOR FINANCIAL CORPORATION LIMITED
26
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000 2.25 Future accounting developments and reporting changes
IFRS (Effective Date)
Subject / Comments
IFRS (Effective Date)
Subject / Comments
IFRS 15 –
Revenue from contracts
with customers
(January 1, 2017)
IFRS 15 deals with revenue recognition and establishes principles for
reporting useful information to users of financial statements about the
nature, amount, timing and uncertainty of revenue and cash flows arising
from an entity’s contracts with customers. Revenue is recognised when
a customer obtains control of a good or service and thus has the ability
to direct the use and obtain the benefits from the good or service. The
standard replaces IAS 18 ‘Revenue’ and IAS 11 ‘Construction contracts’
and related interpretations. The Group is assessing the impact of IFRS
15.
Recognition of Deferred
Tax Assets for Unrealised
Losses – Amendments to
IAS 12
(January 1, 2017)
IFRS 16 – Leases
(Annual periods beginning
on or after 1 January 2019
with earlier application
permitted
IFRS 15,
if
‘Revenue from Contracts
with Customers’, is also
applied.)
in
replaces
the current guidance
This standard
IAS 17 and
is a far-reaching change in accounting by lessees in particular. Under IAS
17, lessees were required to make a distinction between a finance lease
(on balance sheet) and an operating lease (off balance sheet). IFRS 16
now requires lessees to recognise a lease liability reflecting future lease
payments and a ‘right-of-use asset’ for virtually all lease contracts. The
IASB has included an optional exemption for certain short-term leases and
leases of low-value assets; however, this exemption can only be applied
by lessees. For lessors, the accounting stays almost the same. However,
as the IASB has updated the guidance on the definition of a lease (as well
as the guidance on the combination and separation of contracts), lessors
will also be affected by the new standard. At the very least, the new
accounting model for lessees is expected to impact negotiations between
lessors and lessees.
Amendments made to IAS 12 in January 2016 clarify the accounting for
deferred tax where an asset is measured at fair value and that fair value
is below the asset’s tax base.
Specifically, the amendments confirm that:
• A temporary difference exists whenever the carrying amount of an asset
is less than its tax base at the end of the reporting period.
• An entity can assume that it will recover an amount higher than the
•
•
carrying amount of an asset to estimate its future taxable profit.
Where the tax law restricts the source of taxable profits against which
particular types of deferred tax assets can be recovered, the
recoverability of the deferred tax assets can only be assessed in
combination with other deferred tax assets of the same type.
Tax deductions resulting from the reversal of deferred tax assets are
excluded from the estimated future taxable profit that is used to evaluate
the recoverability of those assets.
The Group is assessing the impact of the amendment to IAS 12.
Under IFRS 16, a contract is, or contains, a lease if the contract conveys
the right to control the use of an identified asset for a period of time in
exchange for consideration. The Group is yet to assess the impact of IFRS
16.
27
2016 ANNUAL REPORT
135
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000
2.25 Future accounting developments and reporting changes
IFRS (Effective Date)
Subject / Comments
Initiative
Disclosure
Amendments to IAS 7
(January 1, 2017)
–
joint
venture
between
Sale or contribution of
assets
an
investor and its associate
or
–
Amendments to IFRS 10
and IAS 28
(In December 2016 the
IASB decided to defer the
application date of
this
amendment until such time
as the IASB has finalised
its research project on the
equity method.)
Going forward, entities will be required to explain changes in their liabilities
arising from financing activities. This includes changes arising from cash
flows (e.g. drawdowns and repayments of borrowings) and non-cash
changes such as acquisitions, disposals, accretion of interest and
unrealised exchange differences.
Changes in financial assets must be included in this disclosure if the cash
flows were, or will be, included in cash flows from financing activities. This
could be the case, for example, for assets that hedge liabilities arising from
financing liabilities.
Entities may include changes in other items as part of this disclosure, for
example by providing a ‘net debt’ reconciliation. However, in this case the
changes in the other items must be disclosed separately from the changes
in liabilities arising from financing activities.
The information may be disclosed in tabular format as a reconciliation from
opening and closing balances, but a specific format is not mandated.
The Group is assessing the impact of the amendment to IAS 7.
The IASB has made limited scope amendments to IFRS 10 Consolidated
financial statements and IAS 28 Investments in associates and joint
ventures.
The amendments clarify the accounting treatment for sales or contribution
of assets between an investor and its associates or joint ventures. They
confirm that the accounting treatment depends on whether the non-
monetary assets sold or contributed to an associate or joint venture
constitute a ‘business’ (as defined in IFRS 3 Business Combinations).
Where the non-monetary assets constitute a business, the investor will
recognise the full gain or loss on the sale or contribution of assets. If the
assets do not meet the definition of a business, the gain or loss is
recognised by the investor only to the extent of the other investor’s
investment in the associate or joint venture. The amendments apply
prospectively. The Group is yet to assess the impact of the amendment.
136
SAGICOR FINANCIAL CORPORATION LIMITED
28
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000 3 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
3.3 Impairment of intangible assets (continued)
The development of estimates and the exercise of judgment in applying accounting policies may have
a material impact on the Group’s reported assets, liabilities, income and other comprehensive income.
The items which may have the most effect on the Group’s financial statements are set out below.
3.1 Impairment of financial assets
An available for sale debt security or a loan or a receivable is considered impaired when management
determines that it is probable that all amounts due according to the original contract terms will not be
collected. This determination is made after considering the payment history of the borrower, the
discounted value of collateral and guarantees, and the financial condition and financial viability of the
borrower. The determination of impairment may either be considered by individual asset or by a
grouping of assets with similar relevant characteristics.
3.2 Recognition and measurement of intangible assets
The recognition and measurement of intangible assets, other than goodwill, in a business combination
involve the utilisation of valuation techniques which may be very sensitive to the underlying assumptions
utilised. These intangibles may be marketing related, customer related, contract based or technology
based.
For significant amounts of intangibles arising from a business combination, the Group utilises
independent professional advisors to assist management in determining the recognition and
measurement of these assets.
3.3 Impairment of intangible assets
(a) Goodwill
The assessment of goodwill impairment involves the determination of the value of the cash generating
business units to which the goodwill has been allocated. Determination of the value involves the
estimation of future cash flows or of income after tax of these business units and the expected returns
to providers of capital to the business units and / or to the Group as a whole. For the Sagicor Life
reporting segment, the Group uses the value in use methodology for testing goodwill impairment. For
the Sagicor Jamaica operating segment, the Group uses the fair value less cost to sell methodology,
and for Sagicor General Insurance Inc the value in use methodology.
29
(a) Goodwill (continued)
The Group updates its business unit financial projections annually and applies discounted cash flow or
earnings multiple models to these projections to determine if there is any impairment of goodwill. The
assessment of whether goodwill is impaired can be highly sensitive to the inputs of cash flows, income
after tax, discount rate, growth rate or capital multiple, which are used in the computation. Further details
of the inputs used are set out in note 8.2.
(b) Other intangible assets
The assessment of impairment of other intangible assets involves the determination of the intangible’s
fair value or value in use. In the absence of an active market for an intangible, its fair value may need
to be estimated. In determining an intangible’s value in use, estimates are required of future cash flows
generated as a result of holding the asset.
3.4 Fair value of securities not quoted in an active market
The fair value of securities not quoted in an active market may be determined using reputable pricing
sources (such as pricing agencies), indicative prices from bond/debt market makers or other valuation
techniques. Broker quotes as obtained from the pricing sources may be indicative and not executable
or binding. The Group exercises judgement on the quality of pricing sources used. Where no market
data is available, the Group may value positions using its own models, which are usually based on
valuation methods and techniques generally recognised as standard within the industry. The inputs into
these models are primarily discounted cash flows.
The models used to determine fair values are periodically reviewed by experienced personnel. The
models used for debt securities are based on net present value of estimated future cash flows, adjusted
as appropriate for liquidity, and credit and market risk factors.
2016 ANNUAL REPORT
137
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000
3.5 Valuation of actuarial liabilities
(a) Canadian Actuarial Standards
The objective of the valuation of policy liabilities is to determine the amount of the insurer’s assets that,
in the opinion of the Appointed Actuary (AA) and taking into account the other pertinent items in the
financial statements, will be sufficient without being excessive to provide for the policy liabilities over
their respective terms. The amounts set aside for future benefits are dependent on the timing of future
asset and liability cash flows.
The actuarial liabilities are determined as the present value of liability cash flows discounted at effective
interest rates resulting in a value equivalent to the market value of assets supporting these policy
liabilities under an adverse economic scenario.
The AA identifies a conservative economic scenario forecast, and together with the existing investment
portfolio as at the date of the actuarial valuation and assumed reinvestment of net asset and policy
liability cash flows, calculates the actuarial liabilities required at the date of valuation to ensure that
sufficient monies are available to meet the liabilities as they become due in future years.
The methodology produces the total reserve requirement for each policy group fund. In general, the
methodology is used to determine the net overall actuarial liabilities required by the insurer. Actuarial
liabilities are computed by major group of policies and are used to determine the amount of reinsurance
balances in the reserve, the distribution of the total reserve by country (for statutory reporting), and the
distribution of the reserve by policy, and other individual components in the actuarial liabilities.
Further details of the inputs used are set out in note 43.
(b) Best estimate reserve assumptions & provisions for adverse deviations
Actuarial liabilities include two major components: a best estimate reserve and a provision for adverse
deviations. The latter provision is established in recognition of the uncertainty in computing best
estimate reserves, to allow for possible deterioration in experience and to provide greater comfort that
reserves are adequate to pay future benefits.
For the respective reserve assumptions for mortality and morbidity, lapse, future investment yields,
operating expenses and taxes, best estimate reserve assumptions are determined where appropriate.
The assumption for operating expenses and taxes is in some instances split by universal life and unit
linked business.
Provisions for adverse deviations are established in accordance with the risk profiles of the business,
and are, as far as is practicable, standardised across geographical areas. Provisions are determined
within a specific range established by the Canadian Standards of Practice.
The principal assumptions and margins used in the determination of actuarial liabilities are summarised
in note 13.3. However, the liability resulting from the application of these assumptions can never be
definitive as to the ultimate timing or the amount of benefits payable and is therefore subject to future
re-assessment.
3.6 Carrying value of the assets and liabilities of the discontinued operation
As of December 31, 2016, the liability of the discontinued operation is the estimated residual liability
due to the purchaser arising from the estimated results of the syndicate for the underwriting years of
account up to and including 2013, until the end of the run-off period, December 31, 2018. The reported
liability is also impacted by movements in various foreign exchange rates as the insured risks are
denominated in a number of different currencies. The buyer may also charge a reasonable risk premium
at the end of the run-off period.
138
SAGICOR FINANCIAL CORPORATION LIMITED
30
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000 4 SEGMENTS
4 SEGMENTS (continued)
The management structure of Sagicor consists of the parent company Board of Directors, the Group
Chief Executive Officer (CEO), subsidiary company Boards of Directors and subsidiary company CEOs.
For the parent company and principal subsidiaries, there are executive management committees made
up of senior management who advise the respective CEOs. The principal subsidiaries have a full
management governance structure, a consequence of their being regulated insurance and financial
services entities and of the range and diversity of their products and services.
The Group CEO serves as Board Chairman or as a Board Member of the principal subsidiaries and is
the Group’s Chief Operating decision maker. Through subsidiary company reporting, the Group CEO
obtains details of company performance and of resource allocation needs. Summarisation of planning
and results and prioritisation of resource allocation is done at the parent company level where strategic
decisions are taken.
Sagicor Life Aruba NV
Capital Life Insurance
Company Bahamas Limited
Sagicor Life
Segment Companies
Principal Activities
Sagicor Life Inc
Life and health insurance,
annuities and pension
administration services
Life and health insurance,
annuities and pension
administration services
Country of
Incorporation
Effective
Shareholders’
Interest
Barbados
100%
Aruba
100%
Life insurance
The Bahamas
100%
In accordance with the relevant financial reporting standard, the Group has determined that there are
three principal subsidiary Groups within continuing operations which represent the reportable operating
segments of Sagicor. These segments and other Group companies are set out in the following sections.
Details of the discontinued operating segment are set out in note 38.
(a) Sagicor Life
The group of subsidiaries comprises entities conducting life, health, annuity insurance business,
pension administration services and asset management. During 2015, the segments were (i) Barbados,
Eastern Caribbean, Dutch Caribbean, Bahamas and Central America and (ii) Trinidad and Tobago.
During the year, the Group combined the two segments and brought them under common executive
management control to allow for greater focus and accountability in the execution of our strategies.
Sagicor Panamá, SA
Life and health insurance
Panamá
100%
Nationwide Insurance
Company Limited
Associates
RGM Limited
Life insurance
Trinidad & Tobago
100%
Property ownership and
management
Trinidad & Tobago
33%
FamGuard Corporation
Limited
Investment holding
company
The Bahamas
20%
Principal operating company:
Family Guardian Insurance
Company Limited
Life and health insurance
and annuities
The Bahamas
20%
Primo Holding Limited
Property investment
Barbados
38%
31
2016 ANNUAL REPORT
139
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000
4 SEGMENTS (continued)
(b) Sagicor Jamaica
This segment comprises Group subsidiaries conducting life, health, annuity, property and casualty
insurance business, and pension administration services and financial services in Jamaica, Cayman
Islands and Costa Rica.
All Jamaican subsidiaries are now wholly owned by Sagicor Group Jamaica Limited. The companies
comprising this segment are as follows.
4 SEGMENTS (continued)
Sagicor Jamaica
Segment Companies (continued)
Principal Activities
Country of
Incorporation
Effective
Shareholders’
Interest
Sagicor Property Services Limited
Property management
Jamaica
49.11%
Sagicor Investments Jamaica
Limited
Investment banking
Jamaica
49.11%
Sagicor Bank Jamaica Limited
Commercial banking
Jamaica
Sagicor Costa Rica SCR, S.A.
Life insurance
Costa Rica
49.11%
24.56%
Sagicor Jamaica
Segment Companies
Sagicor Group Jamaica
Limited
Principal Activities
Country of
Incorporation
Effective
Shareholders’
Interest
LOJ Holdings Limited
Group holding company
Jamaica
49.11%
Sagicor St Lucia Limited
Insurance holding
company
Financial services
holding company
Jamaica
100%
St. Lucia
49.11%
Sagicor Life Jamaica
Limited
Life and health insurance
and annuities
Jamaica
49.11%
Sagicor Life of the
Cayman Islands Limited
Sagicor Pooled
Investment Funds Limited
Life insurance
The Cayman
Islands
Pension fund management
Jamaica
Employee Benefits
Administrator Limited
Pension administration
services
Sagicor Re Insurance
Limited
Property and casualty
insurance
Jamaica
The Cayman
Islands
Sagicor Insurance Brokers
Limited
Insurance brokerage
Jamaica
Sagicor International
Administrators Limited
Group insurance
administration
Sagicor Insurance
Managers Limited
Captive insurance
management services
Jamaica
The Cayman
Islands
49.11%
49.11%
49.11%
49.11%
49.11%
49.11%
49.11%
Sagicor Securities Jamaica Limited
Securities trading
Jamaica
49.11%
Associates
Sagicor Real Estate X-Fund Ltd.
Investment in real
estate activities
St. Lucia
29.31%(1)
(1) In September 2015, Sagicor Group acquired the Sagicor Real Estate X Fund. This acquisition took the Sagicor
Group’s holding to 29.3%.
Control of Sagicor Group Jamaica Limited is established through the following:
•
•
•
The power of the group to appoint a majority of the directors of the company and thereby
direct relevant activities.
The Group is exposed to the variable returns from its effective shareholder's interest.
The Group has the ability to use the power to affect the amount of investor's returns.
140
SAGICOR FINANCIAL CORPORATION LIMITED
32
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000 4 SEGMENTS (continued)
(c) Sagicor Life USA
4 SEGMENTS (continued)
(d) Head office function and other operating companies (continued)
This segment comprises Sagicor’s life insurance operations in the USA and comprises the following:
These comprise the following:
Sagicor Life USA
Segment Companies
Principal Activities
Country of
Incorporation
Effective
Shareholders’
Interest
Sagicor Life Insurance
Company
Sagicor USA Inc
Life insurance and annuities
USA - Texas
100%
Insurance holding company
USA - Delaware
100%
(d) Head office function and other operating companies
These comprise the following:
Other Group Companies
Principal Activities
Country of
Incorporation
Effective
Shareholders’
Interest
Sagicor Financial Corporation
Limited (1)
Sagicor General Insurance Inc
Sagicor Finance Inc
Sagicor Asset Management
(T&T) Limited
Sagicor Asset Management
Inc
Group parent company
Bermuda
100%
Property and casualty
insurance
Loan and lease financing,
and deposit taking
Barbados
St. Lucia
53%
70%
Investment management
Trinidad & Tobago
100%
Investment management
Barbados
100%
Other Group Companies
Principal Activities
Country of
Incorporation
Effective
Shareholders’
Interest
Investment management
Barbados
100%
Sagicor Asset Management
(Eastern Caribbean) Limited
Barbados Farms Limited
Sagicor Funds Incorporated
Globe Finance Inc
Farming and real estate
development
Mutual fund holding
company
Loan and lease financing,
and deposit taking
The Mutual Financial Services
Inc
Financial services holding
company
Sagicor Finance Limited
Group financing vehicle
Sagicor Finance (2015)
Limited(2)
Group financing vehicle
Barbados
77%
Barbados
100%
Barbados
Barbados
The Cayman
Islands
The Cayman
Islands
51%
73%
100%
100%
(1)
(2)
On July 20, 2016, Sagicor Financial Corporation continued as an exempted company under the
laws of Bermuda under the name Sagicor Financial Corporation Limited.
In 2015, Sagicor Finance (2015) Limited was incorporated in the Cayman Islands with its primary
function being the issuance of debt.
33
2016 ANNUAL REPORT
141
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000
4.1 Statement of income by segment
2016
Net premium revenue
Interest income
Other investment income
Fees and other revenues
Inter-segment revenues
Net policy benefits
Net change in actuarial liabilities
Interest expense
Administrative expenses
Commissions and premium and asset taxes
Finance costs
Depreciation and amortisation
Inter-segment expenses
Segment income / (loss) before taxes
Income taxes
Net income / (loss) from continuing operations
Net income/(loss) attributable to shareholders from
continuing operations
Total comprehensive income/(loss) attributable to
shareholders from continuing operations
Sagicor Life
Sagicor Jamaica
Sagicor Life USA
Head office
and other
Adjustments
Total
299,565
77,394
3,114
19,107
11,946
411,126
196,116
3,152
13,393
68,990
44,152
-
6,505
5,720(1)
338,028
73,098
(8,177)
64,921
64,811
268,482
157,758
42,753
54,968
-
523,961
168,757
38,350
41,455
112,156
39,979
-
8,017
1,419
410,133
113,828
(23,678)
90,150
44,275
74,383
47,958
10,450
16,095
-
148,886
79,625
3,750
2,853
32,752
15,584
63
1,551
(3,575) (1)
132,603
16,283
(5,797)
10,486
10,486
21,526
9,758
2,883
26,654
60,129
120,950
9,161
-
3,747
40,040
9,534
(136)
5,210
11,581
79,137
41,813
(3,544)
38,269
(1,790)
-
-
1,284
15
(72,075)
(70,776)
-
-
-
1,388
-
38,406
-
(15,145)
24,649
(95,425)
(504)
(95,929)
(57,523)
663,956
292,868
60,484
116,839
-
1,134,147
453,659
45,252
61,448
255,326
109,249
38,333
21,283
-
984,550
149,597
(41,700)
107,897
60,259
50,414
45,840
12,802
(3,378)
(59,867)
45,811
(1) During 2015, Sagicor Life USA entered into a reinsurance agreement with Sagicor Life; included in the inter-segment expenses is $4,819 relating to this transaction.
142
SAGICOR FINANCIAL CORPORATION LIMITED
34
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000 4.1 Statement of income by segment (continued)
2015
Net premium revenue
Interest income
Other investment income
Fees and other revenues
Loss arising on acquisition
Inter-segment revenues
Net policy benefits
Net change in actuarial liabilities
Interest expense
Administrative expenses
Commissions and premium and asset taxes
Finance costs
Depreciation and amortisation
Inter-segment expenses
Segment income / (loss) before taxes
Income taxes
Net income / (loss) from continuing operations
Net income/(loss) attributable to shareholders from
continuing operations
Total comprehensive income/(loss) attributable to
shareholders from continuing operations
Sagicor Life
Sagicor Jamaica
Sagicor Life USA
Head office
and other
Adjustments
Total
291,237
73,121
1,862
12,606
278,312
159,828
21,101
53,243
80,963
51,236
8,831
20,124
-
(1,025)
-
-
(82,890)(1)
92,596(1)
471,422
189,934
(1,482)
11,247
64,958
40,694
-
5,831
82,585(1)
393,767
77,655
(6,888)
70,767
511,459
163,574
44,634
40,824
114,977
44,298
-
6,573
886
415,766
95,693
(15,581)
80,112
78,264
101,898
(16,593)
2,693
35,673
24,761
49
1,276
(81,207)(1)
68,550
9,714
(3,106)
6,608
6,608
23,413
9,247
(66)
23,113
-
39,905
95,612
12,171
-
4,043
35,449
10,148
(343)
5,007
9,943
76,418
19,194
(343)
18,851
(18,740)
-
-
(2,931)
4
-
(49,611)
(52,538)
-
-
-
835
-
37,528
-
(12,207)
26,156
(78,694)
799
(77,895)
(40,367)
673,925
293,432
28,797
109,090
(1,025)
-
1,104,219
467,577
26,559
58,807
251,892
119,901
37,234
18,687
-
980,657
123,562
(25,119)
98,443
56,327
69,482
39,344
70,925
4,881
(3,404)
(19,460)
(38,481)
14,461
(1)
During the year, Sagicor Life USA entered into a reinsurance agreement with Sagicor Life; included in the inter-segment revenues is $90,515 and inter-segment expenses of $82,225 relating to this transaction.
35
2016 ANNUAL REPORT
143
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000
4.1 Statement of income by segment (continued)
4.2 Variations in segment income (continued)
The principal non-controlling interests in the Group are in respect of Sagicor Group Jamaica Limited
(Sagicor Jamaica).
(iv) Foreign exchange gains and losses
Out of the total net income attributable to non-controlling interests of $47,528 (2015 - $40,831), Sagicor
Jamaica contributed $45,876 (2015 - $40,767).
Movements in foreign exchange rates may generate significant exchange gains or losses when the
foreign currency denominated monetary assets and liabilities are re-translated at the date of the financial
statements.
4.2 Variations in segment income
(v) Movements in actuarial liabilities arising from changes in assumptions
The change in actuarial liabilities for the year includes the effects arising from changes in assumptions.
The principal assumptions in computing the actuarial liabilities on life and annuity contracts relate to
mortality and morbidity, lapse, investment yields, asset default and operating expenses and taxes.
Because the process of changes in assumptions is applied to all affected insurance contracts, changes
in assumptions may have a significant effect in the period in which they are recorded.
Variations in segment income may arise from non-recurring or other significant factors. The most
common factors contributing to variations in segment income are as follows.
(i)
Investment gains
Fair value investment gains are recognised on:
- the revaluation of investment property;
- the revaluation of debt and equity securities classified as at fair value through income;
- the disposal of debt and equity securities classified as available for sale or loans and
receivables.
Therefore, significant gains and losses may be triggered by changes in market prices and / or by
decisions to dispose of investments.
(ii) Allowances for impairment of financial investments
Significant impairment losses may be triggered by changes in market prices and economic conditions.
(iii) Gains on acquisitions/divestitures
On acquisition of a business or portfolio, if the fair value of the net assets acquired exceeds the total
consideration transferred, the difference is recognized directly in the statement of income.
144
SAGICOR FINANCIAL CORPORATION LIMITED
36
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000 4.2 Variations in segment income (continued)
The table below summarises by segment the individual line items within income from continuing operations which are impacted by the foregoing factors.
Variations in income by segment
Sagicor Life
Sagicor
Jamaica
Sagicor Life
USA
Head Office
and Other
Total
Sagicor Life
Sagicor
Jamaica
Sagicor Life
USA
Head Office
and Other
2016
2015
Investment gains / (losses)
Impairment of financial investments
Foreign exchange gains
Losses on acquisitions/ divestitures
Decrease / (increase) in actuarial
liabilities from changes in assumptions
999
(328)
8,725
-
42,669
(4,652)
3,566
-
15,586
(4,488)
-
-
21,682
3,805
(18,176)
2,882
(153)
273
-
-
62,136
(9,621)
12,564
-
(1,226)
(1,782)
1,624
-
28,342
(8,368)
1,182
(1,025)
7,311
36,114
(403)
31,078
45,388
(7,078)
3,002
72,390
34,730
19,728
5,309
(17)
-
-
55,700
60,992
Total
32,418
(10,338)
2,814
(1,025)
91,411
(7)
(171)
8
-
-
(170)
115,280
37
2016 ANNUAL REPORT
145
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000
4.3 Other comprehensive income
Variations in other comprehensive income may arise also from non-recurring or other significant factors. The most common are as follows:
(i) Unrealised investment gains
Fair value investment gains are recognised on the revaluation of debt and equity securities classified as available for sale. Therefore, significant gains and losses may be triggered by changes in market prices.
(ii) Changes in actuarial liabilities
Changes in unrealised investment gains identified in (i) above may also generate significant changes in actuarial liabilities as a result of the use of asset liability matching in the liability estimation process.
(iii) Foreign exchange gains and losses
Movements in foreign exchange rates may generate significant exchange gains or losses on the re-translation of the financial statements of foreign currency reporting units.
(iv) Defined benefit plans gains and losses
Experience adjustments and changes in actuarial assumptions gives rise to gains or losses on defined benefit plans.
The table below summarises by segment the individual line items within other comprehensive income from continuing operations which are impacted by the foregoing factors.
2016
Unrealised investment (losses) / gains
Changes in actuarial liabilities
Retranslation of foreign currency operations
Losses on defined benefit plans
2015
Unrealised investment losses
Changes in actuarial liabilities
Retranslation of foreign currency operations
Losses on defined benefit plans
Variations in other comprehensive income by segment
Sagicor Life
Sagicor Jamaica
Sagicor Life
USA
Head Office
and other
Adjustments
Total
(2,474)
961
(7,490)
(4,924)
(5,252)
9,729
(982)
(1,053)
32,226
(5,647)
(21,058)
(7,369)
(61,165)
3,702
(14,708)
(3,787)
11,034
(12,404)
-
-
(36,500)
34,915
-
-
(137)
-
10
(1,582)
(184)
-
23
(591)
(1,466)
-
57
-
-
-
(19)
-
39,183
(17,090)
(28,481)
(13,875)
(103,101)
48,346
(15,686)
(5,431)
146
SAGICOR FINANCIAL CORPORATION LIMITED
38
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000 4.4 Statement of financial position by segment
2016
Financial investments
Other external assets
Inter-segment assets
Total assets
Policy liabilities
Other external liabilities
Inter-segment liabilities
Total liabilities
Net assets
2015
Financial investments
Other external assets
Inter-segment assets
Total assets
Policy liabilities
Other external liabilities
Liabilities of discontinued operation
Inter-segment liabilities
Total liabilities
Net assets
Sagicor Life
Sagicor
Jamaica
Sagicor Life USA
Head office
and other
Adjustments
Total
1,403,870
324,570
199,858
1,928,298
1,272,500
86,871
39,434
1,398,805
529,493
1,402,811
331,311
169,945
1,904,067
1,271,737
87,439
-
28,475
1,387,651
2,212,153
450,104
11,555
2,673,812
675,019
1,544,651
3,715
2,223,385
1,068,244
829,889
2,759
1,900,892
1,434,678
203,929
43,838
1,682,445
129,481
189,807
54,006
373,294
55,061
539,995
181,191
776,247
450,427
218,447
(402,953)
2,087,139
415,738
10,350
2,513,227
646,942
1,467,043
-
1,696
2,115,681
1,061,649
712,944
8,323
1,782,916
1,309,946
224,063
-
43,839
1,577,848
275,022
195,496
53,505
524,023
60,474
629,276
46,026
168,113
903,889
-
(76,198)
(268,178)
(344,376)
(76,198)
-
(268,178)
(344,376)
-
-
(82,225)
(242,123)
(324,348)
(82,225)
-
-
(242,123)
(324,348)
4,813,748
1,718,172
-
6,531,920
3,361,060
2,375,446
-
5,736,506
795,414
4,826,621
1,573,264
-
6,399,885
3,206,874
2,407,821
46,026
-
5,660,721
516,416
397,546
205,068
(379,866)
-
739,164
39
2016 ANNUAL REPORT
147
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000
4.4 Statement of financial position by segment (continued)
4.7 Geographical areas
The principal non-controlling interests in the Group are in respect of Sagicor Group Jamaica Limited
(Sagicor Jamaica). Out of the total non-controlling interests in the statement of financial position of
$257,974 (2015 - $231,735), Sagicor Jamaica contributed $219,361 (2015 - $194,690).
4.5 Additions to non-current assets by segment
Segment operations include certain non-current assets comprising investment property, property, plant
and equipment, investment in associated companies and intangible assets. Additions to these
categories for the year are as follows:
The Group operates in certain geographical areas which are determined by the location of the subsidiary
or branch initiating the business.
Group operations in geographical areas include certain non-current assets comprising investment
property, property, plant and equipment, investment in associated companies and intangible assets.
Total external revenues and non-current assets by geographical area are summarised in the following
table.
Sagicor Life
Sagicor Jamaica
Sagicor Life USA
Head office and other
4.6 Products and services
2016
4,534
8,922
5,782
5,565
24,803
2015
9,139
45,968
2,806
4,557
62,470
Barbados
Jamaica
Trinidad & Tobago
Other Caribbean
USA
External revenue
Non-current assets
2016
2015
2016
2015
170,271
495,476
166,066
152,161
150,173
162,545
478,798
153,790
150,860
158,226
193,522
120,178
66,115
30,025
9,325
195,457
117,964
69,132
34,485
5,096
1,134,147
1,104,219
419,165
422,134
Total external revenues relating to the Group’s products and services are summarised as follows:
Life, health and annuity insurance contracts issued to
individuals
Life, health and annuity insurance and pension administration
contracts issued to groups
Property and casualty insurance
Banking, investment management and other financial services
Farming and unallocated revenues
2016
2015
635,288
636,061
276,893
273,382
36,621
157,573
27,772
32,653
150,152
11,971
1,134,147
1,104,219
148
SAGICOR FINANCIAL CORPORATION LIMITED
40
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000 5 INVESTMENT PROPERTY
The movement in investment property for the year is as follows:
Balance, beginning of year
Additions at cost
Transfer from real estate developed for resale (note 12)
Transfer (to) / from property, plant and equipment (note 7)
Disposals
Change in fair values
Effects of exchange rate changes
Balance, end of year
2016
2015
79,172
88,766
7
555
846
(825)
1,847
(940)
111
-
(3,410)
(5,255)
(816)
(224)
80,662
79,172
Investment property includes $10,603 (2015 - $11,446) which represents the Group’s proportionate
interest in joint operations summarised in the following table.
Country
Description of property
Barbados
Freehold lands
Freehold office buildings
Trinidad & Tobago
Freehold office building
Percentage
ownership
50%
25% -33%
60%
Pension Funds managed by the Group own the remaining 50% interests of freehold lands in Barbados,
and a 33% interest in a freehold office building in Barbados.
41
2016 ANNUAL REPORT
149
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000
6 ASSOCIATES AND JOINT VENTURES
6.1 Interest in Associates and Joint Ventures
Name of Entity
Country of Incorporation
% of ownership interest
RGM Limited
FamGuard Corporation Limited(1)
Primo Holding Limited
Sagicor Costa Rica SCR, S.A.
Sagicor Real Estate X-Fund Ltd.(2)
Trinidad & Tobago
Bahamas
Barbados
Costa Rica
St. Lucia
2016
33%
20%
38%
50%
29%
2015
33%
20%
38%
50%
29%
Nature of
relationship
Measurement
Method
Carrying Amount
2016
2015
Associate
Associate
Associate
Equity Method
Equity Method
Equity Method
Joint Venture
Equity Method
Associate
Equity Method
22,346
13,700
355
3,107
47,785
87,293
23,199
14,059
362
6,326
40,584
84,530
(1) FamGuard Corporation Limited is listed on the Bahamas International Securities Exchange. The proportionate share of market value calculated on the basis of the year-end closing rate of $5.82 per share
was $11,000 (2015 – $11,200).
(2) The Sagicor Real Estate X Fund Limited traded on the Jamaica Stock Exchange. The proportionate share of market value calculated on the basis of the year-end closing rate of $0.10 (J$12.25) per share
was $66,508 (2015 - $58,346).
150
SAGICOR FINANCIAL CORPORATION LIMITED
42
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000 6.2
Summarised Financial Information
RGM Limited
FamGuard Corporation Limited
Primo Holding Limited
Sagicor Costa Rica SCR, S.A.
Sagicor Real Estate X-Fund Ltd.
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
ASSETS
Financial investments
Cash resources
Other investments and assets
Total assets
-
-
6,688
126,117
132,805
11,829
132,735
144,564
LIABILITIES
Policy liabilities
Other liabilities
Total liabilities
-
65,771
65,771
-
74,972
74,972
269,154
15,685
61,288
346,127
220,829
13,073
233,902
251,312
10,092
63,622
325,026
206,002
10,966
216,968
Net Assets
67,034
69,592
112,225
108,058
-
-
1,050
1,050
-
204
204
846
-
-
1,050
1,050
-
186
186
864
9,765
3,561
4,950
7,840
3,607
1,867
18,276
13,314
3,761
8,299
12,060
1,829
144
1,973
122,129
9,478
214,553
346,160
-
190,669
190,669
93,939
19,972
168,306
282,217
-
151,799
151,799
6,216
11,341
155,491
130,418
43
2016 ANNUAL REPORT
151
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000
6.2
Summarised Financial Information (continued)
RGM Limited
FamGuard Corporation
Limited
Primo Holding Limited
Sagicor Costa Rica SCR, S.A.
Sagicor Real Estate X-Fund
Ltd.
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
Reconciliation to carrying amounts:
Investment, beginning of year
23,199
Additions
Amounts assumed on acquisition
Transfers
Dividends received
Share of income/(loss) before
taxes
Share of amortisation or
impairment of intangible assets
which were identified on
acquisition
Share of income taxes
Share of other comprehensive
income/(loss)
Effects of exchange rate changes
Investment, end of year
-
-
-
(470)
1,158
-
(402)
-
(1,139)
22,346
21,080
423
-
-
-
1,677
-
248
-
(229)
23,199
14,059
12,856
362
368
-
-
-
(580)
240
(72)
-
53
-
-
-
-
(480)
959
(72)
-
796
-
-
-
-
-
-
-
-
-
(7)
(6)
-
-
-
-
-
-
-
-
13,700
14,059
355
362
6,326
188
-
(2,886)
-
66
-
-
(264)
(323)
3,107
6,460
152
-
-
-
(284)
-
-
-
(2)
6,326
40,584
-
-
-
(738)
3,968
-
-
6,762
(2,791)
47,785
-
28,453
12,288
-
-
807
-
-
171
(1,135)
40,584
152
SAGICOR FINANCIAL CORPORATION LIMITED
44
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000 6.2
Summarised Financial Information (continued)
RGM Limited
FamGuard Corporation
Limited
Primo Holding Limited
Sagicor Costa Rica SCR, S.A.
Sagicor Real Estate X-Fund
Ltd.
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
Summarised statement of comprehensive income
REVENUE
Net premium revenue
Net investment and other
income
Total revenue
BENEFITS AND EXPENSES
Benefits
Expenses
Total benefits and expenses
INCOME BEFORE TAXES
Income taxes
NET INCOME FOR THE
PERIOD
-
-
23,522
23,522
-
19,916
19,916
3,606
(1,195)
2,411
25,619
25,619
-
20,526
20,526
5,093
747
5,840
Other comprehensive income
-
-
Total comprehensive
income
2,411
5,840
90,753
28,593
90,253
26,444
119,346
116,697
78,106
36,762
75,671
34,205
114,868
109,876
4,478
-
4,478
634
5,112
6,821
-
6,821
882
7,703
-
-
-
-
18
18
(18)
-
(18)
-
(18)
-
-
-
-
16
16
(16)
-
(16)
-
(16)
5,785
668
6,453
3,393
2,626
6,019
434
(301)
133
(670)
(537)
5,893
384
6,277
5,346
1,463
6,809
(532)
(35)
(567)
-
(567)
-
-
82,865
82,865
-
67,411
67,411
15,454
(1,916)
13,538
23,070
36,608
56,654
56,654
-
44,100
44,100
12,554
(1,438)
11,116
709
11,825
Dividends
associates and joint ventures
received
from
470
-
580
480
-
-
-
-
738
-
45
2016 ANNUAL REPORT
153
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000
7 PROPERTY, PLANT AND EQUIPMENT
2016
Owner-occupied property
Lands
Land &
buildings
Office
furnishings,
equipment &
vehicles
Operating
lease
vehicles &
equipment
Total
Net book value, beginning of year
Additions at cost
Transfer (to) / from investment property
(note 5)
Transfer to intangible assets (note 8)
Other transfers
Transfers to real estate developed or held
for sale (Note 12)
Disposals
Change in fair values
Depreciation charge
Effects of exchange rate changes
38,031
-
(846)
-
-
-
-
-
-
-
80,694
2,680
-
-
-
-
(753)
(1,583)
(1,105)
(2,078)
Net book value, end of year
37,185
77,855
39,310
13,787
-
(2,885)
613
-
(508)
-
(8,370)
(768)
41,179
12,214
3,869
170,249
20,336
-
-
-
-
(1,612)
-
(2,967)
-
(846)
(2,885)
613
-
(2,873)
(1,583)
(12,442)
(2,846)
11,504
167,723
38,031
Represented by:
Cost or valuation
Accumulated depreciation
37,185
-
37,185
81,004
(3,149)
77,855
120,299
(79,120)
18,755
257,243
(7,251)
(89,520)
41,179
11,504
167,723
38,031
-
38,031
Owner-occupied lands are largely utilised for farming operations.
Owner-occupied land and buildings consist largely of commercial office buildings.
Owner-occupied properties
Land
38,220
-
-
-
-
(22)
(167)
-
-
-
2015
Office
furnishings,
equipment &
vehicles
Operating
lease
vehicles &
equipment
Total
39,910
14,275
-
(6,348)
139
-
(827)
-
(7,296)
(543)
39,310
13,438
2,933
169,469
18,175
-
-
-
-
3,410
(6,348)
145
(22)
(1,019)
(2,122)
-
815
(3,138)
-
(11,513)
(1,760)
12,214
170,249
112,382
(73,072)
19,705
254,434
(7,491)
(84,185)
39,310
12,214
170,249
Land &
buildings
77,901
967
3,410
-
6
-
(109)
815
(1,079)
(1,217)
80,694
84,316
(3,622)
80,694
154
SAGICOR FINANCIAL CORPORATION LIMITED
46
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000 8 INTANGIBLE ASSETS
8.1 Analysis of intangible assets and changes for the year
Goodwill
2016
Customer &
broker
relationships
Software
Total
Goodwill
2015
Customer &
broker
relationships
Software
Total
Net book value, beginning of year
45,272
16,441
46,643
19,129
-
-
-
-
(1,361)
43,911
26,470
4,272
2,885
-
-
(1,719)
(7,050)
-
(985)
13,737
-
(738)
25,839
Additions at cost
Transfer from property, plant and equipment
(note 7)
Amortisation/impairment charges
Divestitures and disposals
Effects of exchange rate changes
Net book value, end of year
Represented by:
Cost or valuation
Accumulated depreciation and impairments
-
(21,842)
(37,627)
43,911
13,737
25,839
43,911
35,579
63,466
88,183
4,272
2,885
(8,769)
-
(3,084)
83,487
142,956
(59,469)
83,487
-
-
(585)
-
(786)
45,272
47,085
(1,813)
45,272
10,284
15,198
6,348
-
-
(1,837)
(4,680)
-
(851)
16,441
(289)
(391)
26,470
38,316
57,513
(21,875)
(31,043)
16,441
26,470
76,056
15,198
6,348
(7,102)
(289)
(2,028)
88,183
142,914
(54,731)
88,183
47
2016 ANNUAL REPORT
155
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000
8.2 Impairment of intangible assets
Goodwill arises from past acquisitions and is allocated to cash generating units (CGUs). Goodwill is
tested annually for impairment. The recoverable amount of a CGU is determined as the higher of its
value in use or its fair value less costs to sell.
For those CGU’s which the fair value less costs to sell methodology is used, financial projections are
used as inputs to determine maintainable earnings over time to which is applied an appropriate earnings
multiple. For those CGU's which the value in use methodology is used, cash flows are extracted from
financial projections to which are applied appropriate discount factors and residual growth rates, or
alternatively, the cash flows from the financial projections are extended to 50 years using an actuarial
appraisal value technique which incorporates appropriate discount rates and solvency capital
requirements.
As disclosed in note 2.7 (a) goodwill is allocated to the Group’s reportable operating segments. During
the year, as disclosed in note 4, the Group combined the Barbados, Eastern Caribbean, Dutch
Caribbean, the Bahamas and Central America segment with its Trinidad and Tobago operating
segment. Goodwill is allocated to this combined segment and has been tested for impairment at this
level.
8.2 Impairment of intangible assets (continued)
(i) Years ended December 31, 2016 & 2015
An actuarial appraisal value technique was adopted to test goodwill impairment. The principal
assumptions included the following:
•
•
•
•
•
Discount rates of 7 - 11% (2015, 7 - 11%) for individual life and annuity inforce business,
New individual life and annuity business was included for the five year period 2017 to 2021,
Annual growth rate for new individual life and annuity business was 0% - 21.8% for 2017 and
5% – 19.7 % from 2018 to 2021 (2015 – 14% - 49% and 0% to 24.2% from 2017 to 2020),
Discount rates of 11 - 15% (2015, 11 - 15%) for new individual life and annuity business,
Required Minimum Continuing Capital and Surplus Ratio (MCCSR) of 175% (2015 – 200%).
Sensitivity
The excess of the appraisal value over carrying value of the operating segment was also tested by
varying the discount rates and capital ratios. The results are set out in the following tables. Negative
amounts illustrate the extent of possible impairment.
The Group obtains independent professional advice in order to select the relevant discount factors,
residual growth rates and earnings multiples.
Sagicor Life Inc Segment
MCCSR target ratio
The carrying values of goodwill and the impairment test factors used are considered in the following
sections.
Discount rate
Inforce
New business
150%
175%
Low
Mid
High
200%
(a) Sagicor Life operating segment
Carrying value of goodwill
26,576
27,061
2016
2015
Low
Mid
High
7%
9%
11%
11%
13%
15%
286,253
135,970
26,330
281,890
126,454
13,704
277,068
116,026
4,179
156
SAGICOR FINANCIAL CORPORATION LIMITED
48
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000 8.2 Impairment of intangible assets (continued)
8.2 Impairment of intangible assets (continued)
(b) Sagicor Jamaica operating segment
(c) Sagicor General Insurance Inc
Carrying value of goodwill
13,051
13,927
Carrying value of goodwill
2016
2015
2016
4,284
2015
4,284
The fair value less cost to sell methodology was adopted to test goodwill impairment in both years. The
after tax multiple used for the segment was 8.2 (2015– 7.4) which was derived from a pre-tax factor of
6.6 (2015 – 5.9) using an iterative method.
The Group recognised goodwill on the acquisition of its interests in Sagicor General Insurance Inc.
The value in use methodology has been used to test goodwill impairment in both years. The pre-tax
discount factor was 12.8% (2015 –13.1%) which was derived from an after tax factor of 12.5% (2015
– 12.5%) using an iterative method. The residual growth rate was 4.4% (2015 – 4.4%).
Sensitivity
Sensitivity
The possible impairment of goodwill is sensitive to changes in earnings multiples and after tax earnings.
This is illustrated in the following table.
2016 test
Scenario 1
Scenario 2
Scenario 3
After tax earnings multiples
Reduction in forecast earnings
8.2
n/a
Excess of recoverable amount (of 49.11% interest)
126,681
Impairment (of 49.11% interest)
Nil
5.4
10%
10
Nil
4.9
10%
n/a
(18,555)
The possible impairment of goodwill is sensitive to changes in earnings multiples and after tax
earnings. This is illustrated in the following table.
2016 test
Scenario 1
Scenario 2
Scenario 3
After tax discount factor
Residual growth rate
Reduction in residual growth rate
Increase in after tax discount factor
12.5
4.4
n/a
n/a
12.5
3.7
16%
n/a
Excess of recoverable amount (of 53.0% interest)
39,170
29,336
Impairment (of 53.0% interest)
Nil
Nil
15.0
3.7
16%
20%
22,025
Nil
49
2016 ANNUAL REPORT
157
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000
9.1 Analysis of financial investments (continued)
2016
2015
Carrying
value
Fair
value
Carrying
value
Fair
value
Non-derivative financial assets at fair value through
income comprise:
Assets designated at fair value upon initial recognition
2016
2015
316,700
11,176
310,412
-
Assets held for trading
Debt securities comprise:
Government and government-guaranteed debt securities
1,765,558
1,767,389
Collateralised mortgage obligations
Corporate debt securities
Other securities
214,320
213,747
1,352,387
1,314,223
109,089
122,360
3,441,354
3,417,719
Debt securities include $1,836 (2015 - $8,085) that contain options to convert to common shares of the
issuer.
Corporate debt securities include $28,788 (2015 - $10,270) in bonds issued by an associated company.
Equity securities include $1,136 (2015 - $963) in mutual funds managed by the Group.
9 FINANCIAL INVESTMENTS
9.1 Analysis of financial investments
Held to maturity securities:
Debt securities
Available for sale securities:
Debt securities
Equity securities
Financial assets at fair value through income:
Debt securities
Equity securities
Derivative financial instruments (note 41.6)
Mortgage loans
Deposits
Loans and receivables:
Debt securities
Mortgage loans
Policy loans
20,665
21,688
20,530
21,940
2,271,020
2,271,020
2,311,591
2,311,591
96,684
96,684
88,380
88,380
2,367,704
2,367,704
2,399,971
2,399,971
164,005
164,005
136,727
123,524
123,524
126,577
28,980
40,347
-
28,980
40,347
-
15,479
47,052
56
136,727
126,577
15,479
47,052
56
356,856
356,856
325,891
325,891
985,664
1,042,108
948,871
291,419
291,154
293,871
137,940
148,141
132,486
983,063
294,041
141,950
419,214
8,064
Finance loans and finance leases
508,975
491,131
436,161
Securities purchased for re-sale
5,227
5,227
8,064
Deposits
139,298
139,298
260,776
260,776
2,068,523
2,117,059
2,080,229
2,107,108
Total financial investments
4,813,748
4,863,307
4,826,621
4,854,910
158
SAGICOR FINANCIAL CORPORATION LIMITED
50
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000 9.2 Pledged assets
9.4 Reclassification of financial investments
Debt and equity securities include $380,145 (2015 - $234,211) as collateral for loans payable and other
funding instruments.
In 2008, the Group reclassified certain securities from the available for sale classification to the loans
and receivables classification. The assets reclassified were primarily:
Collateral for the obligation to the Federal Home Loan Bank of Dallas (FHLB) which is included in other
funding instruments (note 17), consists of an equity holding in the FHLB with a market value of $5,982
(2015 - $7,589), and mortgages and mortgage backed securities having a total market value of
$139,630 (2015 - $174,478).
Debt securities are pledged as collateral under repurchase agreements with customers and other
financial institutions and for security relating to overdraft and other facilities with other financial
institutions. As of December 31, 2016, these pledged assets totalled $595,314 (2015 - $526,824). Of
these assets pledged as security, $79,681 (2015 – $51,549) represents collateral for securities sold
under agreements to repurchase in instances when the transferee has the right by contract or by custom
to sell or re-pledge the collateral.
9.3 Returns accruing to the benefit of contract-holders
Financial investments include the following amounts for which the full income and capital returns accrue
to the holders of unit linked policy and deposit administration contracts.
2016
2015
133,862
102,641
123,524
122,367
40,271
47,052
297,657
272,060
Debt securities
Equity securities
Mortgage loans
51
•
•
Government of Jamaica debt securities with a maturity date of 2018 and after, which are held
to back long-term insurance liabilities; and
Non-agency collateralised mortgage obligations in the USA.
The reclassifications were made because the markets for these securities were considered by
management to have become inactive.
The following disclosures are in respect of these reclassified assets.
2016
2015
Carrying
value
Fair
value
Carrying
value
Fair
value
Government debt securities maturing after
September 2018
27,591
35,879
44,338
51,818
Other debt securities
1,624
2,217
2,076
2,730
29,215
38,096
46,414
54,548
Cumulative net fair value gain, beginning of year
Net fair value gains
Disposals
Effect of exchange rate changes
Cumulative net fair value gain, end of year
2016
2015
4,263
1,887
(971)
(89)
5,090
1,994
1,355
947
(33)
4,263
2016 ANNUAL REPORT
159
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000
9.4 Reclassification of financial investments (continued)
12 MISCELLANEOUS ASSETS AND RECEIVABLES
The net fair value gain or loss approximates the fair value gain or loss that would have been recorded
in total comprehensive income had the reclassification not been made. The disposal amount represents
the net gain/loss that would have been reclassified from other comprehensive income to income on
disposal.
10 REINSURANCE ASSETS
Reinsurers’ share of:
Actuarial liabilities (note 13.1)
Policy benefits payable (note 14.2)
Provision for unearned premiums (note 14.3)
Other items
713,252
601,597
35,994
21,775
6,323
37,816
21,356
5,050
777,344
665,819
The provision for unearned premiums and other items are expected to mature within one year
of the financial statements date.
11 INCOME TAX ASSETS
Deferred income tax assets (note 33)
Income and withholding taxes recoverable
2016
2015
36,279
23,296
59,575
41,023
25,319
66,342
Income and withholding taxes recoverable are expected to be recovered within one year of the
financial statements date.
Net defined benefit assets (note 31)
Real estate developed or held for resale (ii)
Prepaid and deferred expenses (ii)
Premiums receivable
Legal claim (iii)
2016
2015
Other assets and accounts receivable (i)
2016
2015
1,333
10,162
21,047
46,530
52,720
51,226
1,066
11,084
19,967
42,398
42,902
51,063
183,018
168,480
(i) Other assets and accounts receivables include $9,880 (2015 - $5,478) due from
managed funds.
(ii) Real estate developed for resale includes $7,878 (2015 - $8,234) which is expected to be
realised within one year of the financial statements date. Prepaid and deferred expenses are
also expected to be realised within one year of the financial statements date.
(iii) $52,720 (2015 – $42,902) Legal claim
In March 2014, the Supreme Court of Jamaica granted judgement in favour of a claimant in a
case brought against Sagicor Bank Jamaica Limited (formerly RBC Royal Bank of Jamaica
Limited). This claim pre-dated the acquisition of control of the Bank by Sagicor Group Jamaica
Limited, and also pre-dated the acquisition of control of the Bank by RBTT International Limited
from Finsac Limited (‘Finsac’) in 2001. By virtue of the Share Sale Agreement entered into
between Finsac, RBTT Financial Holdings Limited and RBTT International Limited, Finsac
agreed to fully indemnify RBTT International Limited (now SGJ Holdings (St. Lucia) Limited).
Though the judgement is being appealed, the amount computed as settlement has been
recorded as payable to the claimant and correspondingly receivable from Finsac (Note 20).
During 2016, interest was accrued on this liability and resulted in an increase in the amount
outstanding to $52.7 million.
160
SAGICOR FINANCIAL CORPORATION LIMITED
52
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000 13 ACTUARIAL LIABILITIES
13.1 Analysis of actuarial liabilities
13.2 Movement in actuarial liabilities
Gross liability
Reinsurers’ share
2016
2015
2016
2015
Gross liability
Reinsurers’ share
2016
2015
2016
2015
Balance, beginning of year
2,632,387
2,562,221
601,597
470,271
Contracts issued to individuals:
Changes in actuarial liabilities:
Life insurance - participating policies
238,604
239,861
51
57
Life insurance and annuity
- non-participating policies
Health insurance
Unit linked funds
1,889,653
1,767,313
694,882
582,224
13,926
5,361
438
420
177,454
166,234
-
-
-
-
Reinsurance contracts held
28,894
27,982
Recorded in income (note 27)
156,983
157,887
111,731
131,328
Recorded in other comprehensive
income
23,769
(67,146)
Other movements
1
(679)
Effect of exchange rate changes
(36,778)
(19,896)
-
(62)
(14)
-
-
(2)
Balance, end of year
2,776,362
2,632,387
713,252
601,597
2,348,531
2,206,751
695,371
582,701
Analysis of changes in actuarial liabilities
Contracts issued to groups:
Life insurance
Annuities
Health insurance
30,404
31,548
118
267
362,980
358,604
17,660
18,460
34,447
35,484
103
169
427,831
425,636
17,881
18,896
Total actuarial liabilities
2,776,362
2,632,387
713,252
601,597
The following notes are in respect of the foregoing table:
•
•
•
Life insurance includes coverage for disability and critical illness.
Actuarial liabilities include $83,238 (2015 - $81,615) in assumed reinsurance.
The liability for reinsurance contracts held occurs because the reinsurance premium costs
exceed the mortality costs assumed in determining the gross liability of a policy contract.
Arising from increments and
decrements of inforce policies and
from the issuance of new policies
Arising from changes in assumptions
for mortality, lapse, expenses,
investment yields and asset default
Other changes:
Actuarial modelling, refinements,
improvements and corrections
Other items
Total
206,505
210,929
105,642
131,327
(7,311)
(91,411)
(12,915)
(3,431)
-
-
(5,527)
(25,346)
6,089
-
-
1
180,752
90,741
111,731
131,328
53
2016 ANNUAL REPORT
161
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000
13.3 Assumptions – life insurance and annuity contracts
13.3 Assumptions – life insurance and annuity contracts (continued)
(a) Process used to set actuarial assumptions and margins for adverse deviations
(d)
Assumptions for investment yields
At each date for valuation of actuarial liabilities, the Appointed Actuary (AA) of each insurer reviews the
assumptions made at the last valuation date. The AA tests the validity of each assumption by reference
to current data, and where appropriate, changes the assumptions for the current valuation. A similar
process of review and assessment is conducted in the determination of margins for adverse deviations.
Any recent changes in actuarial standards and practice are also incorporated in the current valuation.
Returns on existing variable rate securities, shares, investment property and policy loans are linked to
the current economic scenario. Yields on reinvested assets are also tied to the current economic
scenario. Returns are however assumed to decrease and it is assumed that at the end of twenty years
from the valuation date, all investments, except policy loans, are reinvested in long-term, default free
government bonds.
(b) Assumptions for mortality and morbidity
The ultimate rate of return is the assumed rate that will ultimately be earned on long-term government
bonds. It is established for each geographic area and is summarised in the following table.
Mortality rates are related to the incidence of death in the insured population. Morbidity rates are related
to the incidence of sickness and disability in the insured population.
Ultimate rate of return
Annually, insurers update studies of recent mortality experience. The resulting experience is compared
to external mortality studies including the Canadian Institute of Actuaries (CIA) 1997 - 2004 tables.
Appropriate modification factors are selected and applied to underwritten and non-underwritten
business respectively. Annuitant mortality is determined by reference to CIA tables or to other
established scales.
Assumptions for morbidity are determined after taking into account insurer and industry experience and
established guidelines from Actuarial Institutes.
Barbados
Jamaica
Trinidad & Tobago
Other Caribbean
USA
2016
6.75%
5.0%
5.0%
2015
6.5%
5.0% – 5.5%
4.75%
4.5% - 6.75%
4.5% - 6.5%
0.85% - 3.65%
0.85% - 4.75%
(c) Assumptions for lapse
(e)
Assumptions for operating expenses and taxes
Policyholders may allow their policies to lapse prior to the maturity date either by choosing not to pay
premiums or by surrendering their policy for its cash value. Lapse studies are updated annually by
insurers to determine the persistency of the most recent period. Assumptions for lapse experience are
generally based on five-year averages.
Policy acquisition and policy maintenance expense costs for the long-term business of each insurer are
measured and monitored using internal expense studies. Policy maintenance expense costs are
reflected in the actuarial valuation after adjusting for expected inflation. Costs are updated annually and
are applied on a per policy basis.
Taxes reflect assumptions for future premium taxes and income taxes levied directly on investment
income. For income taxes levied on net income, actuarial liabilities are adjusted for policy related
recognised deferred tax assets and liabilities.
54
162
SAGICOR FINANCIAL CORPORATION LIMITED
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000 13.3 Assumptions – life insurance and annuity contracts (continued)
(f)
Asset defaults
The AA of each insurer includes a provision for asset default in the modelling of the cash flows. The
provision is based on industry and Group experience and includes specific margins, where appropriate,
for assets backing the actuarial liabilities, e.g. for investment property, equity securities, debt securities,
mortgage loans and deposits.
(g) Margins for adverse deviations
Margins for adverse deviations are determined for the assumptions in the actuarial valuations. The
application of these margins resulted in provisions for adverse deviations being included in the actuarial
liabilities as set out in the following table.
Provisions for adverse deviations
2016
2015
Mortality and morbidity
Lapse
Investment yields and asset default
Operating expenses and taxes
Other
89,986
63,855
69,109
11,136
10,486
82,363
59,595
68,830
11,101
9,997
244,572
231,886
13.4 Assumptions – health insurance contracts
The outstanding liabilities for health insurance claims incurred but not yet reported and for claims
reported but not yet paid are determined by statistical methods using expected loss ratios which have
been derived from recent historical data. No material claim settlements are anticipated after one year
from the date of the financial statements.
55
2016 ANNUAL REPORT
163
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000
14 OTHER INSURANCE LIABILITIES
14.1 Analysis of other insurance liabilities
Dividends on deposit and other policy balances
Policy benefits payable
Provision for unearned premiums
2016
2015
65,719
107,219
34,184
207,122
66,271
105,910
33,710
205,891
14.2 Policy benefits payable (continued)
Gross liability
Reinsurers’ share
2016
2015
2016
2015
Movement for the year:
Balance, beginning of year
105,910
95,276
Policy benefits incurred
541,502
532,532
37,816
93,314
31,998
67,528
Policy benefits paid
(538,459)
(520,933)
(94,898)
(61,571)
Effect of exchange rate changes
(1,734)
(965)
(238)
(139)
Balance, end of year
107,219
105,910
35,994
37,816
14.2 Policy benefits payable
Analysis of policy benefits payable:
Life insurance and annuity benefits
Health claims
Property and casualty claims
Gross liability
Reinsurers’ share
2016
2015
2016
2015
14.3 Provision for unearned premiums
79,445
4,284
23,490
72,120
3,379
30,411
107,219
105,910
22,084
1,686
12,224
35,994
19,091
1,363
17,362
37,816
Analysis of the provision:
Property and casualty insurance
Health insurance
Gross liability
Reinsurers’ share
2016
2015
2016
2015
33,777
407
34,184
32,399
1,311
33,710
21,775
21,356
-
-
21,775
21,356
The provision for unearned premiums is expected to mature within a year of the financial
statements’ date.
164
SAGICOR FINANCIAL CORPORATION LIMITED
56
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000 14.3 Provision for unearned premiums (continued)
16 NOTES AND LOANS PAYABLE
Movement for the year:
Balance, beginning of year
Premiums written
Premium revenue
Gross liability
Reinsurers’ share
2016
2015
2016
2015
33,710
75,004
33,602
72,779
21,356
48,939
20,152
48,757
(74,434)
(72,683)
(48,463)
(47,552)
Effect of exchange rate changes
(96)
12
(57)
(1)
Balance, end of year
34,184
33,710
21,775
21,356
15 INVESTMENT CONTRACT LIABILITIES
At amortised cost:
Deposit administration liabilities
Other investment contracts
At fair value through income:
Unit linked deposit administration
liabilities
2016
2015
Carrying
value
Fair
value
Carrying
value
Fair
value
128,345
118,563
246,908
128,345
121,051
249,396
127,882
115,537
243,419
127,780
118,860
246,640
130,668
130,668
125,177
125,177
377,576
380,064
368,596
371,817
2016
2015
Carrying
value
Fair
value
Carrying
value
Fair
value
8.875% senior notes due 2022
315,383
364,095
313,780
350,336
6.5% convertible redeemable
preference shares due 2016
4.85% / 5.0% notes due 2019
Finance lease payable
-
-
115,488
130,932
74,825
5,005
75,491
5,005
44,551
1,698
44,551
1,698
395,213
444,591
475,517
527,517
(a) On August 11, 2015, the Group issued seven year senior notes in the amount of $320.0 million
which are repayable in 2022. The notes carry a fixed annual rate of interest of 8.875% payable
semi-annually. Financial covenants in respect of these notes are summarised in Note 46.3 (a).
(b) On March 22, 2016, the Company repaid, before maturity, the $43,386 eighteen month 4.6% notes.
On March 21, 2016, the Company issued fourteen month notes with a par value of $75 million which
were repayable in 2017 and carried a 5.0% annual rate of interest. Effective December 20, 2016,
the notes were extended at an annual rate of interest of 4.85% with a maturity date of August 14,
2019. Financial covenants in respect of these notes are summarised in Note 46.3 (b).
(c) On July 18, 2016 the Company redeemed the 6.5% convertible redeemable preference shares due
2016.
57
2016 ANNUAL REPORT
165
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000
17 DEPOSIT AND SECURITY LIABILITIES
18 PROVISIONS
At amortised cost:
Other funding instruments
Customer deposits
Securities sold for re-purchase
Bank overdrafts
At fair value through income:
2016
2015
Carrying
value
Fair
value
Carrying
value
Fair
value
349,514
915,155
320,574
1,939
346,216
915,419
320,574
1,939
379,612
669,518
519,608
2,158
381,499
772,011
519,508
2,158
1,587,182
1,584,148
1,570,896
1,675,176
Net defined benefit liabilities (note 31)
Other provisions
19 INCOME TAX LIABILITIES
Deferred income tax liabilities (note 33)
Structured products
34,779
34,779
35,112
35,112
Income taxes payable
2016
2015
101,235
57
101,292
87,950
256
88,206
2016
2015
36,238
14,403
29,785
4,980
Derivative financial instruments
(note 41.6)
1,364
1,364
1,603
1,603
36,143
36,143
36,715
36,715
1,623,325
1,620,291
1,607,611
1,711,891
34,765
Income taxes payable are expected to be settled within a year of the financial statements’ date.
50,641
20 ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Other funding instruments consist of loans from banks and other financial institutions and include
balances of $134,321 (2015 - $167,913) due to the Federal Home Loan Bank of Dallas (FHLB). The
Group participates in the FHLB program in which funds received from the Bank are invested in
mortgages and mortgage backed securities.
Structured products are offered by a banking subsidiary. A structured product is a pre-packaged
investment strategy created to meet specific needs that cannot be met from the standardised financial
instruments available in the market. Structured products can be used as an alternative to a direct
investment, as part of the asset allocation process to reduce risk exposure of a portfolio, or to capitalize
on current market trends.
Collateral for other funding instruments and securities sold under agreements to resell is set out in note
9.2.
166
SAGICOR FINANCIAL CORPORATION LIMITED
Amounts due to policyholders
Amounts due to reinsurers
Legal claim (i)
Other accounts payable and accrued liabilities
2016
2015
20,525
17,179
52,720
114,551
204,975
15,702
23,792
42,902
119,326
201,722
(i)
In March 2014, the Supreme Court of Jamaica granted judgement in favour of a claimant in a case brought
against Sagicor Bank Jamaica Limited (formerly RBC Royal Bank of Jamaica Limited). This claim pre-dated the
acquisition of control of the Bank by Sagicor Group Jamaica Limited, and also pre-dated the acquisition of control of
the Bank by RBTT International Limited from Finsac Limited (‘Finsac’) in 2001. By virtue of the Share Sale Agreement
entered into between Finsac, RBTT Financial Holdings Limited and RBTT International Limited, Finsac agreed to
fully indemnify RBTT International Limited (now SGJ Holdings (St. Lucia) Limited). Though the judgement is being
appealed, the amount computed as settlement has been recorded as payable to the claimant and correspondingly
receivable from Finsac (Note 12).
During 2016, interest was accrued on this liability and resulted in an increase in the amount outstanding to $52.7
million.
58
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000 21 COMMON AND PREFERENCE SHARES
21.2 Convertible redeemable preference shares
The Company is authorised to issue:
•
•
304,494,131 common shares,
120,000,000 convertible redeemable preference shares.
In each case the shares have a par value of US$0.01.
21.1 Common shares
2016
2015
Number
in 000’s
Share
capital
Share
premium
Total
Number
in 000’s
Share
capital
On July 18, 2016, the Company redeemed the 120,000,000 convertible redeemable preference shares
which were originally issued on July 18, 2011 with the following features:
•
•
Issue price of US $1.00 or Barbados $2.00 per share;
Annual dividend rate of 6.5%, dividends to be declared by the Company’s directors and payable
half yearly on May 15 and November 15;
• Convertible into common shares at a ratio of 1.98 preference shares to 1.00 common shares,
conversion to be at the option of the shareholder and exercisable on May 16 or November 16 in
any year prior to the redemption date;
The preference shares were accounted for as a compound financial instrument and were initially
recognised in the statement of financial position as a financial liability (note 16) and also as equity (note
22). The preference shares were listed on the Barbados and Trinidad & Tobago stock exchanges. Put
option rights in respect of the preference shares are disclosed in note 46.3(c).
Issued and fully paid:
Balance,
beginning of year
Redomiciliation
adjustment(1)
Allotments arising
from LTI
Balance, end of
year
Treasury shares:
Shares held for LTI
and ESOP,
end of year (note
30.1)
304,494
302,156
- 302,156
303,917
301,600
21.3 Dividends
-
-
(299,111)
299,111
-
-
-
-
-
-
577
556
304,494
3,045
299,111
302,156
304,494
302,156
(1,646)
(16)
(2,061)
(2,077)
(2,126)
(2,836)
The dividends declared and paid during the year in respect of the Company’s convertible redeemable
preference shares and common shares are set out in the following table.
Dividends declared and paid:
Preference shares
Common shares
2016
2015
Per share
Total
Per share
Total
4.38 ¢
4.5 ¢
5,256
6.50 ¢
13,624
4.0 ¢
18,880
7,800
12,042
19,842
Total
302,848
3,029
297,050
300,079
302,368
299,320
The common shares are listed on the Barbados, Trinidad & Tobago and London stock exchanges.
(1)The redomiciliation adjustment includes $2,815 in share premium relating to treasury shares.
59
2016 ANNUAL REPORT
167
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000
21.3 Dividends (continued)
The dividends declared after the date of the financial statements in respect of the Company’s convertible redeemable preference shares and common shares are set out in the following table.
Dividends proposed:
Preference shares - May 15
Common shares - final for current year
2016
2015
Per share
Total
Per share
-
2.5 ¢
-
7,612
7,612
3.25 ¢
2.0 ¢
Total
3,900
6,090
9,990
21.4 Restrictions on common share dividends
The Company’s Constitutive documents include the following limitations on the payment of common share dividends.
(i)
(ii)
For any 6 month period that the convertible redeemable preference shares are not paid, dividends on common shares shall be suspended for that period plus the next 6 month period, and the Company shall
not repurchase any of its common shares, except when pursuant to the LTI plan and ESOP.
The Company shall not pay any dividends on its common shares, in respect of the 2011 financial year or thereafter, or repurchase any of its common shares, other than a repurchase pursuant to the LTI plan
and ESOP, if the cumulative amount of such dividends and repurchases after July 31, 2011 would exceed 50% of the cumulative amount of Group net income from January 1, 2011.
168
SAGICOR FINANCIAL CORPORATION LIMITED
60
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000
22 RESERVES
2016
Balance, beginning of year
Other comprehensive income from continuing operations allocated to reserves
Transactions with holders of equity instruments:
Allocated to reserve for equity compensation benefits
Eliminated from reserve for equity compensation benefits
Transfers to retained earnings and other movements
Balance, end of year
2015
Balance, beginning of year
Other comprehensive income from continuing operations allocated to reserves
Transactions with holders of equity instruments:
Allocated to reserve for equity compensation benefits
Eliminated from reserve for equity compensation benefits
Transfers to retained earnings and other movements
<<<<<< Fair value reserves >>>>>>
Owner
occupied
property
Available for
sale assets
Actuarial
liabilities
Currency
translation
reserves
Preference
share
reserves
Other
reserves
Total
reserves
25,047
2,137
(33,305)
8,773
27,194
(15,509)
(96,339)
(18,141)
-
-
-
-
-
-
-
-
1
-
-
-
27,184
(6,111)
(6,735)
(114,480)
4,219
31,917
(59,688)
-
-
-
(4,219)
-
-
(4,319)
5,280
(3,148)
1,298
35,347
5,280
(3,148)
(2,920)
(64,795)
43,850
(38,556)
(87,946)
10,481
38,157
(8,765)
25,249
(202)
-
-
-
(77,153)
47,329
(8,393)
-
-
(2)
-
-
-
-
-
-
-
-
-
(6,262)
4,219
-
(38,419)
3,171
(4,821)
(4,590)
31,917
3,171
(4,821)
(10,854)
(59,688)
Balance, end of year
25,047
(33,305)
8,773
(96,339)
Other reserves comprise reserves for equity compensation benefits of $16,552 (2015 - $14,420) and statutory reserves of $18,795 (2015 - $17,497).
61
2016 ANNUAL REPORT
169
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000
23 PARTICIPATING ACCOUNTS
24
PREMIUM REVENUE
The movements in the participating accounts during the year and the amounts in the financial
statements relating to participating accounts were as follows:
Gross premium
Ceded to reinsurers
2016
2015
2016
2015
Life insurance
Annuity
Health insurance
388,287
383,655
225,204
364,726
153,666
155,414
Property and casualty insurance
66,761
65,727
30,876
86,490
4,077
48,519
30,808
212,130
5,107
47,552
833,918
969,522
169,962
295,597
Closed participating
account
Open participating
account
2016
2015
2016
2015
(607)
(677)
3
(950)
343
1,990
809
1,314
906
-
(227)
(230)
Movement for the year:
Balance, beginning of year
Total comprehensive income / (loss)
Return of transfer to support profit
distribution, to shareholders
Balance, end of year
(1,281)
(607)
2,572
1,990
Financial statement amounts:
Assets
Liabilities
Revenues
Benefits
Expenses
Income taxes
82,306
83,587
7,557
7,669
428
187
84,909
85,516
7,825
6,811
584
122
196,999
200,009
194,427
198,019
22,261
18,917
1,630
877
25,453
22,034
2,037
405
The Group has the ability to reduce future policy bonuses and dividends in order to eliminate a deficit in
a participating account.
170
SAGICOR FINANCIAL CORPORATION LIMITED
62
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000 25 NET INVESTMENT INCOME
25 NET INVESTMENT INCOME (continued)
2016
2015
Further details of interest income and investment gains are set out in the following table.
Investment income:
Interest income
Dividend income
Rental income from investment property
Net investment gains
Share of operating income of associates and joint venture
Other investment income
Investment expenses:
Allowances for impairment losses
Direct operating expenses of investment property
Other direct investment expenses
292,868
293,432
3,088
3,816
62,136
5,425
(57)
3,244
4,165
32,418
3,153
125
367,276
336,537
9,621
2,107
2,196
13,924
10,338
1,947
2,023
14,308
Net investment income
353,352
322,229
The Group operates across both active and inactive financial markets. The financial investments placed
in both types of market support the insurance and operating financial liabilities of the Group. Because
the type of financial market is incidental and not by choice, the Group manages its financial investments
by the type of financial instrument (i.e. debt securities, equity securities, mortgage loans etc). Therefore,
the income from financial instruments is presented consistently with management practice, rather than
by accounting classification.
The capital and income returns of most investments designated at fair value through income accrue to
the holders of unit linked policy and deposit administration contracts which do not affect the net income
of the Group.
Interest income:
Debt securities
Mortgage loans
Policy loans
Finance loans and finance leases
Securities purchased for re-sale
Deposits
Other balances
Net investment gains / (losses):
Debt securities
Equity securities
Investment property
Other financial instruments
2016
2015
205,068
211,596
19,908
9,053
56,166
584
1,902
187
19,963
9,407
50,402
464
1,681
(81)
292,868
293,432
37,341
15,982
1,847
6,966
62,136
14,937
22,366
(842)
(4,043)
32,418
63
2016 ANNUAL REPORT
171
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000
26 FEES AND OTHER REVENUE
28 INTEREST EXPENSE
2016
2015
2016
2015
Fee income – assets under administration
Fee income – deposit administration and policy funds
Commission income on insurance and reinsurance contracts
Other fees and commission income
Foreign exchange gains
Other operating and miscellaneous income
25,470
1,739
29,375
28,288
12,564
19,403
23,328
1,813
32,845
25,937
2,814
22,353
116,839
109,090
Insurance contracts
Investment contracts
Other funding instruments
Customer deposits
Securities sold for re-purchase
Other items
2,866
16,833
6,981
16,204
18,519
45
61,448
2,828
14,279
8,098
11,755
21,695
152
58,807
The Group manages its interest-bearing obligations by the type of obligation (i.e. investment contracts,
securities etc). Therefore, the interest expense is presented consistently with management practice,
rather than by accounting classification.
The capital and income returns of most financial liabilities designated at fair value through income
accrue directly from the capital and income returns of financial assets designated at fair value through
income. Therefore, the related interest expense does not affect the net income of the Group.
27 POLICY BENEFITS AND CHANGE IN ACTUARIAL LIABILITIES
Gross benefit
Ceded to reinsurers
2016
2015
2016
2015
Life insurance benefits
Annuity benefits
Health insurance claims
199,946
206,977
199,037
191,897
119,499
114,315
Property and casualty claims
17,708
21,861
Total policy benefits
536,190
535,050
16,966
51,566
3,995
10,004
82,531
12,591
39,849
2,826
12,207
67,473
Change in actuarial liabilities (note 13.2)
156,983
157,887
111,731
131,328
Total policy benefits and change in
actuarial liabilities
693,173
692,937
194,262
198,801
172
SAGICOR FINANCIAL CORPORATION LIMITED
64
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000 29 EMPLOYEE COSTS
30.1 The Company (continued)
Included in administrative expenses, commissions and related compensation are the following:
The movement in restricted share grants during the year is as follows:
Administrative staff salaries, directors’ fees and short-term
benefits
Social security and defined contribution retirement costs
Equity-settled compensation benefits (note 30.1 to 30.2)
Defined benefit expense (note 31 (b))
2016
2015
107,329
109,339
9,125
5,365
11,528
133,347
8,859
4,646
10,772
133,616
30 EQUITY COMPENSATION BENEFITS
30.1 The Company
Effective December 31, 2005, the Company introduced a Long Term Incentive (LTI) plan for designated
executives of the Sagicor Group and an Employee Share Ownership Plan (ESOP) for permanent
administrative employees and sales agents of the Group. A total of 26,555,274 common shares of the
Company (or 10% of shares then in issue) have been set aside for the purposes of the LTI plan and the
ESOP.
(a)
LTI plan – restricted share grants
Restricted share grants have been granted to designated key management of the Group. Share grants
may vest over a four year period beginning at the grant date. The vesting of share grants is conditional
upon the relative profitability of the Group as compared to a number of peer companies. Relative
profitability is measured with reference to the financial year preceding the vesting date.
2016
2015
Number of
grants
‘000
Weighted
average
price
Number of
grants
‘000
Weighted
Average
price
3,527
3,552
US$0.93
US$0.94
3,749
2,703
US$1.02
US$0.84
(1,854)
US$0.94
(2,695)
US$0.96
(588)
4,637
US$1.05
US$0.92
(230)
3,527
US$1.04
US$0.93
Balance, beginning of year
Grants issued
Grants vested
Grants lapsed/forfeited
Balance, end of year
Grants issued may be satisfied out of new shares issued by the Company or by shares acquired in the
market. The shares acquired in the market and distributed during the year were as follows:
2016
2015
Number
in 000’s
$000
Number
in 000’s
$000
Balance, beginning of year
Shares acquired
Shares distributed
Balance, end of year
1
-
-
1
3
-
-
3
2
1,376
(1,377)
1
2
2,469
(2,468)
3
During 2016 a cash settlement was made in lieu of share issue.
65
2016 ANNUAL REPORT
173
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000
30.1 The Company (continued)
(b) LTI plan – share options
Share options have been granted to designated key management of the Group during the year. Up to
2008, options were granted at the fair market price of the Company shares at the time that the option
was granted. From 2009, options are granted at the fair market price of the Company shares prevailing
one year before the option is granted. Options vest over four years, 25% each on the first four
anniversaries of the grant date. Options are exercisable up to 10 years from the grant date.
The movement in share options for the year and details of the share options and assumptions used in
determining their pricing are as follows:
2016
2015
Number of
options
‘000
Weighted
average
exercise
price
Number of
options
‘000
Weighted
average
exercise
price
16,397
4,927
(1,524)
19,800
10,197
US$1.48
US$0.86
US$1.82
US$1.30
US$1.61
16,206
3,029
(2,838)
16,397
US$1.63
US$1.05
US$1.85
US$1.48
9,903
US$1.73
US $0.86 – 2.50
US$0.16 – 0.69
19.3% – 35.8%
7.0 years
2.6% - 4.7%
4.8% - 6.8%
US $1.05 – 2.50
US$0.23 – 0.69
19.3% – 35.8%
7.0 years
2.6% - 3.8%
4.8% - 6.8%
Balance, beginning of year
Options granted
Options lapsed/forfeited
Balance, end of year
Exercisable at the end of the year
Share price at grant date
Fair value of options at grant date
Expected volatility
Expected life
Expected dividend yield
Risk-free interest rate
30.1 The Company (continued)
The expected volatility of options is based on statistical analysis of monthly share prices over the 7
years prior to grant date.
(c) ESOP
From 2006, the Company approved awards under the ESOP in respect of permanent administrative
employees and sales agents of the Company and certain subsidiaries. The ESOP is administered by
Trustees under a discretionary trust. The amount awarded is used by the Trustees to acquire company
shares. Administrative employees and sales agents are required to serve a qualifying period of five
years from the award date in order to qualify as a beneficiary. Shares are distributed to beneficiaries
upon their retirement or termination of employment. During 2012, the rules were amended so that
vesting will take place in four equal annual instalments commencing one year after the award. The
change came into effect during 2013. The shares acquired by the Trustees during the year were as
follows:
2016
2015
Number
in 000’s
$000
Number
in 000’s
$000
Balance, beginning of year
Shares acquired
Shares distributed
Balance, end of year
2,125
100
(580)
1,645
2,833
98
(857)
2,074
3,143
414
(1,432)
2,125
5,609
378
(3,154)
2,833
30.2
Sagicor Group Jamaica Limited
(a)
Long-term incentive plan
The Group offers stock grants and stock options to senior executives as part of its long-term incentive
plan. The Group has set aside 150,000,000 of its authorised but un-issued shares of J$0.10 each for
the stock grants and stock options.
174
SAGICOR FINANCIAL CORPORATION LIMITED
66
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000 30.2 Sagicor Group Jamaica Limited (continued)
30.2 Sagicor Group Jamaica Limited (continued)
Further details of share options and the assumptions used in determining their pricing are as follows:
2016
2015
Fair value of options outstanding
J$31,770,000
J$53,646,000
Share price at grant date
Exercise price
J$4.20 – 14.10
J$4.20 – 14.10
J$4.20 – 14.10
J$4.20 – 14.10
Standard deviation of expected share price returns
26.0%
27.0%
Remaining contractual term
Risk-free interest rate
0.25 - 7 years
0.08 - 7 years
9.19%
9.58%
The expected volatility is based on statistical analysis of daily share prices over three years.
(b) Employee share purchase plan
Sagicor Life Jamaica has in place a share purchase plan which enables its administrative and sales
staff to purchase shares at a discount. The proceeds from shares issued under this plan totalled $1,298
(2015 – $312).
In January 2007, the Group introduced a new Long Term Incentive (LTI) plan which replaced the
previous Stock Option plan. Under the LTI plan, executives are entitled but not obliged to purchase the
Group stock at a pre-specified price at some future date. The options are granted each year on the
date of the Board of Directors Human Resources Committee meeting following the performance year
at which the stock option awards are approved. Stock options vest in 4 equal installments beginning the
first December 31 following the grant date and for the next three December 31 dates thereafter (25%
per year). Options are not exercisable after the expiration of 7 years from the date of grant. The number
of stock options in each stock option award is calculated based on the LTI opportunity via stock options
(percentage of applicable salary) divided by the Black-Scholes value of a stock option of Sagicor Group
Jamaica Limited stock on 31 March of the measurement year. The exercise price of the options is the
closing bid price on 31 March of the measurement year.
In December 2013, the Sagicor Group of companies in Jamaica was reorganized to establish a new
holding company which directly or indirectly carries the Group’s holdings in member companies. As a
consequence Sagicor Life Jamaica (SLJ) was delisted from the Jamaica Stock Exchange (JSE) and
Sagicor Group Jamaica Limited (SGJ) was listed. Further, to harmonize compensation plans across
the Group and considering the pending delisting of the subsidiary, Sagicor Investments Jamaica Limited
(SIJL), all outstanding options in SIJL as at December 2013 were converted to corresponding SGJ
options with equivalent monetary value. From the 2013 measurement year, all executives of the Group
participate in the SGJ LTI plan.
Details of the share options outstanding are set out in the following table. J$ represents Jamaica dollars.
2016
2015
Number of
options
‘000
Weighted
average
exercise
price
Number of
options
‘000
Weighted
average
exercise
price
Balance, beginning of year
Options granted
Options exercised
Options lapsed/forfeited
Balance, end of year
Exercisable at the end of the year
53,644
12,463
(18,924)
(2,238)
44,945
26,509
J$8.63
J$10.52
J$8.56
J$9.09
J$8.83
J$9.47
70,025
10,849
(19,657)
(7,573)
53,644
36,529
J$8.19
J$9.50
J$7.25
J$9.40
J$8.63
J$8.64
67
2016 ANNUAL REPORT
175
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000
31 EMPLOYEE RETIREMENT BENEFITS
The Group maintains a number of defined contribution and defined benefit retirement benefit plans for
eligible sales agents and administrative employees. The plans for sales agents and some administrative
employees provide defined contribution benefits. The plans for administrative employees in Barbados,
Jamaica, Trinidad, Eastern Caribbean and certain other Caribbean countries provide defined benefits
based on final salary and number of years active service. Also, in these countries, retired employees
may be eligible for medical and life insurance benefits which are partially or wholly funded by the Group.
The principal defined benefit retirement plans are as follows:
Funded Plans
Unfunded Plans
Sagicor Life Barbados & Eastern Caribbean
Pension
Sagicor Life Trinidad Pension
Sagicor Life Jamaica Pension
Sagicor Life (Heritage Life of Barbados -
Barbados & Eastern Caribbean) Pension
Sagicor Investments Jamaica Pension
Group medical and life plans
The above plans also incorporate employees of the Company and other subsidiaries, whose attributable
obligations and attributable assets are separately identified for solvency, contribution rate and reporting
purposes.
The assets of the Sagicor Life Trinidad and Sagicor Life (Heritage Life of Barbados) pension plans are
held under deposit administration contracts with Sagicor Life Inc and because these assets form part of
the Group's assets, these plans are presented as unfunded in accordance with IAS 19 (revised).
The above pension plans are registered with the relevant regulatory authorities in the Caribbean and
are governed by Trust Deeds which conform with the relevant laws. The plans are managed by the
Group under the direction of appointed Trustees.
The group medical and life obligations arise from employee benefit insurance plans where benefits are
extended to retirees.
All disclosures in sections 31 (a) to (d) of this note relate only to defined retirement benefit plans.
31 EMPLOYEE RETIREMENT BENEFITS (continued)
(a) Amounts recognised in the statement of financial position
2016
2015
Present value of funded pension obligations
239,330
215,680
Fair value of retirement plan assets
(214,502)
(192,612)
24,828
23,068
Present value of unfunded pension obligations
Present value of unfunded medical and life benefits
Net liability
Represented by:
Amounts held on deposit by the Group as deposit
administration contracts
Other recognised liabilities
Total recognised liabilities (note 18)
Recognised assets (note 12)
Net liability
45,975
29,099
99,902
44,382
56,853
101,235
(1,333)
99,902
37,763
26,053
86,884
37,611
50,339
87,950
(1,066)
86,884
Pension plans have purchased annuities from insurers in the Group to pay benefits to plan retirees.
These obligations are included in actuarial liabilities in the statement of financial position and are
excluded from the table above.
176
SAGICOR FINANCIAL CORPORATION LIMITED
68
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000 31 EMPLOYEE RETIREMENT BENEFITS (continued)
(b) Movements in balances
2016
2015
Medical and
life benefits
Retirement
obligations
Retirement plan
assets
Total
Medical and
life benefits
Retirement
obligations
Retirement plan
assets
Total
Net liability / (asset), beginning of year
26,053
253,443
(192,612)
86,884
23,254
221,786
(168,169)
76,871
Current service cost
Interest expense / (income)
Past service cost and gains / losses on settlements
Net expense recognised in income
(Gains) / losses from changes in assumptions
(Gains) / losses from changes in experience
Return on plan assets excluding interest income
1,429
2,107
-
3,536
(2,593)
4,401
-
6,278
17,333
(253)
23,358
(6,896)
26,332
-
Net losses recognised in other comprehensive income
1,808
19,436
Contributions made by the Group
Contributions made by employees and retirees
Benefits paid
Other items
Effect of exchange rate movements
Other movements
-
-
(547)
-
(1,751)
(2,298)
-
7,248
(12,805)
3,968
(9,343)
(10,932)
-
(15,366)
-
7,707
4,074
(253)
(15,366)
11,528
314
(7,537)
2,442
(4,781)
(9,175)
23,196
2,442
16,463
(12,219)
(12,219)
(5,373)
11,054
(3,658)
8,453
(1,743)
1,875
(2,298)
310
(2,641)
(14,973)
1,218
2,140
-
3,358
6,172
(5,010)
-
1,162
-
-
(517)
-
(1,204)
(1,721)
6,032
16,178
-
22,210
14,341
(1,546)
-
12,795
-
6,987
(12,353)
8,339
(6,321)
(3,348)
-
(14,888)
92
7,250
3,430
92
(14,796)
10,772
(1,466)
(7,799)
2,997
(6,268)
(8,164)
(5,191)
11,459
(7,274)
5,791
(3,379)
19,047
(14,355)
2,997
7,689
(8,164)
1,796
(1,411)
1,065
(1,734)
(8,448)
Net liability / (asset), end of year
29,099
285,305
(214,502)
99,902
26,053
253,443
(192,612)
86,884
69
2016 ANNUAL REPORT
177
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000
31 EMPLOYEE RETIREMENT BENEFITS (continued)
31 EMPLOYEE RETIREMENT BENEFITS (continued)
(c) Retirement plan assets
(d) Significant actuarial assumptions
2016
2015
The significant actuarial assumptions for the principal geographic areas as of December 31, 2016 were
as follows:
Equity unit linked pension funds under Group management:
Sagicor Equity Fund (Barbados)
Sagicor Bonds Fund (Barbados)
Sagicor Pooled Investment Funds (Jamaica):
Equity Funds
Mortgage & Real Estate Fund
Fixed Income Fund
Foreign Currency Funds
Money Market Fund
Other Funds
Other assets
Total plan assets
(32,103)
(23,189)
(35,820)
(26,486)
(15,526)
(18,185)
(2,258)
(17,307)
(29,020)
(18,605)
(23,044)
(19,887)
(15,272)
(16,657)
(16,423)
(14,373)
(170,874)
(153,281)
(43,628)
(39,331)
(214,502)
(192,612)
The equity unit linked pension funds are funds domiciled in Barbados and Jamaica. Annual reports of
these funds are available to the public.
Pension plans
Barbados &
Eastern
Caribbean
Jamaica
Trinidad
Discount rate - local currency benefits
7.75%
Discount rate - US$ indexed benefits
Expected return on plan assets
Future promotional salary increases
n/a
7.75%
3.00%
Future inflationary salary increases
1.50% – 2.00%
2.00%
3.50%
9.00%
5.00%
9.00%
6.50%
6.00%
3.00%
n/a
5.00%
n/a
5.00%
2.00%
2.00%
0.00%
4.00%
Future pension increases
Future increases in National
Insurance Scheme Ceilings
Mortality table
Termination of active members
Early retirement
UP94 with
projection scale
AA
GAM1994 with 5
year improvement
UP94 with
projection scale
AA
3% up to age 30,
reducing to 1% at
age 50, 0% at age
51
5% - 10% up to
age 30, reducing
to 5% at age 50,
0% at age 51
3% up to age 30,
reducing to 1% at
age 50, 0% at age
51
n/a
100% at the
earliest possible
age to receive
unreduced
benefits
100% at the
earliest possible
age to receive
unreduced
benefits
178
SAGICOR FINANCIAL CORPORATION LIMITED
70
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000 31 EMPLOYEE RETIREMENT BENEFITS (continued)
31 EMPLOYEE RETIREMENT BENEFITS (continued)
Group medical and life plans
Long term increase in health costs
Jamaica
8.00%
The sensitivity of the medical and life benefits obligations to individual changes in actuarial assumptions
is summarised below:
Jamaica
(e) Sensitivity of actuarial assumptions
Base medical and life obligation
29,099
The sensitivity of the pension retirement benefit obligations to individual changes in actuarial
assumptions is summarised below:
Barbados &
Eastern
Caribbean
Jamaica
Trinidad
Base pension obligation
81,789
156,672
13,637
Change in absolute assumption
Increase / (decrease) in pension obligations
Decrease discount rate by 1.0%
Increase discount rate by 1.0%
Decrease salary growth rate by 0.5%
Increase salary growth rate by 0.5%
Increase average life expectancy by 1 year
10,307
(7,293)
(1,519)
1,842
1,779
10,467
(8,208)
(3,279)
3,791
1,342
Decrease average life expectancy by 1 year
(1,744)
(1,364)
1,667
(1,198)
(351)
409
358
(333)
Change in absolute assumption
Decrease discount rate by 1.0%
Increase discount rate by 1.0%
Decrease salary growth rate by 0.5%
Increase salary growth rate by 0.5%
Increase average life expectancy by 1 year
Decrease average life expectancy by 1 year
Increase / (decrease) in medical and
life obligations
7,201
(5,359)
(166)
194
953
(950)
(f) Amount, timing and uncertainty of future cash flows
In addition to the annual actuarial valuations prepared for the purpose of annual financial statement
reporting, full actuarial valuations of pension plans are conducted every 1-3 years. These full valuations
contain recommendations for Group and employee contribution levels which are implemented by the
Group as the recommendations are made.
For the 2017 financial year, the total Group contributions to its defined benefits pension plans are
estimated at $12,727.
71
2016 ANNUAL REPORT
179
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000
32 INCOME TAXES
32 INCOME TAXES (continued)
Group companies are taxed according to the taxation rules of the country where the operations are
carried out. The principal rates of taxation are summarised in note 2.18(c). The income tax expense and
the income subject to taxation in the statement of income are set out in the following table.
Income tax on the total income subject to taxation differs from the theoretical amount that would arise
is as follows:
2016
2015
Income before income tax expense
149,597
123,562
2016
2015
Income tax expense:
Current tax
Current tax on profits for the year
Adjustments to current tax of prior periods
Total current tax expense
Deferred tax
Decrease/(increase) in deferred tax assets
(Decrease)/increase in deferred tax liabilities
Total deferred tax expense
Share of tax of associated companies
34,872
232
35,104
498
5,696
6,194
402
41,700
24,506
(257)
24,249
(1,740)
2,858
1,118
(248)
25,119
Taxation at the applicable rates on income subject to tax
46,090
29,228
Adjustments to current tax for items not subject to / allowed for
tax
(23,996)
(15,207)
Other current tax adjustments
Adjustments for current tax of prior periods
Movement in unrecognised deferred tax asset
Deferred tax relating to the origination of temporary differences
Deferred tax relating to changes in tax rates or new taxes
Deferred tax that arises from the write down / (reversal of a
write down) of a tax asset
Tax on distribution of profits from policyholder funds
Other taxes
(221)
232
13,926
(18)
(35)
296
670
4,756
41,700
175
(257)
8,682
223
387
(383)
1,046
1,225
25,119
In addition to the above, the income tax on items in other comprehensive income is set out in note 35.
180
SAGICOR FINANCIAL CORPORATION LIMITED
72
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000 33 DEFERRED INCOME TAXES
Analysis of deferred income tax assets:
Defined benefit liabilities
Unrealised losses on financial investments
Unused tax losses
Other items
Total deferred income tax assets (note 11)
Deferred income tax assets to be recovered within one year
Unrecognised tax balances:
Tax losses
Potential deferred income tax assets
Expiry period for unrecognised tax losses:
2016
2017
2018
2019
2020
2021
2022
2023
2024
After 2024
73
2016
13,581
6,918
14,993
787
36,279
3,230
265,699
66,428
-
19,635
24,888
28,153
25,540
19,399
37,007
29,577
33,586
47,914
2015
11,031
12,406
21,870
(4,284)
41,023
2,067
237,548
59,404
18,765
20,054
25,324
27,785
24,956
20,207
37,007
29,577
33,873
-
265,699
237,548
2016 ANNUAL REPORT
181
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000
33 DEFERRED INCOME TAXES (continued)
Deferred income tax assets movements:
2016
Defined
benefit
liabilities
Unrealised losses
on financial
investments
Unused tax
losses
Other items
Total
Balance, beginning of year as previously reported
11,031
12,406
21,870
(4,284)
41,023
(Charged)/credited to:
Profit or Loss
Other comprehensive income
Effects of exchange rate changes
Balance, end of year
2015
689
2,608
(747)
13,581
297
(5,141)
(644)
6,918
(5,756)
4,272
-
(1,121)
14,993
687
112
787
Balance, beginning of year as previously reported
7,367
1,093
26,376
(6,526)
(Charged)/credited to:
Profit or Loss
Other comprehensive income
Effects of exchange rate changes
Balance, end of year
1,753
2,280
(369)
11,031
238
11,443
(368)
12,406
(3,467)
-
(1,039)
21,870
3,216
(1,186)
212
(4,284)
(498)
(1,846)
(2,400)
36,279
28,310
1,740
12,537
(1,564)
41,023
182
SAGICOR FINANCIAL CORPORATION LIMITED
74
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000 33 DEFERRED INCOME TAXES (continued)
Analysis of deferred income tax liability:
Accelerated tax depreciation
Policy liabilities taxable in the future
Defined benefit assets
Accrued interest
Unrealised gains on financial investments
Off-settable tax assets in respect of unused tax losses and
other items
Total (note 19)
2016
2015
1,640
62,738
343
1,000
6,398
1,806
58,377
133
944
(1,023)
(36,280)
(30,851)
399
36,238
399
29,785
Deferred income tax liabilities to be settled within one year
7,285
5,728
75
2016 ANNUAL REPORT
183
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000
33 DEFERRED INCOME TAXES (continued)
Deferred income tax liabilities movements:
Accelerated
tax
depreciation
Policy
liabilities
taxable in the
future
Defined
benefit assets
Accrued
interest
Unrealised gains
on financial
investments
Off-settable tax
assets in respect
of unused tax
losses and other
items
Other Items
Total
2016
Balance, beginning of year as previously reported
1,806
58,377
Charged/(credited) to:
Profit or Loss
Other comprehensive income
Effects of exchange rate changes
Balance, end of year
2015
(167)
-
1
11,034
(6,679)
6
1,640
62,738
Balance, beginning of year as previously reported
1,775
40,064
Charged/(credited) to:
Profit or Loss
Other comprehensive income
Equity
Balance, end of year
31
-
-
(487)
18,800
-
1,806
58,377
133
133
189
21
-
343
84
56
(7)
-
944
(1,023)
(30,851)
399
29,785
75
(8)
(11)
1,000
(6)
7,428
(1)
6,398
(5,429)
-
-
-
-
-
5,696
762
(5)
(36,280)
399
36,238
963
22,486
(34,214)
399
31,557
(20)
-
1
944
(85)
(23,425)
1
(1,023)
3,363
-
-
(30,851)
-
-
-
2,858
(4,632)
2
399
29,785
184
SAGICOR FINANCIAL CORPORATION LIMITED
76
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000 34 EARNINGS PER COMMON SHARE
34 EARNINGS PER COMMON SHARE (continued)
The basic earnings per common share is computed by dividing earnings attributable to common
shareholders by the weighted average number of shares in issue during the year, after deducting
treasury shares. Earnings attributable to common shareholders recognise the impact on net income of
the Company’s convertible redeemable preference shares (note 21.2).
The table below derives the earnings attributable to common shareholders and the basic earnings per
common share.
Net income attributable to common shareholders
Finance costs attributable to preference share subscription
Amortisation of issue expenses allocated to
preference share reserve
Preference share dividends declared
Earnings attributable to common shareholders
2016
2015
61,671
4,368
34,679
6,483
(149)
(221)
(5,256)
60,634
(7,800)
33,141
Weighted average number of shares in issue in thousands
303,572
301,924
Basic earnings per common share
20.0¢
11.0¢
The table below derives the adjusted earnings attributable to common shareholders, the adjusted
weighted average number of common shares, and the fully diluted earnings per common share.
Earnings attributable to common shareholders
Preference share dividends declared
Amortisation of issue expenses allocated to preference share
reserve
Finance costs attributable to preference share subscription
Preference share liability finance cost
2016
2015
60,634
5,256
149
(4,368)
4,104
65,775
33,141
-
-
-
-
33,141
Weighted average number of shares in issue in thousands
303,572
301,924
LTI restricted share grants
ESOP shares
Convertible redeemable preference shares
Adjusted weighted average number of shares in issue
4,706
2,103
33,209
343,590
3,877
2,996
-
308,797
Fully diluted earnings / (loss) per common share
19.1¢
10.7¢
Attributable to:
Continuing operations
Discontinued operation
19.5¢
0.5¢
18.2¢
(7.2)¢
Attributable to:
Continuing operations
Discontinued operation
18.7¢
0.4¢
17.3¢
(6.6)¢
The computation of diluted earnings per common share recognises the dilutive impact of LTI share
grants and share options (note 30.1), ESOP share grants (note 30.1), and the convertible redeemable
preference shares. In computing diluted earnings per share, the income attributable to common
shareholders is adjusted by the dilutive impact of the convertible preference shares and the weighted
average number of common shares is adj usted by the dilutive impacts of the aforementioned share
grants, options and preference shares.
77
2016 ANNUAL REPORT
185
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000
35 OTHER COMPREHENSIVE INCOME (OCI)
Schedule to OCI from continuing
operations
2016
After tax OCI is attributable to
2015
After tax OCI is attributable to
OCI tax
release
Shareholders
Participating
policyholders
Non-
controlling
interests
Total
OCI tax
expense
Shareholders
Participating
policyholders
Non-
controlling
interests
Total
Items that may be reclassified
subsequently to income:
Available for sale assets:
Gains / (losses) arising on revaluation
(11,058)
(Gains) / losses transferred to income
Net change in actuarial liabilities
Retranslation of foreign currency operations
(1,491)
6,679
-
24,082
3,112
(15,509)
(18,141)
(5,870)
(6,456)
(1,292)
16,393
-
1,293
21
22
(437)
(2,874)
(10,361)
2,721
(72,866)
867
(31,102)
(103,101)
39,183
2,675
(17,090)
(28,481)
31,306
3,553
(18,800)
-
(3,713)
16,059
(38,217)
(4,287)
47,329
(8,393)
-
(867)
(36)
(36)
3,112
1,884
(7,257)
(33,363)
Items that will not be reclassified
subsequently to income:
Gains / (losses) arising on revaluation of
owner-occupied property
(939)
2,137
Defined benefit gains / (losses)
2,588
(10,001)
Other items
-
1,649
(128)
(7,992)
-
-
-
-
3,008
(3,874)
-
(866)
5,145
(1,159)
(13,875)
(128)
(8,858)
2,258
-
1,099
(202)
(3,447)
-
(3,649)
-
-
-
-
(143)
(1,984)
-
(2,127)
(1,175)
48,346
(15,686)
(71,616)
(345)
(5,431)
-
(5,776)
Total OCI movements
(4,221)
(14,448)
22
1,855
(12,571)
17,158
(41,866)
(36)
(35,490)
(77,392)
Allocated to equity reserves
Allocated to retained earnings
(4,319)
(10,129)
(14,448)
(38,419)
(3,447)
(41,866)
186
SAGICOR FINANCIAL CORPORATION LIMITED
78
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000 36 CASH FLOWS
36.1 Operating activities
36.1 Operating activities (continued)
The gross changes in investment property, debt securities and equity securities are as follows.
Adjustments for non-cash items, interest and
dividends:
Interest and dividend income
Net investment gains
(Gain) / loss arising on acquisition
Net increase in actuarial liabilities
Interest expense and finance costs
Depreciation and amortisation
Increase in provision for unearned premiums
Other items
Net increase in investments and operating assets:
Investment property
Debt securities
Equity securities
Mortgage loans
Policy loans
Finance loans and finance leases
Securities purchased for re-sale
Deposits
Other assets and receivables
79
2016
2015
(295,956)
(296,676)
(62,136)
(32,418)
-
45,252
99,781
21,283
59
3,619
1,025
26,559
96,041
18,687
(1,093)
(12,908)
(188,098)
(200,783)
818
30,495
1,037
(1,989)
(6,115)
5,118
(151,201)
(15,875)
(51,613)
934
Investment property:
Disbursements
Disposal proceeds
Debt securities:
Disbursements
Disposal proceeds
Equity securities:
Disbursements
Disposal proceeds
Net increase in operating liabilities:
Insurance liabilities
Investment contract liabilities
Other funding instruments
(99,130)
(43,147)
Deposits
1,913
10,236
5,647
8,189
(37,627)
(27,133)
(100,362)
(269,081)
Securities sold for re-purchase
Other liabilities and payables
2016
2015
(7)
825
818
(111)
5,229
5,118
(1,931,861)
(1,351,966)
1,962,356
1,200,765
30,495
(151,201)
(118,139)
119,176
1,037
6,486
20,012
(29,788)
286,658
(200,610)
1,035
83,793
(55,395)
39,520
(15,875)
7,020
12,190
8,881
137,800
(137,084)
29,707
58,514
2016 ANNUAL REPORT
187
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000
36.2 Investing activities
Property, plant and equipment:
Purchases
Disposal proceeds
36.3 Financing activities
Other notes and loans payable:
Proceeds
Repayments
36.4 Cash and cash equivalents
Cash resources
Call deposits and other liquid balances
Bank overdrafts
Other short-term borrowings
2016
2015
37 SUBSIDIARY ACQUISITION AND OWNERSHIP CHANGES
(20,336)
2,340
(17,996)
(18,175)
1,589
(16,586)
2016
2015
78,050
(44,042)
34,008
310,545
(154,087)
156,458
2016
279,070
110,652
(1,939)
(75,677)
312,106
2015
250,489
183,068
(2,158)
(46,520)
384,879
On June 27, 2014, the Group acquired 100% of the share capital of RBC Royal Bank (Jamaica) Limited
and its subsidiary, RBC Securities (Jamaica) Limited.
The net assets acquired amounted to $113,429 for a purchase consideration of $84,378. This gave rise
to negative goodwill of $29,051. The acquisition was recorded based on provisionally determined values
in 2014. These balances were finalized during 2015. The adjustments made during 2015 amounted to
$1.0 million, and was recognised in 2015 as they were not material to the Group.
38 DISCONTINUED OPERATION
On July 29, 2013, the Company entered into an agreement to sell Sagicor Europe and its subsidiaries
to AmTrust Financial Services, Inc. (AmTrust), subject to regulatory approvals. Final regulatory
approvals were obtained on December 23, 2013, on which date the sale was completed.
The operations of the Sagicor Europe operating segment are presented as discontinued operations in
these financial statements.
The terms of the sale required the Company to take certain actions and provide certain commitments
which included future price adjustments to the consideration up to December 31, 2018, representing
adjusted profits or losses from January 1, 2013 in the run-off of the 2011, 2012 and 2013 underwriting
years of account of syndicates 1206 and 44, the total price adjustments subject to a limit.
188
SAGICOR FINANCIAL CORPORATION LIMITED
80
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000 38 Discontinued operation (continued)
38 Discontinued operation (continued)
As of December 31, 2016, the price adjustments have been estimated as outlined below:
The net gain / (loss) recognised in the statement of income and the statement of comprehensive
income is as follows.
Statement of income
Currency translation gain
Other expenses
Movement in price adjustment
Net gain / (loss) and total comprehensive gain / (loss)
2016
1,827
(884)
469
1,412
2015
1,552
(187)
(23,013)
(21,648)
March 31, 2016
March 31, 2019
2016
-
-
-
2015
46,525
(499)
46,026
After accounting for its status as a discontinued operation and for the details of the sale the net loss
recognised in the statement of income is set out below. The statement of comprehensive income is as
follows:
Movement in Price Adjustments
Balance payable, beginning of year
Payment made
Experience gain
Net currency movements
(Receivable) / payable, end of year
2016
46,026
(44,614)
415
(1,827)
-
2015
45,796
(21,231)
23,013
(1,552)
46,026
The price adjustments are subject to a limit based on the terms of the agreement. During the
financial period 2016 to 2018, the results are subject to further underwriting, investment and foreign
currency adjustments constrained by the limit as the experience develops.
81
2016 ANNUAL REPORT
189
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000
39 CONTINGENT LIABILITIES
39 Contingent Liabilities (continued)
(ii) Suit has been filed by an independent contractor against one of the Group’s subsidiaries
for breach of contract arising from alleged contractual agreement. The Claimant alleges
that the company failed to pursue initiatives contemplated by the contract with a third party
and that by not doing so, it caused the Claimant company significant losses which they
have estimated at over US$300,000,000. No provision was made in these financial
statements for this claim as the claim has been stayed to accommodate arbitration as
required under the Agreement between the parties coupled with the probability of success
against the Group is considered low.
(b) Tax assessments
The Group is also subject to tax assessments during the normal course of business. Adequate
provision has been made for all assessments received to date and for tax liabilities accruing in
accordance with management’s understanding of tax regulations. Potential tax assessments may be
received by the Group which are in addition to accrued tax liabilities. No provisions have been made
in these financial statements for such potential tax assessments.
Guarantee and financial facilities at the date of the financial statements for which no provision has
been made in these financial statements include the following:
2016
2015
Customer guarantees and letters of credit (1)
22,513
27,154
(1) There are equal and offsetting claims against customers in the event of a call on the above
commitments for customer guarantees and letters of credit.
(a) Legal proceedings
The Group and the company are subject to various claims, disputes and legal proceedings, as part
of the normal course of business. Provision is made for such matters when, in the opinion of
management and its professional advisors, it is probable that a payment will be made by the Group,
and the amount can be reasonably estimated.
In respect of claims asserted against the Group which, according to the principles outlined above,
have not been provided for, management is of the opinion that such claims are either without merit,
can be successfully defended, cannot be reasonably estimated or will result in exposure to the Group
which is immaterial to both the financial position and results of operations.
Significant matters as follows:
(i)
Suit has been filed by a customer against one of the Group’s, subsidiaries for breach of
contract, and breach of trust in the amount of US$8,928,500, being loss allegedly suffered
as a result of what the claimants say is the unlawful withholding of insurance proceeds by
the subsidiary. No provision was made in these financial statements for this claim as the
probability of success against the Group is considered low prior to the matter being heard.
190
SAGICOR FINANCIAL CORPORATION LIMITED
82
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000 40 FAIR VALUE OF PROPERTY
40 Fair value of property (continued)
Investment and owner-occupied property are carried at fair value as determined by independent valuations
using internationally recognised valuation techniques. Direct sales comparisons, when such data is
available, and income capitalisation methods, when appropriate, are included in the assessment of fair
values. The highest and best use of a property may also be considered in determining its fair value.
Some tracts of land are currently used for farming operations or are un-developed or are leased to third
parties. In determining the fair value of all lands, their potential for development within a reasonable period
is assessed, and if such potential exists, the fair value reflects that potential. These lands are mostly in
Barbados and the Group has adopted a policy of orderly development and transformation to realise their
full potential over time.
The fair value hierarchy has been applied to the valuations of the Group's property. The different levels of
the hierarchy are as follows:
•
•
•
Level 1 - fair value is determined by quoted un-adjusted prices in active markets for identical
assets;
Level 2 - fair value is determined by inputs other than quoted prices in active markets that are
observable for the asset either directly or indirectly;
Level 3 - fair value is determined from inputs that are not based on observable market data.
The results of applying the fair value hierarchy to the Group's property as of December 31, 2016
follows:
are as
Investment property
Owner-occupied lands
Owner-occupied land and buildings
Level 1
Level 2
Level 3
Total
-
-
-
-
-
-
-
-
80,662
37,185
77,855
80,662
37,185
77,855
195,702
195,702
For Level 3 investment property, reasonable changes in fair value would affect net income. For Level
3 owner occupied property, reasonable changes in fair value would affect other comprehensive income.
The following table represents the movements in Level 3 property for the current year.
Investment
property
Owner-occupied property
Lands
Land and
buildings
Total
Balance, beginning of year
79,172
38,031
80,694
197,897
Additions
Transfers in / (out)
Fair value changes recorded in net
investment income
Fair value changes recorded in other
comprehensive income
Depreciation
Disposals and divestitures
Effect of exchange rate changes
7
1,401
1,847
-
-
(825)
(940)
-
2,680
2,687
555
1,847
-
-
(1,583)
(1,583)
(1,105)
(753)
(2,078)
(1,105)
(1,578)
(3,018)
(846)
-
-
-
-
-
Balance, end of year
80,662
37,185
77,855
195,702
83
2016 ANNUAL REPORT
191
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000
41 FINANCIAL RISK
41.1 Credit risk
The Group’s activities of issuing insurance contracts, of accepting funds from depositors, of investing
insurance premium and deposit receipts in a variety of financial and other assets, banking and dealing
in securities, exposes the Group to various insurance and financial risks. Financial risks include credit
default, liquidity and market risks. Market risks arise from changes in interest rates, equity prices,
currency exchange rates or other market factors. The principal insurance risks are identified in notes
42 and 43.
The overriding objective of the Group’s risk management framework is to enhance its capital base
through competitive earnings growth and to protect capital against inherent business risks. This means
that the Group accepts certain levels of risk in order to generate returns, and the Group manages the
levels of risk assumed through enterprise wide risk management policies and procedures. Identified
risks are assessed as to their potential financial impact and as to their likelihood of occurrence.
Credit risk is the exposure that the counterparty to a financial instrument is unable to meet an obligation,
thereby causing a financial loss to the Group. Credit risks are primarily associated with financial
investments and reinsurance contracts held.
Credit risk from financial investments is minimised through holding a diversified portfolio of investments,
purchasing securities and advancing loans only after careful assessment of the borrower, obtaining
collateral before advancing loans, and placing deposits with financial institutions with a strong capital
base. Limits may be placed on the amount of risk accepted in relation to one borrower.
The Group has developed an internal credit rating standard. The internal rating is a 10 point scale which
allows for distinctions in risk characteristics and is referenced to the rating scales of international credit
rating agencies. The scale is set out in the following table.
The amounts disclosed in this note and in notes 42 and 43, exclude amounts in the statement of financial
position classified as liabilities of discontinued operation.
Category
Investment
grade
Non-
investment
grade
Watch
t
l
f
u
a
e
d
-
n
o
N
Default
Sagicor
Risk
Rating
Classification
S&P
Moody’s
Fitch
AM Best
1
2
3
4
5
6
7
8
9
10
Minimal risk
AAA, AA
Aaa, Aa
AAA, AA
aaa, aa
Low risk
Moderate risk
Acceptable risk
Average risk
A
BBB
BB
B
A
Baa
Ba
B
A
BBB
BB
B
a
bbb
bb
b
Higher risk
CCC, CC
Caa, Ca
CCC, CC
ccc, cc
Special mention
C
Substandard
Doubtful
Loss
D
C
C
C
DDD
DD
D
c
d
192
SAGICOR FINANCIAL CORPORATION LIMITED
84
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000 41.1 Credit risk (continued)
41.1 Credit risk (continued)
The Group applies this rating scale to three categories of exposures:
• Investment portfolios, comprising debt securities, deposits, securities purchased for re-sale, and
cash balances;
• Lending portfolios, comprising mortgage, policy and finance loans and finance leases;
• Reinsurance exposures, comprising reinsurance assets for life, annuity and health insurance (see
note 43.3) or realistic disaster scenarios for property and casualty insurance (see note 42.3).
The 3 default grades are used for lending portfolios while investment portfolios and reinsurance
exposures use one default grade: 8.
The maximum exposures of the Group to credit risk without taking into account any collateral or any
credit enhancements are set out in the following table.
Investment portfolios
Lending portfolios
Reinsurance assets
Other financial assets
2016
$000
3,864,949
978,681
755,569
179,456
%
65.5
16.6
12.8
3.0
2015
$000
3,937,104
909,570
644,463
151,842
Total financial statement exposures
5,778,655
97.9
5,642,979
Loan commitments
Customer guarantees and letters of credit
Other
82,088
22,513
15,262
Total off financial statement exposures
119,863
1.4
0.4
0.3
2.1
69,936
27,154
19,380
116,470
%
68.4
15.8
11.2
2.6
98.0
1.2
0.5
0.3
2.0
Total
5,898,518
100.0%
5,759,449
100.0%
The amounts in respect of customer guarantees and letters of credit represent potential claims against
customers in the event of a call on customer guarantees and letters of credit issued by the Group.
The Group’s largest exposures to individual counterparty credit risks as of December 31, 2016 and 2015
are set out below. The individual ratings reflect the rating of the counterparty listed below, while the
amounts include exposures with subsidiaries of the counterparty.
Sagicor
Risk
Rating
5
2
5
2
3
1
1
4
3
2016
804,051
226,094
303,973
29,457
80,965
106,341
63,664
28,704
585,561
Sagicor
Risk
Rating
5
2
5
2
5
1
1
3
3
2015
901,896
200,307
307,185
185,743
81,412
101,356
67,523
29,780
543,329
Investment portfolios:
Government of Jamaica
Government of Trinidad and Tobago
Government of Barbados
The Bank of Nova Scotia
Government of St Lucia
The Federal National Mortgage
Association
The Federal Home Loan Mortgage
Corporation
Lending portfolios:
Value Assets International S.A. and
Egret Limited
Reinsurance assets:
Guggenheim Partners(1)
(1)The reinsurance asset held in the name of Guggenheim Partners are secured by assets held in
trust totalling $596,785 (2015 - $573,774).
85
2016 ANNUAL REPORT
193
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000
41.1 Credit risk (continued)
(a)
Investment portfolios
41.1 Credit risk (continued)
(b) Lending portfolios
The results of the risk rating of investment portfolios are as follows:
The results of the risk rating of lending portfolios are as follows:
Investment portfolios
Risk
Rating
Classification
1
2
3
4
5
6
7
8
Minimal risk
Low risk
Moderate risk
Acceptable risk
Average risk
Higher risk
Special mention
Substandard
2016
2015
Exposure
$000
Exposure
%
Exposure
$000
Exposure
%
337,503
657,285
1,018,985
250,267
1,497,421
58,447
15
707
9%
17%
26%
6%
39%
2%
0%
0%
99%
1%
317,670
794,812
1,026,099
193,025
1,518,308
23,472
18
2,683
3,876,087
61,017
8%
20%
26%
5%
39%
1%
0%
0%
99%
1%
TOTAL RATED EXPOSURES
3,820,630
UN-RATED EXPOSURES
44,319
Lending portfolios
Risk
Rating
Classification
1
2
3
4
5
6
7
8
9
10
Minimal risk
Low risk
Moderate risk
Acceptable risk
Average risk
Higher risk
Special mention
Substandard
Doubtful
Loss
2016
2015
Exposure
$000
Exposure
$000
Exposure
$000
Exposure
%
434,061
142,469
220,827
76,993
35,200
25,338
15,330
8,703
7,532
12,154
43%
15%
22%
8%
4%
3%
2%
1%
1%
1%
455,471
77,350
184,911
30,282
26,653
8,852
23,345
8,953
4,693
9,699
830,209
79,361
50%
9%
20%
3%
3%
1%
3%
1%
1%
1%
92%
8%
TOTAL
3,864,949
100%
3,937,104
100%
TOTAL RATED EXPOSURES
978,607
100%
UN-RATED EXPOSURES
74
0%
Investment portfolio assets are mostly unsecured except for securities purchased under agreement to
resell for which title to the securities is transferred to the Group for the duration of each agreement.
TOTAL
978,681
100%
909,570
100%
194
SAGICOR FINANCIAL CORPORATION LIMITED
86
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000 41.1 Credit risk (continued)
41.1 Credit risk (continued)
Exposure to credit risk is also managed in part by obtaining collateral and guarantees for lending
portfolios. For mortgage loans, the collateral is real estate property, and the approved loan limit is 75%
to 95% of collateral value. For finance loans and finance leases, the collateral often comprises a vehicle
or other form of security and the approved loan / lease limit is 50% to 100% of the collateral value.
Unsecured finance loans and finance leases are only granted when the initial amount is less than
$5,103.
Policy loans are advanced on the security of the underlying insurance policy cash values. Cash loans
are advanced to a maximum of 80% to 100% of the cash surrender value. Automatic premium loans
may be advanced to the extent of available cash surrender value.
Exposure to the lending portfolios by geographic area is as follows.
Mortgage loans less than 90 to 180 days past due and finance loans and finance leases less than 90
days past due are not assessed for impairment unless other information is available to indicate the
contrary.
The assessment for impairment includes a review of the collateral. If the past due period is less than
the trigger for impairment review, the collateral is not normally reviewed and re-assessed. Accumulated
allowances for impairment reflect the Group’s assessment of total individually impaired assets at the
date of the financial statements. The following tables set out the carrying values of debt securities,
mortgage loans, finance loans and finance leases, analysed by past due or impairment status.
Debt
securities
Mortgage
loans
Finance
loans &
leases
2016
2015
2016
Barbados
Jamaica
Trinidad & Tobago
Other Caribbean
USA
195,597
463,675
145,409
113,301
60,699
978,681
203,250
389,521
150,387
108,598
57,814
909,570
(c) Past due and impaired financial assets
A financial asset is past due when a counterparty has failed to make payment when contractually due.
The Group is most exposed to the risk of past due assets with respect to its debt securities, mortgage
loans, finance loans and finance leases.
Debt securities are assessed for impairment when amounts are past due, when the borrower is
experiencing cash flow difficulties, or when the borrower’s credit rating has been downgraded.
Neither past due nor impaired
3,429,408
270,089
429,066
Past due up to 3 months, but not impaired
9,568
Past due up to 12 months, but not impaired
Past due up to 5 years, but not impaired
Past due over 5 years, but not impaired
-
-
-
Total past due but not impaired
9,568
25,312
3,580
10,206
3,051
42,149
72,947
679
-
-
73,626
Impaired assets (net of impairment)
2,378
19,528
6,283
Total carrying value
3,441,354
331,766
508,975
Accumulated allowances on impaired assets
Accrued interest on impaired assets
4,944
19
7,624
468
10,795
-
87
2016 ANNUAL REPORT
195
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000
41.1 Credit risk (continued)
Debt
securities
Mortgage
loans
Finance
loans &
leases
2015
Neither past due nor impaired
3,410,331
275,500
369,137
Past due up to 3 months, but not impaired
3,706
Past due up to 12 months, but not impaired
Past due up to 5 years, but not impaired
Past due over 5 years, but not impaired
-
-
-
Total past due but not impaired
3,706
30,483
3,891
11,137
2,490
48,001
59,836
982
-
-
60,818
Impaired assets (net of impairment)
3,682
17,422
6,206
Total carrying value
3,417,719
340,923
436,161
Accumulated allowances on impaired assets
Accrued interest on impaired assets
723
10
2,754
462
15,779
49
The Group is also exposed to impaired premiums receivable. Property and casualty insurers frequently
provide settlement terms to customers and intermediaries which extend up to 3 months. However, under
the terms of insurance contracts, insurers can usually lapse an insurance policy for non-payment of
premium, or if there is a claim, recover any unpaid premiums from the claim proceeds.
(d) Repossessed assets
The Group may foreclose on overdue mortgage loans and finance loans and finance leases by
repossessing the pledged asset. The pledged asset may consist of real estate, equipment or vehicles
which the Group will seek to dispose of by sale. In some instances, the Group may provide re-financing
to a new purchaser on customary terms.
41.1 Credit risk (continued)
(e) Renegotiated assets
The Group may renegotiate the terms of any financial investment to facilitate borrowers in financial
difficulty. Arrangements to waive, adjust or postpone scheduled amounts due may be entered into. The
Group classifies these amounts as past due, unless the original agreement is formally revised, modified
or substituted.
41.2 Liquidity risk
Liquidity risk is the exposure that the Group may encounter difficulty in meeting obligations associated
with financial or insurance liabilities that are settled by cash or by another financial asset. Liquidity risk
also arises when excess funds accumulate resulting in the loss of opportunity to increase investment
returns.
Asset liability matching is a tool used by the Group to mitigate liquidity risks particularly in operations
with significant maturing short-term liabilities. For long-term insurance contracts, the Group has adopted
a policy of investing in assets with cash flow characteristics that closely match the cash flow
characteristics of its policy liabilities. The primary purpose of this matching is to ensure that cash flows
from these assets are synchronised with the timing and the amounts of payments that must be paid to
policyholders.
Group companies monitor cash inflows and outflows in each operating currency. Through experience
and monitoring, the Group is able to maintain sufficient liquid resources to meet current obligations.
Investment property may be held to back insurance liabilities. As these assets are relatively illiquid, the
insurers hold less than 5% of their total assets in investment property.
196
SAGICOR FINANCIAL CORPORATION LIMITED
88
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000 41.2 Liquidity risk (continued)
(a) Insurance liabilities
The Group’s monetary insurance liabilities mature in periods which are summarised in the following table. Amounts are stated at their carrying values recognised in the financial statements and are analysed by their
expected due periods, which have been estimated by actuarial or other statistical methods.
2016
Actuarial liabilities
Other insurance liabilities
Total
2015
Actuarial liabilities
Other insurance liabilities
Total
Maturing
within
1 year
224,827
104,860
329,687
206,721
103,394
310,115
Expected discounted cash flows
Maturing
1 to 5
years
678,161
15,297
693,458
631,453
15,500
646,953
Maturing
after
5 years
1,873,374
52,781
1,926,155
1,794,213
53,287
1,847,500
Total
2,776,362
172,938
2,949,300
2,632,387
172,181
2,804,568
89
2016 ANNUAL REPORT
197
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000
41.2 Liquidity risk (continued)
(b) Financial liabilities and commitments
Contractual cash flow obligations of the Group in respect of its financial liabilities and commitments are summarised in the following table. Amounts are analysed by their earliest contractual maturity dates and
consist of the contractual un-discounted cash flows. Where the interest rate of an instrument for a future period has not been determined as of the date of the financial statements, it is assumed that the interest rate
then prevailing continues until final maturity.
Financial liabilities:
Investment contract liabilities
Notes and loans payable
Deposit and security liabilities:
Other funding instruments
Customer deposits
Structured products
Securities sold for re-purchase
Derivative financial instruments
Bank overdrafts
Accounts payable and accrued liabilities
Total financial liabilities
Off financial statement commitments:
Loan commitments
Non-cancellable operating lease and rental payments
Capital commitments
Customer guarantees and letters of credit
Total off financial statements commitments
2016 - Contractual un-discounted cash flows
2015 - Contractual un-discounted cash flows
On demand
or within
1 year
1 to 5
years
After
5 years
Total
On demand
or within
1 year
1 to 5
years
After
5 years
Total
354,549
34,158
335,928
905,685
19,391
325,495
355
1,939
151,436
2,128,936
82,088
4,839
7,500
15,476
109,903
18,819
197,760
15,752
43,952
15,388
717
1,010
-
53,436
346,834
-
9,528
-
2,454
11,982
10,702
348,400
12,033
138
-
-
-
-
384,070
580,318
363,713
949,775
34,779
326,212
1,365
1,939
310,094
194,461
361,328
591,403
23,799
524,578
1,052
2,158
2,447
207,319
158,072
373,720
2,849,490
2,166,945
-
977
-
4,583
5,560
82,088
15,344
7,500
22,513
69,936
2,679
13,174
23,733
127,445
109,522
54,054
143,079
15,626
78,632
12,268
28
551
-
51,631
355,869
-
9,483
-
3,003
12,486
9,834
348,400
12,305
701
-
-
-
-
373,982
685,940
389,259
670,736
36,067
524,606
1,603
2,158
747
210,450
371,987
2,894,801
-
2,226
-
418
2,644
69,936
14,388
13,174
27,154
124,652
Total
2,238,839
358,816
379,280
2,976,935
2,276,467
368,355
374,631
3,019,453
198
SAGICOR FINANCIAL CORPORATION LIMITED
90
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000 41.2 Liquidity risk (continued)
(c) Financial and insurance assets
The contractual maturity periods of monetary financial assets and the expected maturity periods of monetary insurance assets are summarised in the following table. Amounts are stated at their carrying values
recognised in the financial statements. For this disclosure, monetary insurance assets comprise policy loans and reinsurance assets.
Debt securities
Mortgage loans
Policy loans
Finance loans and finance leases
Securities purchased for re-sale
Deposits
Derivative financial instruments
Reinsurance assets: share of actuarial liabilities
Reinsurance assets: other
Premiums receivable
Other assets and accounts receivable
Cash resources
Total
2016 – Contractual or expected discounted cash flows
2015 – Contractual or expected discounted cash flows
Maturing
within
1 year
Maturing
1 to 5
years
Maturing
after
5 years
Total
Maturing
within
1 year
Maturing
1 to 5
years
Maturing
after
5 years
Total
471,274
622,930
2,347,690
3,441,894
389,557
872,098
2,156,064
3,417,719
15,883
5,010
133,440
5,227
137,860
27,970
96,222
36,963
46,530
41,484
263,191
39,082
21,085
152,738
-
159
1,010
285,264
5,149
-
55,447
-
276,801
111,845
222,797
-
1,279
-
331,766
205
-
7,015
15,879
331,766
137,940
508,975
5,227
139,298
28,980
713,252
42,317
46,530
103,946
279,070
20,890
5,319
73,664
8,064
256,636
14,928
79,535
37,366
42,398
47,431
229,755
36,484
13,746
64,948
-
1,927
551
248,411
5,295
-
43,800
-
283,549
113,421
297,549
-
2,269
-
273,651
205
-
2,734
20,734
340,923
132,486
436,161
8,064
260,832
15,479
601,597
42,866
42,398
93,965
250,489
1,281,054
1,182,864
3,315,277
5,779,195
1,205,543
1,287,260
3,150,176
5,642,979
91
2016 ANNUAL REPORT
199
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000
41.3
Interest rate risk
41.3
Interest rate risk (continued)
The Group manages its interest rate risk by a number of measures, including where feasible the
selection of assets which best match the maturity of liabilities, the offering of investment contracts which
match the maturity profile of assets, the re-pricing of interest rates on loans receivable, policy contracts
and financial liabilities in response to market changes. In certain Caribbean markets, where availability
of suitable investments is often a challenge, the Group holds many of its fixed rate debt securities to
maturity and therefore mitigates the transient interest rate changes in these markets.
The Group is exposed to interest rate risks. Cash flow interest rate risk is the risk that future cash flows
of a financial instrument will fluctuate because of changes in market interest rates. Fair value interest rate
risk is the risk that the fair value of a financial instrument will fluctuate because of changes in market
interest rates. The occurrence of an adverse change in interest rates on invested assets may result in
financial loss to the Group in fulfilling the contractual returns on insurance and financial liabilities.
The return on investments may be variable, fixed for a term or fixed to maturity. On reinvestment of a
matured investment, the returns available on the new investment may be significantly different from the
returns formerly achieved. This is known as reinvestment risk.
Guaranteed minimum returns exist within cash values of long term traditional insurance contracts, long
term universal life insurance contracts, annuity options, deposit administration liabilities and policy funds
on deposit. Where the returns credited exceed the guaranteed minima, the insurer usually has the option
to adjust the return from period to period. For other financial liabilities, returns are usually contractual and
may only be adjusted on contract renewal or contract re-pricing.
The Group is therefore exposed to the effects of fluctuations in the prevailing levels of market interest
rates on its financial position and cash flows. Interest margins may increase or decrease as a result of
such changes. Interest rate changes may also result in losses if asset and liability cash flows are not
closely matched with respect to timing and amount.
The Group is exposed to risk under embedded derivatives contained in a host insurance contract. These
risks include exposures to investment returns which may produce losses to the insurer arising from the
following contract features:
•
•
•
minimum annuity rates which are guaranteed to be applied at some future date;
minimum guaranteed death benefits which are applicable when the performance of an interest
bearing or unit linked fund falls below expectations;
minimum guaranteed returns in respect of cash values and universal life investment accounts.
200
SAGICOR FINANCIAL CORPORATION LIMITED
92
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000 41.3
Interest rate risk (continued)
The table following summarises the exposures to interest rates on the Group’s monetary insurance and financial liabilities (excluding actuarial liabilities which are disclosed in note 43). It includes liabilities at carrying
amounts, categorised by the earlier of contractual re-pricing or maturity dates. Insurance liabilities are categorised by their expected maturities.
Exposure
within
1 year
Exposure
1 to 5
years
31,706
352,503
1,964
342,292
703,049
19,318
318,685
-
1,939
5,217
4,705
15,984
77,756
1,565
86,798
15,289
697
-
-
52,721
Other insurance liabilities
Investment contract liabilities
Notes and loans payable
Deposit and security liabilities:
Other funding instruments
Customer deposits
Structured products
Securities sold for re-purchase
Derivative financial instruments
Bank overdrafts
Accounts payable and accrued liabilities
2016
Exposure
after
5 years
Not
exposed to
interest
52,781
9,089
83,746
-
316,895
(1,402)
5,184
138
473
125,170
172
1,192
1,364
-
-
-
-
-
-
Total
172,938
377,576
395,213
349,514
915,155
34,779
320,574
1,364
1,939
Exposure
within
1 year
Exposure
1 to 5
years
33,518
308,644
159,911
364,132
477,934
22,927
516,944
-
2,158
981
4,860
51,442
1,042
8,688
78,511
11,966
171
-
-
42,904
2015
Exposure
after
5 years
Not
exposed to
interest
53,287
8,510
80,516
-
316,740
(2,176)
6,242
701
550
112,372
219
2,493
1,603
-
-
-
-
-
-
Total
172,181
368,596
475,517
379,612
669,518
35,112
519,608
1,603
2,158
147,037
204,975
157,837
201,722
Total
1,776,673
255,515
384,087
357,752
2,774,027
1,887,149
199,584
385,480
353,414
2,825,627
93
2016 ANNUAL REPORT
201
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000
41.3
Interest rate risk (continued)
The table following summarises the exposures to interest rate and reinvestment risks of the Group’s monetary insurance and financial assets. Assets are stated at carrying amounts, categorised by the earlier of
contractual re-pricing or maturity dates. Reinsurance assets and policy loans are categorised by their expected maturities.
Exposure
within
1 year
Exposure
1 to 5
years
2016
Exposure
after
5 years
Not
exposed
to interest
Total
Exposure
within
1 year
Exposure
1 to 5
years
2015
Exposure
after
5 years
Not
exposed
to interest
Total
Debt securities
Equity securities
Mortgage loans
Policy loans
Finance loans and leases
Securities purchased for re-sale
Deposits
Derivative financial instruments
Reinsurance assets: other
Premiums receivable
Other assets and accounts receivable
Cash resources
Total
647,158
557,849
2,186,167
50,180
3,441,354
585,718
785,142
1,996,826
50,033
3,417,719
-
19,295
4,110
463,487
5,178
137,123
-
1,043
2,302
3,632
221,380
-
50,617
20,752
24,520
-
159
-
-
-
53,044
-
-
220,208
220,208
258,480
108,507
20,391
-
1,279
-
205
-
-
-
3,374
4,571
577
49
737
28,980
41,069
44,228
47,270
57,690
331,766
137,940
508,975
5,227
139,298
28,980
42,317
46,530
103,946
279,070
-
40,595
4,302
374,909
8,041
256,385
-
112
1,495
797
153,277
-
53,664
13,510
25,663
-
1,908
-
-
-
43,337
-
-
214,957
214,957
243,497
110,311
34,390
-
1,902
-
205
-
-
-
3,167
4,363
1,199
23
637
15,479
42,549
40,903
49,831
97,212
340,923
132,486
436,161
8,064
260,832
15,479
42,866
42,398
93,965
250,489
1,504,708
706,941
2,575,029
498,933
5,285,611
1,425,631
923,224
2,387,131
520,353
5,256,339
202
SAGICOR FINANCIAL CORPORATION LIMITED
94
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000 41.3
Interest rate risk (continued)
41.3
Interest rate risk (continued)
The table below summarises the average interest yields on financial assets and liabilities held during
the year in respect of continuing operations.
Sagicor Investments Jamaica Limited and Sagicor Bank Jamaica Limited
2016
2015
The following table indicates the sensitivity to a reasonable possible change in interest rates, with all other
variables held constant, on net income and total comprehensive income (TCI) of the above companies
which operate in Jamaica.
Financial assets:
Debt securities
Mortgage loans
Policy loans
Finance loans and finance leases
Securities purchased for re-sale
Deposits
Financial liabilities:
Investment contract liabilities
Notes and loans payable
Other funding instruments
Deposits
Securities sold for re-purchase
6.2%
6.1%
6.9%
12.6%
9.2%
1.0%
6.1%
9.4%
1.9%
2.1%
4.5%
6.4%
6.5%
7.3%
12.7%
2.4%
0.9%
5.2%
8.3%
2.2%
1.9%
3.7%
a) Sensitivity
Sensitivity to interest rate risk is considered by operating subsidiaries. The effects of changes in interest
rates of assets backing actuarial liabilities are disclosed in note 43.4. The Group’s property and casualty
operations are not exposed to a significant degree of interest rate risk, since the majority of its interest
bearing instruments has short-term maturities. The sensitivity of the Group’s principal operating
subsidiaries engaged in banking, investment management and other financial services are considered
in the following paragraphs.
The sensitivity of income is the effect of the assumed changes in interest rates on income based on floating
rate debt securities and financial liabilities. The sensitivity of TCI is calculated by revaluing fixed rate
available-for-sale financial assets for the effects of the assumed changes in interest rates. The correlation
of a number of variables will have an impact on market risk. It should be noted that movements in these
variables are non-linear and are assessed individually.
Change in
interest rate
JMD
USD
2016
Effect on
net
income
Effect on
TCI
Change in
interest rate
JMD
USD
2015
Effect on
net
income
Effect on
TCI
- 1%
- 0.5%
1,057
13,141
- 1%
- 0.5%
4,145
10,219
+2.5%
+ 2%
(3,690)
(46,516)
+2.5%
+ 2%
(6,838)
(35,879)
41.4 Foreign exchange risk
The Group is exposed to foreign exchange risk as a result of fluctuations in exchange rates since its
financial assets and liabilities are denominated in a number of different currencies.
In order to manage the risk associated with movements in currency exchange rates, the Group seeks
to maintain investments and cash in each operating currency, which are sufficient to match liabilities
denominated in the same currency. Exceptions are made to invest amounts in United States dollar
assets which are held to back liabilities in Caribbean currencies. Management considers that these
assets diversify the range of investments available in the Caribbean, and in the long-term are likely to
either maintain capital value and/or provide satisfactory returns.
Assets and liabilities by currency are summarised in the following tables.
95
2016 ANNUAL REPORT
203
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000
41.4 Foreign exchange risk (continued)
2016
US$ 000 equivalents of balances denominated in
Barbados $
Jamaica $
Trinidad $
Eastern
Caribbean $
US $
Other
Currencies
Total
ASSETS
Financial investments(1)
Reinsurance assets
Receivables (1)
Cash resources
Total monetary assets
Other assets (2)
Total assets of continuing operations
LIABILITIES
Actuarial liabilities
Other insurance liabilities(1)
Investment contracts
Notes and loans payable
Deposit and security liabilities
Provisions
Accounts payable and accruals
Total monetary liabilities
Other liabilities (2)
Total liabilities of continuing operations
Net position
452,914
817,968
384,175
148,864
2,619,819
169,800
4,593,540
5,758
20,613
15,064
494,349
207,993
702,342
386,276
65,787
33,733
-
86,251
31,160
42,710
645,917
13,848
659,765
42,577
336
86,232
43,379
947,915
337,791
1,285,706
302,777
20,504
66,482
-
483,291
48,198
89,992
1,011,244
12,794
1,024,038
261,668
10,432
10,271
28,492
433,370
82,129
515,499
329,544
27,874
140,242
-
1,413
12,487
16,484
528,044
19,315
547,359
(31,860)
1,820
13,226
15,430
179,340
28,264
207,604
61,905
10,105
52,451
-
14,414
844
2,831
142,550
3,492
146,042
61,562
736,067
13,939
135,180
3,505,005
99,446
3,604,451
1,605,596
37,273
76,301
395,213
1,021,431
1,784
50,073
3,187,671
33,751
3,221,422
383,029
1,156
6,059
41,525
218,540
(2,222)
216,318
90,264
11,395
8,367
-
16,525
6,819
2,885
136,255
1,625
137,880
78,438
755,569
150,340
279,070
5,778,519
753,401
6,531,920
2,776,362
172,938
377,576
395,213
1,623,325
101,292
204,975
5,651,681
84,825
5,736,506
795,414
(1) Monetary balances only
(2) Non-monetary balances, income tax balances and retirement plan assets
204
SAGICOR FINANCIAL CORPORATION LIMITED
96
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000 41.4 Foreign exchange risk (continued)
2015
US$ 000 equivalents of balances denominated in
Barbados $
Jamaica $
Trinidad $
Eastern
Caribbean $
US $
Other
Currencies
Total
ASSETS
Financial investments(1)
Reinsurance assets
Receivables (1)
Cash resources
Total monetary assets
Other assets (2)
Total assets of continuing operations
LIABILITIES
Actuarial liabilities
Other insurance liabilities(1)
Investment contracts
Notes and loans payable
Deposit and security liabilities
Provisions
Accounts payable and accruals
Total monetary liabilities
Other liabilities (2)
Total liabilities of continuing operations
Net position
459,902
782,475
355,091
146,006
2,698,719
169,471
4,611,664
11,040
25,533
21,349
517,824
200,772
718,596
392,022
70,336
34,561
19,980
91,187
26,870
30,769
665,725
12,787
678,512
40,084
1,189
76,047
45,720
905,431
324,237
1,229,668
271,391
18,878
66,619
-
476,088
37,236
85,701
955,913
4,756
960,669
268,999
11,068
10,338
39,224
415,721
86,074
501,795
330,099
28,989
135,169
-
1,548
14,732
12,973
523,510
20,089
543,599
(41,804)
1,792
12,873
14,825
175,496
28,755
204,251
63,948
9,113
49,993
-
14,929
988
10,130
149,101
2,789
151,890
52,361
618,240
7,368
89,379
3,413,706
119,332
3,533,038
1,500,972
33,929
74,847
455,537
1,003,153
2,815
50,510
3,121,763
26,944
3,148,707
384,331
1,134
4,204
39,992
214,801
(2,264)
212,537
73,955
10,936
7,407
-
20,706
5,565
11,639
130,208
1,110
131,318
81,219
644,463
136,363
250,489
5,642,979
756,906
6,399,885
2,632,387
172,181
368,596
475,517
1,607,611
88,206
201,722
5,546,220
68,475
5,614,695
785,190
(1) Monetary balances only
(2) Non-monetary balances, income tax balances and retirement plan assets
97
2016 ANNUAL REPORT
205
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000
41.4 Foreign exchange risk (continued)
41.4 Foreign exchange risk (continued)
(a) Sensitivity
JMD currency risk
The Group is exposed to currency risk in its operating currencies whose values have noticeably
fluctuated against the United States dollar (USD).
The effect of a 10% depreciation in the JMD relative to the USD arising from JMD reporting units as of
December 31, 2016 and for the year then ended are considered in the following table.
The exposure to currency risk may result in three types of risk, namely:
•
Currency risk relating to the future cash flows of monetary balances
This occurs when a monetary balance is denominated in a currency other than the functional currency
of the reporting unit to which it belongs. In this instance, a change in currency exchange rates results in
the monetary balances being retranslated at the date of the financial statements and the exchange gain
or loss is taken to income (note 26).
Amounts denominated in
JMD
USD
Total
amounts
Effect of a 10%
depreciation
Financial position:
Assets
Liabilities
Net position
Represented by:
1,359,388
1,159,171
2,518,559
1,040,655
1,032,241
2,072,896
318,733
126,930
445,663
•
Currency risk of reported results of foreign operations
Currency risk of the Group’s investment in foreign operations
This occurs when a reporting unit’s functional currency depreciates or appreciates in value when
retranslated to the USD, which is the Group’s presentational currency. In this instance, the conversion
of the reporting unit’s results at a different rate of exchange results in either less or more income being
consolidated in the Group’s income statement.
•
Currency risk of the Group’s investment in foreign operations
This occurs when a reporting unit’s functional currency depreciates or appreciates in value when
retranslated to the USD, which is the Group’s presentational currency. In this instance, the conversion
of the reporting unit’s assets and liabilities at a different rate of exchange results in a currency loss or
gain which is recorded in the currency translation reserve (note 22). If the reporting unit was disposed
of, either wholly or in part, then the corresponding accumulated loss or gain in the currency translation
reserve would be transferred to income or retained earnings.
Income statement:
Revenue
Benefits
Expenses
Income taxes
Net income
Represented by:
423,398
(216,843)
(141,023)
(23,722)
41,810
79,354
(21,539)
(14,606)
502,752
(238,382)
(155,629)
(24)
(23,746)
43,185
84,995
Currency risk relating to the future cash flows of monetary balances
Currency risk of reported results of foreign operations
(135,939)
(104,066)
(31,873)
(31,873)
(29,319)
21,684
14,102
2,372
8,839
13,021
(4,182)
8,839
The operating currency whose value noticeably fluctuate against the USD is the Jamaica dollar (JMD).
The theoretical impact of JMD currency risk on reported results and of the Group’s investment in foreign
operations is considered in the following section.
A 10% appreciation in the JMD relative to the USD would have equal and opposite effects to those
disclosed above.
206
SAGICOR FINANCIAL CORPORATION LIMITED
98
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000 41.5 Fair value of financial instruments
41.5 Fair value of financial instruments (continued)
The fair value of financial instruments is measured according to a fair value hierarchy which reflects the
significance of market inputs in the valuation. This hierarchy is described and discussed in sections (i)
to (iii) below.
(i)
Level 1 – unadjusted quoted prices in active markets for identical instruments
A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly
available from an exchange or other independent source, and those prices represent actual and
regularly occurring market transactions on an arm’s length basis. The Group considers that market
transactions should occur with sufficient frequency that is appropriate for the particular market, when
measured over a continuous period preceding the date of the financial statements. If there is no data
available to substantiate the frequency of market transactions of a financial instrument, then the
instrument is not classified as Level 1.
(ii) Level 2 – inputs that are observable for the instrument, either directly or indirectly
A financial instrument is classified as Level 2 if:
•
•
The fair value is derived from quoted prices of similar instruments which would be classified
as Level 1; or
The fair value is determined from quoted prices that are observable but there is no data
available to substantiate frequent market trading of the instrument.
In estimating the fair value of non-traded financial assets, the Group uses a variety of methods such as
obtaining dealer quotes and using discounted cash flow techniques. Where discounted cash flow
techniques are used, estimated future cash flows are discounted at market derived rates for government
securities in the same country of issue as the security; for non-government securities, an interest spread
is added to the derived rate for a similar government security rate according to the perceived additional
risk of the non-government security.
In assessing the fair value of non-traded financial liabilities, the Group uses a variety of methods
including obtaining dealer quotes for specific or similar instruments and the use of internally developed
pricing models, such as the use of discounted cash flows. If the non-traded liability is backed by a pool
of assets, then its value is equivalent to the value of the underlying assets.
Certain of the Group’s policy liabilities are unit linked, i.e. derive their value from a pool of assets which
are carried at fair value. The Group assigns a fair value hierarchy of Level 2 to the contract liability if the
liability represents the unadjusted fair value of the underlying pool of assets.
(iii)
Level 3 – inputs for the instrument that are not based on observable market data
A financial instrument is classified as Level 3 if:
•
•
The fair value is derived from quoted prices of similar instruments that are observable and
which would be classified as Level 2; or
The fair value is derived from inputs that are not based on observable market data.
Level 3 available for sale securities include corporate and government agency debt instruments issued
in the Caribbean, primarily in Jamaica and Trinidad. The fair values of these instruments have been
derived from December 31 market yields of government instruments of similar durations in the country
of issue of the instruments.
Level 3 assets designated fair value through income include mortgage loans, debt securities and
equities for which the full income return and capital returns accrue to holders of unit linked policy and
deposit administration contracts. These assets are valued with inputs other than observable market
data.
The techniques and methods described in the preceding section (ii) for non traded financial assets and
liabilities may also be used in determining the fair value of Level 3 instruments.
99
2016 ANNUAL REPORT
207
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000
41.5 Fair value of financial instruments (continued)
(a)
Financial instruments carried at fair value
2016
2015
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Available for sale securities:
Debt securities
Equity securities
Investments at fair value through income:
Debt securities
Equity securities
Derivative financial instruments
Mortgage loans
Deposits
Total assets
604,786
35,350
640,136
35,720
3,992
-
-
-
39,712
679,848
1,663,306
51,732
1,715,038
32,436
119,532
1,364
-
-
153,332
1,868,370
2,928
9,602
12,530
95,849
-
27,616
40,347
-
163,812
176,342
2,271,020
96,684
2,367,704
164,005
123,524
28,980
40,347
-
356,856
2,724,560
Total assets by percentage
25%
69%
6%
100%
Investment contracts:
Unit linked deposit administration liabilities
Deposit and security liabilities:
Structured products
Derivative financial instruments
Total liabilities
Total liabilities by percentage
-
-
-
-
-
0%
-
-
1,364
1,364
1,364
1%
130,668
130,668
34,779
-
34,779
165,447
99%
34,779
1,364
36,143
166,811
100%
355,330
46,644
401,974
15,820
12,100
-
-
56
27,976
429,950
16%
-
-
-
-
-
0%
1,929,520
29,538
1,959,058
35,048
110,267
1,603
-
-
146,918
2,105,976
77%
-
-
1,603
1,603
1,603
1%
208
SAGICOR FINANCIAL CORPORATION LIMITED
26,741
12,198
38,939
85,859
4,210
13,876
47,052
-
150,997
189,936
7%
2,311,591
88,380
2,399,971
136,727
126,577
15,479
47,052
56
325,891
2,725,862
100%
125,177
125,177
35,112
-
35,112
160,289
99%
35,112
1,603
36,715
161,892
100%
100
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000 41.5 Fair value of financial instruments (continued)
Transfers from Level 1 to Level 2 in 2016 - $59,752 (2015 - $4,805). Transfers from Level 2 to Level 1 in 2016 – Nil (2015 - Nil).
For Level 3 instruments, reasonable changes in inputs which could be applied to the valuation of available for sale securities would affect other comprehensive income. Reasonable changes in inputs which could be
applied to the valuations of investments designated at fair value are largely offset in income, since the changes in fair value are borne by contract holders. Changes in the valuations of structured products reflect changes
in the underlying securities and are borne by the contract holders. The following table presents the movements in Level 3 instruments for the year.
2016
Available
for sale
securities
Investments
at fair value
through income
Derivative
instruments
Total
assets
2015
Total
assets
2016
2015
Policy
liabilities
Structured
products
Total
liabilities
Total
liabilities
Balance, beginning of year
Additions
Transfers into Level 3 classification
Issues
Settlements
Fair value changes recorded within net investment
income
Fair value changes recorded within interest expense
Fair value changes recorded in other comprehensive
income
38,939
1,638
-
-
-
493
-
(308)
Transfers to instruments carried at amortised cost
Effect of exchange rate changes
Balance, end of year
Fair value changes recorded in investment income for
instruments held at end of year
Fair value changes recorded in interest expense for
instruments held at end of year
-
(974)
12,530
-
-
137,121
23,419
13,876
19,205
189,936
155,926
125,177
35,112
160,289
136,877
44,262
76
-
-
95,084
1,873
-
-
-
-
-
-
-
-
16,458
19,206
35,664
(5,687)
(17,064)
(22,751)
76
-
-
266
-
-
-
(6,637)
136,196
-
-
-
-
-
7,376
8,135
(743)
-
-
-
(308)
-
(54)
-
-
(7,611)
(3,512)
(5,468)
27,616
176,342
189,936
130,668
1,054
9,013
10,067
(3,930)
-
-
-
-
-
188
-
-
35,194
(8,471)
-
(682)
-
-
-
(2,629)
-
188
-
-
(252)
(7,691)
165,447
160,289
-
-
188
(682)
-
188
-
-
-
-
-
-
-
(252)
(2,223)
34,779
-
-
Disposals
(27,258)
(18,049)
(12,841)
(58,148)
(58,638)
101
2016 ANNUAL REPORT
209
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000
41.5 Fair value of financial instruments (continued)
(b) Financial instruments carried at amortised cost
41.5 Fair value of financial instruments (continued)
Level 1
Level 2
Level 3
Total
The carrying values of the Group’s non-traded financial assets and financial liabilities carried at
amortised cost approximate their fair value in notes 10, 12, and 20. The fair value hierarchy of other
financial instruments carried at amortised cost as of December 31, 2016 is set out in the following tables.
Level 1
Level 2
Level 3
Total
Investment contracts:
Deposit administration liabilities
Other investment contracts
Held to maturity securities:
Debt securities
Loans and receivables:
Debt securities
Mortgage loans
Policy loans
Finance loans and finance leases
Securities purchased for resale
-
-
-
-
-
-
-
-
21,688
-
21,688
Notes and loans payable:
Notes and lease payables
387,182
654,926
1,042,108
-
-
-
-
291,154
148,141
491,131
5,227
291,154
148,141
491,131
5,227
387,182
1,590,579
1,977,761
Deposit and security liabilities
Other funding instruments
Customer deposits
Securities sold for repurchase
-
408,870
1,590,579
1,999,449
-
-
-
-
-
-
-
-
-
-
9,574
-
9,574
118,771
121,051
239,822
128,345
121,051
249,396
364,095
364,095
80,496
80,496
444,591
444,591
-
1,463
-
346,216
913,956
320,574
346,216
915,419
320,574
1,463
1,580,746
1,582,209
375,132
1,901,064
2,276,196
210
SAGICOR FINANCIAL CORPORATION LIMITED
102
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000 41.5 Fair value of financial instruments (continued)
41.6 Derivative financial instruments and hedging activities (continued)
(c) Equity price risk
The Group is exposed to equity price risk arising from changes in the market values of its equity
securities. The Group mitigates this risk by establishing overall limits of equity holdings for each
investment portfolio and by maintaining diversified holdings within each portfolio of equity securities.
Sensitivity
The sensitivity to fair value changes in equity securities arises from those instruments classified as
available for sale. There is no significant sensitivity to those instruments classified at fair value through
income, since fair value changes are borne by policy contract holders.
The effects of an across the board 20% change in equity prices of the Group’s available for sale equity
securities as of December 31, 2016 on total comprehensive income before tax (TCIBT) are as follows.
Available for sale equities
Carrying value
Listed on Caribbean stock exchanges and markets
Listed on US stock exchanges and markets
Listed on other exchanges and markets
19,275
49,679
27,730
96,684
20% change
on TCIBT
3,855
9,936
5,546
19,337
41.6 Derivative financial instruments and hedging activities
The Group's derivative activities give rise to open positions in portfolios of derivatives. These positions
are managed to ensure that they remain within acceptable risk levels, with matching deals being utilised
to achieve this where necessary. When entering into derivative transactions, the Group employs its
credit risk management procedures to assess and approve potential credit exposures.
Derivatives are carried at fair value and presented in the financial statements as separate assets and
liabilities. Asset values represent the cost to the Group of replacing all transactions with a fair value in
the Group’s favour assuming that all relevant counterparties default at the same time, and that
transactions can be replaced instantaneously. Liability values represent the cost to the Group
counterparties of replacing all their transactions with the Group with a fair value in their favour if the
Group were to default. Derivative assets and liabilities on different transactions are only set off if the
transactions are with the same counterparty, a legal right of set-off exists and the cash flows are
intended to be settled on a net basis. The contract or notional amounts of derivatives and their fair
values are set out below.
2016
Derivatives held for trading:
Equity indexed options
2015
Derivatives held for trading:
Equity indexed options
Contract /
notional
amount
Fair value
Assets
Liabilities
673,264
673,264
28,980
28,980
643,667
643,667
15,479
15,479
1,364
1,364
1,603
1,603
103
2016 ANNUAL REPORT
211
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000
41.6 Derivative financial instruments and hedging activities (continued)
(i) Equity indexed options
The Group has purchased equity indexed options in respect of structured products and in respect of
life and annuity insurance contracts.
For certain structured product contracts with customers (note 17), equity indexed options give the
holder the ability to participate in the upward movement of an equity index while being protected from
downward risk. The Group is exposed to credit risk on purchased options only, and only to the extent
of the carrying amount, which is their fair value.
For certain universal life and annuity insurance contracts, an insurer has purchased custom call options
that are selected to materially replicate the policy benefits that are associated with the equity indexed
components within the policy contract. These options are appropriate to reduce or minimise the risk of
movements in specific equity markets. Credit risk that the insurer has regarding the options is mitigated
by ensuring that the counterparty is sufficiently capitalized. Both the asset and the associated actuarial
liability are valued at fair market value on a consistent basis, with the change in values being reflected
in the income statement. The valuations combine external valuations with internal calculations.
212
SAGICOR FINANCIAL CORPORATION LIMITED
104
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000 41.7 Offsetting Financial Assets and Liabilities
The Group is eligible to present certain financial assets and financial liabilities on a net basis on the balance sheet pursuant to criteria described in Note 1 “Accounting Policies: 2.15 Offsetting financial instruments”.
The following tables provide information on the impact of offsetting on the consolidated balance sheet, as well as the financial impact of netting for instruments subject to an enforceable master netting arrangement or
similar agreement as well as available cash and financial instrument collateral.
2016
ASSETS
Financial investments
Securities purchases under resale agreement
Derivative financial instruments
LIABILITIES
Security liabilities
Derivative financial instruments
2015
ASSETS
Financial investments
Securities purchases under resale agreement
Derivative financial instruments
LIABILITIES
Security liabilities
Derivative financial instruments
Gross amounts of
financial assets
Gross amounts set off
on the balance sheet
Net amounts of
financial assets
presented on the
balance sheet
Impact of master
netting arrangements
Financial instruments
collateral
Net amount
4,779,541
5,227
28,980
4,813,748
1,621,961
1,364
1,623,325
4,803,078
8,064
15,479
4,826,621
1,606,008
1,603
1,607,611
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,779,541
5,227
28,980
4,813,748
1,621,961
1,364
1,623,325
4,803,078
8,064
15,479
4,826,621
1,606,008
1,603
1,607,611
(821,168)
-
(1,364)
(822,532)
(415,910)
(1,364)
(417,274)
(629,825)
-
(1,603)
(631,428)
(614,643)
(1,603)
(616,246)
(260,443)
-
-
(260,443)
(220,100)
-
(220,100)
(302,098)
-
-
(302,098)
(255,860)
-
(255,860)
3,697,930
5,227
27,616
3,730,773
985,951
-
985,951
3,871,155
8,064
13,876
3,893,095
735,505
-
735,505
105
2016 ANNUAL REPORT
213
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000
42 INSURANCE RISK – PROPERTY & CASUALTY CONTRACTS
42.2 Claims risk (continued)
Property and casualty insurers in the Group are exposed to insurance risks such as underwriting, claims
and availability of reinsurance, and to credit risk in respect of reinsurance counterparties.
Sagicor General Insurance is the principal insurer within the Group's continuing operations that issues
property and casualty insurance contracts. It operates mainly in Barbados and Trinidad and Tobago.
The principal insurance risks affecting property and casualty contracts are disclosed in the following
sections.
42.1 Underwriting risk
Risks are priced to achieve an adequate return on capital on the insurer’s business as a whole. This
return is expressed as a premium target return. Budgeted expenses and reinsurance costs are included
in the pricing process. Various pricing methodologies, including benchmark exposure rates and historic
experience are used and are generally applied by class of insurance. All methods produce a technical
price, which is compared against the market to establish a price margin.
Annually, the overall risk appetite is reviewed and approved. The risk appetite is defined as the
maximum loss the insurer is willing to incur from a single event or proximate cause. Risks are only
underwritten if they fall within the risk appetite. Individual risks are assessed for their contribution to
aggregate exposures by nature of risk, by geography, by correlation with other risks, before acceptance.
Underwriting a risk may include specific tests and enquiries which determine the insurer’s assessment
of the risk. Insurers may also establish deductibles, exclusions, and coverage limits which will limit the
potential losses incurred.
Inaccurate pricing or inappropriate underwriting of insurance contracts, which may arise from poor
pricing or lack of underwriting control, can lead to either financial loss or reputational damage to the
insurer.
42.2 Claims risk
Incurred claims are triggered by an event and may be categorised as:
•
losses, which are expected to be of reasonable frequency and are less than
attritional
established threshold amounts;
214
SAGICOR FINANCIAL CORPORATION LIMITED
•
•
large losses, which are expected to be relatively infrequent and are greater than established
threshold amounts;
catastrophic losses, which are an aggregation of losses arising from one incident or
proximate cause, affecting one or more classes of insurance. These losses are infrequent
and are generally very substantial.
The insurer records claims based on submissions made by claimants. The insurer may also obtain
additional information from loss adjustors, medical reports and other specialist sources. The initial claim
recorded may only be an estimate, which has to be refined over time until final settlement occurs. In
addition, from the pricing methodology used for risks, it is assumed that at any particular date, there are
claims incurred but not reported (IBNR).
Claims risk is the risk that incurred claims may exceed expected losses. Claims risk may arise from
•
•
•
•
invalid or fraudulent claim submissions;
the frequency of incurred claims;
the severity of incurred claims;
the development of incurred claims.
Claims risk may be concentrated in geographic locations, altering the risk profile of the insurer. The
most significant exposure for this type of risk arises where a single event could result in a large number
of claims. Concentration of risk is mitigated through risk selection, line sizes, event limits, quota share
reinsurance and excess of loss reinsurance.
Total insurance coverage on insurance policies provides a quantitative measure of absolute risk.
However, claims arising in any one year are a very small proportion in relation to the total insurance
coverage provided. The total amounts insured by the Group at December 31, gross and net of
reinsurance, are summarised by class of insurance.
106
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000 42.2 Claims risk (continued)
42.3 Reinsurance risk (continued)
Total insurance coverage
2016
2015
Property
Motor
Accident and liability
Total
Gross
Net
Gross
Net
Gross
Net
Gross
Net
7,673,403
1,083,282
385,978
192,989
2,275,771
1,086,198
10,335,152
2,362,469
6,726,203
1,004,774
346,729
173,364
2,162,735
1,034,289
9,235,667
2,212,427
The insurer assesses its exposures by modelling realistic disaster scenarios of potential catastrophic
events. Claims arising from wind storms, earthquakes and floods and events triggering multi-coverage
corporate liability claims are considered to be the potential sources of catastrophic losses arising from
insurance risks. A realistic disaster scenario modelled for 2016 is presented below and results in
estimated gross and net losses.
The Group selects reinsurers which have well established capability to meet their contractual obligations
and which generally have a Sagicor credit risk rating of 1 or 2. Insurers also place reinsurance coverage
with various reinsurers to limit their exposure to any one reinsurer.
The reinsurance programmes are negotiated annually with reinsurers for coverage generally over a 12
month period. It is done by class of insurance, though for some classes there is aggregation of classes
and / or subdivision of classes by the location of risk.
For its property risks, insurers use quota share and excess of loss catastrophe reinsurance treaties to
obtain reinsurance cover. Catastrophe reinsurance is obtained for multiple claims arising from one event
or occurring within a specified time period. However, treaty limits may apply and may expose the insurer
to further claim exposure. Under some treaties, when treaty limits are reached, the insurer may be
required to pay an additional premium to reinstate the reinsurance coverage. Excess of loss catastrophe
reinsurance treaties typically cover up to four separate catastrophic events per year.
For other insurance risks, insurers limit their exposure by event or per person by excess of loss or quota
share treaties.
A Barbados and St. Lucia windstorm having a 200 year return
period.
Gross loss
Net loss
318,357
5,000
Retention limits represent the level of risk retained by the insurer. Coverage in excess of these limits is
ceded to reinsurers up to the treaty limit. Claim amounts in excess of reinsurance treaty limits revert to
the insurer. Principal features of retention program used by Sagicor General for its property insurance
class is summarised in the following table.
The occurrence of one or more catastrophic events in any year may have a material impact on the
reported net income of the Group.
42.3 Reinsurance risk
To limit the potential loss for single policy claims and for aggregations of catastrophe claims, the insurer
may cede certain levels of risk to a reinsurer. Reinsurance however does not discharge the insurer’s
liability. Reinsurance risk is the risk that reinsurance is not available to mitigate the potential loss on an
insurance policy. The risk may arise from
•
•
•
the credit risk of holding a recovery from a reinsurer;
the unavailability of reinsurance cover in the market at adequate levels or prices,
the failure of a reinsurance layer upon the occurrence of a catastrophic event.
Type of risk
Retention by insurers - currency amounts in thousands
Property
• maximum retention of $4,500 for a single event;
• maximum retention of $5,000 for a catastrophic event;
•
•
quota share retention to maximum of 20% in respect of treaty limits;
quota share retention is further reduced to a maximum of $375 per
event.
The effects of reinsurance ceded are disclosed in notes 14, 24 and 27 and information on reinsurance
balances is included in notes 10, 20 and 41.
107
2016 ANNUAL REPORT
215
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000
42.3 Reinsurance risk (continued)
In order to assess the potential reinsurance recoveries on the occurrence of a catastrophic insurance
event, the Sagicor credit risk ratings of the reinsurance recoverable are assessed using the following
realistic disaster scenario:
• Hurricane with a 200 year return period affecting Barbados and St. Lucia and an earthquake
with a 250 year return period affecting Trinidad within a 24 hour period.
The reinsurance recoveries derived from the foregoing are assigned internal credit ratings as follows:
Risk Rating
Classification
Exposure
$000
Exposure
%
1
2
3
4
5
6
7
8
Minimal risk
Low risk
Moderate risk
Acceptable risk
Average risk
Higher risk
Special mention
Substandard
253,696
559,762
-
5,241
-
-
-
-
31%
68%
0%
1%
0%
0%
0%
0%
TOTAL
818,699
100%
43 INSURANCE RISK – LIFE, ANNUITY & HEALTH CONTRACTS
Insurers are exposed to insurance risks such as product design and pricing, mortality and morbidity,
lapse, expense, reinsurance, and actuarial liability estimation in respect of life, annuity and health
contracts. Disclosure of these risks is set out in the following sections.
43.1 Contracts without investment returns
These contracts are principally term life, critical illness and health insurance. Individual term life and
critical illness products are generally long-term contracts while group term life and health insurance
products are generally one year renewable. The principal insurance risks associated with these
contracts are product design and pricing and mortality and morbidity.
43.1 Contracts without investment returns (continued)
(a) Product design and pricing risk
Product design and pricing risk arises from poorly designed or inadequately priced contracts and can
lead to both financial loss and reputational damage to the insurer.
Risks are priced to achieve an adequate return on capital on the insurer’s business as a whole. In
determining the pricing of an insurance contract, the insurer considers the nature and amount of the risk
assumed, and recent experience and industry statistics of the benefits payable. Pricing inadequacy
may arise either from the use of inadequate experience and statistical data in deriving pricing factors or
from market softening conditions.
The underwriting process has established pricing guidelines, and may include specific medical tests
and enquiries which determine the insurer’s assessment of the risk. Insurers may also establish
deductibles and coverage limits for health risks which will limit the potential claims incurred. Term life
and critical illness risks have limitations of insured amounts. The pricing of a contract therefore consists
of establishing appropriate premium rates, deductibles and coverage limits.
(b) Mortality and morbidity risk
Mortality risk is the risk that worsening mortality rates will result in an increase of death claims. Morbidity
is the incidence of disease or illness and the associated risk is that of increased disability and medical
claims. Insurance claims are triggered by the incurrence of a medical claim, the diagnosis of a critical
illness or by death of the person insured.
For contracts providing death benefits, higher mortality rates would result in an increase in death claims.
The Group annually reviews its mortality experience and compares it to industry mortality tables. This
review may result in future adjustments to the pricing or re-pricing of these contracts.
Critical illness claims arise from the diagnosis of a specific illness incurred by the policy beneficiary. The
Group annually reviews its critical illness claims experience and compares it to industry statistics. This
review may result in future adjustments to the pricing or re-pricing of these contracts.
The concentration risks of term life and critical illness contracts are included in the related disclosure on
other long-term contracts in note 43.2(b).
216
SAGICOR FINANCIAL CORPORATION LIMITED
108
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000 43.1 Contracts without investment returns (continued)
43.2 Contracts with investment returns
The cost of health related claims depends on the incidence of beneficiaries becoming ill, the duration of
their illness, and the cost of providing medical services. An increase in any of these three factors will
result in increased health insurance claims. In such circumstances, the insurer may adjust the pricing
or re-pricing of these contracts.
For health insurance contracts, the concentration of insurance risk is illustrated by the distribution of
premium revenue by the location of the insured persons.
Life and annuity insurance contracts with investment returns generally have durations of 5 or more
years. The contract terms provide for the policyholder to pay either a single premium at contract
inception, or periodic premiums over the duration of the contract. From the premium received,
acquisition expenses and maintenance expenses are financed. Investment returns are credited to the
policy and are available to fund surrender, withdrawal and maturity policy benefits. The principal risks
associated with these policies are in respect of product design and pricing, mortality and longevity,
lapse, expense and investment.
2016 Premium revenue by location of insureds
Gross
Ceded
Net
(a) Product design and pricing risk
Barbados
Jamaica
Trinidad & Tobago
Other Caribbean
USA
Total
(c) Sensitivity of incurred claims
22,349
77,718
27,485
26,057
57
871
2,004
606
536
60
21,478
75,714
26,879
25,521
(3)
153,666
4,077
149,589
Product design and pricing risk arises from poorly designed or inadequately priced contracts and can
lead to both financial loss and reputational damage to the insurer.
Risks are priced to achieve an adequate return on capital on the insurer’s business as a whole. In
determining the pricing of a contract, the insurer considers the age of the policyholder and/or beneficiary,
the expenses and taxes associated with the contract, the prospective investment returns to be credited
to the contract, and the guaranteed values within the contract. Pricing inadequacy may arise either from
the use of inadequate experience and statistical data in deriving pricing factors or from future changes
in the economic environment.
The sensitivity of term life and critical illness claims is included in the related disclosure on other long-
term contracts in note 43.4. The impact on gross claims of increasing the total liability by 5% for un-
reinsured health insurance claims is illustrated in the following table.
2016
2015
Liability
5% increase
in liability
Liability
5% increase
in liability
48,373
4,284
52,657
2,419
214
2,633
40,845
3,379
44,224
2,042
169
2,211
Actuarial liability
Claims payable
109
(b) Mortality and longevity risk
Mortality risk is the risk that worsening mortality rates will result in an increase of death claims. Longevity
risk is the risk that improving mortality rates will lengthen the payout period of annuities.
For contracts providing death benefits, higher mortality rates will result in an increase in death claims
over time. For contracts providing the payout of annuities, improving mortality rates will lead to increased
annuity benefits over time. Insurers annually review their mortality experience and compare it to industry
mortality tables. This review may result in future adjustments to the pricing or re-pricing of these
contracts.
2016 ANNUAL REPORT
217
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000
43.2 Contracts with investment returns (continued)
43.2 Contracts with investment returns (continued)
Mortality risk may be concentrated in geographic locations, affecting the risk profile of the insurer. The
most significant exposure for this type of risk arises where a single event or pandemic could result in a
large number of claims.
Total insurance coverage on insurance policies provides a quantitative measure of absolute mortality
risk. However, claims arising in any one year are a very small proportion in relation to the total insurance
coverage provided. The total amounts insured by the Group in respect of both contracts with or without
investment returns at December 31, gross and net of reinsurance, are summarised by geographic area
below.
Total insurance coverage
Individual
contracts
Group
contracts
Individual
contracts
Group
contracts
2016
2015
Barbados
Jamaica
Gross
Net
Gross
Net
3,855,798
1,338,221
3,717,465
1,319,187
3,546,641
1,286,564
3,404,278
1,272,561
7,107,905
4,901,489
6,788,633
4,722,254
6,961,507
4,869,094
6,633,173
4,693,456
Trinidad & Tobago
Gross
3,322,781
2,379,773
3,299,470
2,591,709
Net
2,741,682
2,262,405
2,699,592
2,460,183
Other Caribbean
Gross
7,702,307
1,824,971
7,425,375
1,993,205
USA
Total
Net
Gross
Net
Gross
Net
6,616,723
1,647,151
6,315,588
1,718,537
5,935,908
2,018,213
43,463
41,422
5,416,515
1,944,902
45,491
43,300
27,924,699
10,487,917
26,647,458
10,671,846
21,884,766
10,106,636
20,997,533
10,188,037
Total liability under annuity contracts which represents the present value of future annuity benefits
provides a good measure of longevity risk exposure.
Total liability
under annuity contracts
Individual
contracts
Group
contracts
Individual
contracts
Group
contracts
2016
2015
Barbados
Jamaica
Gross
Net
Gross
Net
Trinidad & Tobago
Gross
Net
Other Caribbean
Gross
USA
Total
Net
Gross
Net
Gross
Net
110,544
110,544
575
575
115,254
115,254
26,827
26,827
1,150,170
390,478
1,403,370
643,678
43,674
43,674
293,596
293,596
-
-
27
27
25,684
8,024
362,981
345,321
114,475
114,475
509
509
113,108
113,108
24,171
24,171
946,891
375,338
1,199,154
627,601
46,288
46,288
285,843
285,843
-
-
-
-
26,447
7,988
358,578
340,119
218
SAGICOR FINANCIAL CORPORATION LIMITED
110
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000 43.2 Contracts with investment returns (continued)
43.3 Reinsurance risk
(c)
Lapse risk
Lapse risk is that, on average, policyholders will terminate their policies ahead of the insurer’s
expectation. Early lapse may result in the following:
•
•
Acquisition costs are not recovered from the policyholder;
In order to settle benefits, investments are liquidated prematurely resulting in a loss to the
insurer;
• Maintenance expenses are allocated to the remaining policies, resulting in an increase in
expense risk.
(d) Expense risk
The Group monitors policy acquisition and policy maintenance expenses. Expenses are managed
through policy design, fees charged and expense control. However, there are a significant number of
inforce contracts for which insurers have limited or no ability to re-price for increases in expenses caused
by inflation or other factors. Therefore growth in maintenance expenses has to be funded either by
increasing the volume of inforce policies or by productivity gains. Failure to achieve these goals will
require increases in actuarial liabilities held.
(e)
Investment risk
A substantial proportion of the Group’s financial investments support insurer obligations under life and
annuity contracts with investment returns. The financial risks outlined in note 41 pertaining to credit,
liquidity, interest rate, foreign exchange and equity price are considered integral investment risks
associated with these insurance contracts.
Asset defaults, mismatches in asset and liability cash flows, interest rate and equity price volatility
generally have the effect of increasing investment risk and consequential increases in actuarial liabilities
held.
To limit its exposure of potential loss on an insurance policy, the insurer may cede certain levels of risk
to a reinsurer. The Group selects reinsurers which have well established capability to meet their
contractual obligations and for new business a Sagicor credit risk rating of 1 or 2 is usually selected.
Reinsurance ceded does not discharge the insurer’s liability and failure by a reinsurer to honour its
commitments could result in losses to the Group.
Insurers have limited their exposure per person by excess of loss or quota share treaties. Retention
limits represent the level of risk retained by the insurer. Coverage in excess of these limits is ceded to
reinsurers up to the treaty limit. The principal features of retention programs used by insurers are
summarised in the following table.
Type of insurance contract
Retention by insurers
- currency amounts in thousands
Health insurance contracts with individuals
Retention per individual to a maximum of $175
Health insurance contracts with groups
Retention per individual to a maximum of $175
Life insurance contracts with individuals
Retention per individual life to a maximum of $500
Life insurance contracts with groups
Retention per individual life to a maximum of $500
43.4 Sensitivity arising from the valuation of actuarial liabilities
The estimation of actuarial liabilities is sensitive to a number of assumptions. Changes in those
assumptions could have a significant effect on the valuation results which are discussed below.
The valuation of actuarial liabilities of life insurance and annuity contracts is sensitive to:
•
•
•
•
the economic scenario used,
the investments allocated to back the liabilities,
the underlying assumptions used (note 13.3 (b) to (f)), and
the margins for adverse deviations (note 13.3 (g)).
111
2016 ANNUAL REPORT
219
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000
43.4 Sensitivity arising from the valuation of actuarial liabilities (continued)
43.4 Sensitivity arising from the valuation of actuarial liabilities (continued)
Under Canadian accepted actuarial standards, the AA is required to test the actuarial liability under
economic scenarios. The scenarios developed and tested by insurers were as follows.
The following table represents the estimated sensitivity of each of the above scenarios to net actuarial
liabilities for insurers by segment. Correlations that may exist between scenario assumptions were not
explicitly taken into account.
Sensitivity
Scenario
Sagicor Life Inc
segment
Sagicor Jamaica
segment
Worsening
rate of lapse
Lapse rates were either doubled or halved, and
the more adverse result was selected.
High interest
rate
Low interest
rate
Worsening
mortality and
morbidity
Assumed increases in the
investment portfolio yield
rates of 0.25% per year for
5 years, with the rates
remaining constant
thereafter.
Assumed decreases in
investment portfolio yield
rates of 0.25% per year for
5 years, with the rates
remaining constant
thereafter.
Assumed
increases in the
investment
portfolio yield rates
of 0.5% for 10
years.
Assumed
decreases in
investment
portfolio yield
rates of 0.5% per
year for 10 years.
Mortality and morbidity rates for insurance and
critical illness products were increased by 3% of
the base rate per year for 5 years.
For annuity products, the mortality rates were
decreased by 3% of the base rate for 5 years.
Sagicor USA segment
Sagicor Life segment
Sagicor Jamaica
segment
Sagicor Life USA
segment
For 2016, lapse rates were
increased or reduced by 30%,
and the more adverse result
was selected. For 2015, lapse
rates were doubled or halved.
A 1% increase was applied to
the investment portfolio rate.
A 1% decrease was applied
to the investment portfolio
rate.
2016
2015
2016
2015
2016
2015
Base net actuarial
liability
936,049
939,819
327,183
326,652
580,784
562,236
Scenario
increase in liability
increase in liability
increase in liability
Worsening rate
of lapse
135,728
127,997
47,635
40,153
9,330
9,123
High interest rate
(84,334)
(76,882)
(98,734)
(101,205)
(34,545)
(33,619)
Low interest rate
156,127
151,291
124,400
136,247
39,771
38,922
Worsening mortality/
morbidity
35,808
34,191
37,209
33,891
12,842
12,737
Higher expenses
20,715
19,174
14,939
15,972
4,418
3,846
For life insurance products
only, the base assumed rates
were increased annually by
3% cumulatively over the next
5 years. For annuity
products, the mortality rates
were decreased by 3% of the
base rate for 5 years.
.
Higher
expenses
Policy unit maintenance expense rates were increased by 5% per year for 5 years
above those reflected in the base scenario.
220
SAGICOR FINANCIAL CORPORATION LIMITED
112
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000 43.5 Dynamic capital adequacy testing (DCAT)
44 FIDUCIARY RISK
DCAT is a technique used by the Group to assess the adequacy of the insurer’s financial position and
financial condition in the light of different future economic and policy experience scenarios. DCAT
assesses the impact over the next 5 years on the insurer’s financial position and financial condition
under specific scenarios.
The Group provides investment management and pension administration services to investment and
pension funds which involve the Group making allocation, purchase and sale decisions in relation to a
wide range of investments. These services give rise to fiduciary risk that may expose the Group to
claims for mal-administration or under-performance of these funds.
The financial position of an insurer is reflected by the amounts of assets, liabilities and equity in the
financial statements at a given date. The financial position therefore relies on the valuation assumptions
used for establishing the actuarial liabilities being adequate to measure future adverse deviations in
experience. The financial position does not offer any indication of an insurer’s ability to execute its
business plan.
The financial condition of an insurer at a particular date is its prospective ability at that date to meet its
future obligations, especially obligations to policyholders, those to whom it owes benefits and to its
shareholders. The financial condition analysis examines both an insurer’s ability to execute its business
plan and to absorb adverse experience beyond that provided for when its actuarial liabilities are
established.
In the ordinary course of business, the Group manages assets of pension funds, mutual funds and unit
trusts which are held in a fiduciary capacity and are not included in the Group’s financial statements.
The investments and cash under administration are summarised in the following table.
2016
2015
Pension and insurance fund assets
1,726,467
1,576,696
Mutual fund, unit trust and other investment fund assets
890,235
796,775
2,616,702
2,373,471
The purpose of the DCAT is
Fee income under administration is discussed in Note 26.
•
•
•
to develop an understanding of the sensitivity of the total equity of the insurer and future
financial condition to changes in various experience factors and management policies;
to alert management to material, plausible and imminent threats to the insurer’s solvency;
and to describe possible courses of action to address these threats.
Full DCAT is conducted periodically by some insurers within the Group.
45 STATUTORY RESTRICTIONS ON ASSETS
Insurers are registered to conduct insurance business under legislation in place in each relevant
jurisdiction. This legislation may prescribe a number of requirements with respect to deposits,
investment of funds and solvency for the protection of policyholders. In general, these requirements do
not restrict the ability of the insurer to trade investments. Banking subsidiaries may also be required
to hold deposits with Central Banks which regulate the conduct of banking operations.
To satisfy the above requirements, invested assets and cash totalling $1,436,232 (2015 - $1,313,013)
have been deposited with regulators or are held in trust to the order of regulators.
In some countries where the Group operates, there are exchange controls or other restrictions on the
remittance of funds out of those countries.
113
2016 ANNUAL REPORT
221
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000
46 CAPITAL MANAGEMENT
46.2 Capital adequacy
The Group's objectives when managing capital, which is a broader concept than equity in the statement
of financial position, are:
•
•
•
•
•
To comply with capital requirements established by insurance, banking and other financial
intermediary regulatory authorities;
To comply with internationally recognised capital requirements for insurance, where local
regulations do not meet these international standards;
To safeguard its ability as a going concern to continue to provide benefits and returns to
policyholders, depositors, note-holders and shareholders;
To provide adequate returns to shareholders;
To maintain a strong capital base to support the future development of Group operations.
46.1 Capital resources
The principal capital resources of the Group are as follows:
Shareholders’ equity
Non-controlling interest
Notes and loans payable
2016
2015
536,149
257,974
395,213
506,046
231,735
475,517
Total financial statement capital resources
1,189,336
1,213,298
The Group deploys its capital resources through its operating activities. These operating activities are
carried out by subsidiary companies which are either insurance entities or provide other financial
services. The capital is deployed in such a manner as to ensure that subsidiaries have adequate and
sufficient capital resources to carry out their activities and to meet regulatory requirements.
The capital adequacy of the principal operating subsidiaries is discussed in this section.
(a) Life insurers
Capital adequacy is managed at the operating company level. It is calculated by the Appointed Actuary
and reviewed by executive management, the audit committee and the board of directors. In addition,
certain subsidiaries of the Group seek to maintain internal capital adequacy at levels higher than the
regulatory or internationally recognised requirements.
To assist in evaluating the current business and strategy opportunities, a risk-based capital approach is
a core measure of financial performance. The risk-based assessment measure which has been adopted
is the Canadian Minimum Continuing Capital and Surplus Requirement (MCCSR) standard. The
minimum standard recommended by the Canadian regulators for companies is an MCCSR of 150%. A
number of jurisdictions in the Caribbean region have no internationally recognised capital adequacy
requirements, and in accordance with its objectives for managing capital, the Group has adopted the
Canadian MCCSR standard. Jamaica and the USA have recognised capital adequacy standards.
The consolidated MCCSR for the Sagicor Group as of December 31 has been estimated as 291% (2015
– 301%). The 2015 MCCSR which was disclosed as 221% in 2015 has been reviewed and restated to
301% this year. This is the principal standard of capital adequacy used to assess the overall strength
of the Sagicor Group. However, because of the variations in capital adequacy standards across
jurisdictions, the consolidated result should be regarded as applicable to the Group as a whole and not
necessarily applicable to each individual segment, insurance subsidiary or insurance subsidiary branch.
The Company is in compliance with all capital requirements.
222
SAGICOR FINANCIAL CORPORATION LIMITED
114
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000 46.2 Capital adequacy (continued)
46.2 Capital adequacy (continued)
(i) Sagicor Life Jamaica
(b) Sagicor Investments Jamaica Limited and Sagicor Bank Jamaica Limited
Sagicor Life Jamaica is governed by the Jamaican MCCSR regime which requires an insurer to maintain
a minimum ratio of 150%. For the years ended December 31, 2016 and 2015, this ratio was 156.5%
and 201.5% respectively.
(ii) Sagicor Life Insurance Company (USA)
A risk-based capital (RBC) formula and model have been adopted by the National Association of
Insurance Commissioners (NAIC) of the United States. RBC is designed to assess minimum capital
requirements and raise the level of protection that statutory surplus provides for policyholder obligations.
The RBC formula for life insurance companies measures four major areas of risk: (i) underwriting, which
encompasses the risk of adverse loss developments and property and casualty insurance product mix;
(ii) declines in asset values arising from credit risk; (iii) declines in asset values arising from investment
risks, including concentrations; and (iv) off-balance sheet risk arising from adverse experience from
non-controlled assets such as reinsurance guarantees for affiliates or other contingent liabilities and
reserve and premium growth. If an insurer's statutory surplus is lower than required by the RBC
calculation, it will be subject to varying degrees of regulatory action, depending on the level of capital
inadequacy.
The RBC methodology provides for four levels of regulatory action. The extent of regulatory intervention
and action increases as the ratio of surplus to RBC falls. The least severe regulatory action is the
"Company Action Level" (as defined by the NAIC) which requires an insurer to submit a plan of
corrective actions to the regulator if surplus falls below 200% of the RBC amount.
Sagicor Life Insurance Company looks to maintain at least 300% of the Company Action Level, and has
maintained these ratios as of December 31, 2016 and 2015 respectively.
Capital adequacy and the use of regulatory capital are monitored monthly by management employing
techniques based on the guidelines developed by the Financial Services Commission (FSC), the Bank
of Jamaica (BOJ), Basel II and the Risk Management and Compliance Unit. The required information
is filed with the respective Regulatory Authorities at stipulated intervals. The BOJ and the FSC require
each regulated entity to hold the minimum level of regulatory capital, and to maintain a minimum ratio
of total regulatory capital to the risk-weighted assets.
The risk-weighted assets are measured by means of a hierarchy of five risk weights classified according
to the nature of each asset and counterparty, taking into account any eligible collateral or guarantees.
A similar treatment is adopted for off financial statements exposure, with some adjustments to reflect
the more contingent nature of the potential losses.
The table below summarises the capital adequacy ratios. During 2016 and 2015, all applicable
externally imposed capital requirements were complied with.
Sagicor
Investments
Jamaica
Sagicor Bank
Jamaica
2016
13%
10%
2015
2016
2015
14%
10%
14%
10%
14%
10%
Actual capital base to risk weighted assets
Required capital base to risk weighted assets
115
2016 ANNUAL REPORT
223
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000
46.3 Financial covenants
(a) 8.875% Senior Notes
46.3 Financial covenants (continued)
(b) 4.85% notes due 2019
Under the indenture entered into by the Group on the issue of these senior notes the Group has to
comply with a number of covenants as follows:
COVENANT
DESCRIPTION
Limitation of indebtedness
Limitation on restricted
payments covenant
Limitation on restricted
distributions from subsidiaries
Under this covenant, the Group is restricted to incremental
borrowing up to a prescribed level. The Group must maintain a
fixed charge coverage ratio, in excess of 2:1 in order to incur
additional debt.
This covenant limits cash outflows, dividends, acquisition and
investments by the Group. The Group must maintain a fixed
charge coverage ratio of 2:1 and an MCCSR capital ratio in
excess of 175%.
limits
This covenant
encumbrances or
distributions to the Parent.
the subsidiaries
restrictions on
their ability
from creating
to make
Limitation on sale of assets of
subsidiary stock
This covenant restricts
the Group from selling material
subsidiary assets without using the proceeds to either reinvest
in the business or offer to buy back bondholders.
Limitation on affiliate
transactions
Change in control
Limitation on liens
Optional Redemption
This covenant restricts affiliate transactions of the Group.
This covenant allows investors to put their bonds back to the
Group at a certain value when a specified event has changed
ownership/control of the Group.
This covenant restricts the Group’s ability to secure future debt
with the Group’s assets.
The notes are redeemable at the Group’s option after August
11, 2018 at specified redemption rates.
Under an indenture and a trust deed entered into by the Group on the issue of the senior notes and
notes respectively (see note 16), the Group has to comply with permitted lien covenants, which will not
allow the Company nor any of its subsidiaries to directly or indirectly, incur or permit to exist any lien to
secure any indebtedness or any guarantee of indebtedness, other than permitted liens, without
effectively providing that the senior notes and notes are secured equitably and rateably with (or, if the
obligation to be secured by lien, this is subordinated in right of payment to the senior notes and notes,
prior to) the obligations so secured for so long as such obligations are so secured.
Permitted liens are liens existing on the dates of issue of the senior notes and notes respectively, certain
liens which would arise in the course of normal business, and other liens whose outstanding principal
amounts in aggregate outstanding principal amount do not exceed 10% of the consolidated net tangible
assets (as is defined in the indenture and trust deed). As of December 31, 2016, and 2015, the Group
satisfied these requirements.
(c) International Finance Corporation (IFC)
On March 31, 2011, the Company entered into subscription and policy agreements with IFC, regarding
the latter’s participation in the issue of new common and convertible redeemable preference shares.
Pursuant to the aforementioned agreements, on July 18, 2011, 12,269,938 common shares and
78,339,530 convertible redeemable preference shares were issued to IFC. The convertible redeemable
preference shares were redeemed on July 18, 2016.
The Company is in compliance with all covenants.
224
SAGICOR FINANCIAL CORPORATION LIMITED
116
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000 47 RELATED PARTY TRANSACTIONS
48 EVENTS AFTER DECEMBER 31, 2016
Other than as disclosed in notes 5, 9, 12, 26, 30, 31 and 44, there are no material related party
transactions except as disclosed below.
Key management transactions and balances
On March 3rd, 2017 Standards & Poor’s downgraded the Government of Barbados’ long-term foreign
and local currency sovereign rating by one notch from ‘B-’ to ‘CCC+’ and assigned a negative
outlook. On March 9th, 2017 Moody’s Investors Service also downgraded the Government of Barbados’
credit rating one notch from ‘Caa1’ to ‘Caa3’ and maintained a stable outlook.
Key management comprises directors and senior management of the Company and of Group
subsidiaries. Key management includes those persons at or above the level of Vice President or its
equivalent. Compensation of and loans to these individuals are summarised in the following tables:
Subsequent to the year end, the Board of Directors of Sagicor Bank Jamaica Limited (SBJ) approved
the issuance of:
Compensation
2016
2015
Salaries, directors’ fees and other short-term benefits
Equity-settled compensation benefits
Pension and other retirement benefits
20,548
4,047
1,235
25,830
20,176
3,377
1,717
25,270
Balance, beginning of year
Advances
Repayments
Effects of exchange rate changes
Balance, end of year
Mortgage loans
Other loans
Total loans
5,492
282
(837)
-
4,937
836
592
(400)
(36)
992
6,328
874
(1,237)
(36)
5,929
Interest rates prevailing during the year
3.75% - 7.00%
5.95% - 8.00%
(i)
Up to 1,500,000,000 Class A Cumulative Redeemable Preference Shares without par value with a
tenor of eighteen (18) months @ 7.75% interest per annum to be issued at a share price of J$1.00
per share; and
(ii) Up to 1,500,000,000 Class B Cumulative Redeemable Preference Shares without par value with a
tenor of three (3) years @ 8.25% interest per annum to be issued at a share price of J$1.00 per
share by way of private placement in an Exempt Distribution made under the Guidelines for Exempt
Distribution. The Preference Shares will be offered to accredited investors and to investors whose
investment is J$10,000,000 or more and thereafter an application shall be made to the Jamaica
Stock Exchange to list the Preference Shares on the exchange using the listing method of
introduction.
117
2016 ANNUAL REPORT
225
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2016 Amounts expressed in US $000
SHAR EHOLDER INFORMATI ON
Let your imagination guide you wherever you want to go.
There are no limits to where your life can take you.
Together, we can turn the future we envision into a reality,
and accomplish any goals we set out to achieve.
SH AREHOLDER INFORMATI O N
DIVIDENDS
An interim dividend of US 2.5 cents per common share, approved for the half-year ended June 30, 2016, was paid on November 15, 2016 to the holders of
common shares, including depositary interest holders, whose names were registered on the books of the Company at the close of business on October 18, 2016.
A final common dividend of US 2.5 cents per common share, payable on May 15, 2017, was approved for the financial year ended December 31, 2016 to the
holders of common shares, including depositary interest holders, whose names were registered on the books of the Company at the close of business on April 13,
2017. The total dividend on common shares for the 2016 financial year amounted to US 5.0 cents per share.
The convertible redeemable preference shares were redeemed on July 18, 2016. A final dividend of US 1.13 cents per convertible redeemable preference
was paid on July 18, 2016 to the holders of convertible redeemable preference shares, whose names were registered on the books of the Company at the
close of business on July 8, 2016.
SHARES
The following Shareholders own more than 4% of the capital of the Company as at December 31, 2016:
Common Shares
Number of Shares
Percentage
National Insurance Board
International Finance Corporation
18,950,000
12,269,938
6.22
4.03
The total number of issued shares as at December 31, 2016 and as at December 31, 2015 is set out below
Common Shares
As at 31-Dec-16
As at 31-Dec-15
304,494,131
304,494,131
228
SAGICOR FINANCIAL CORPORATION LIMITED
LONG TERM INCENTIVE PLAN (LTI)
The Tables below show grants of restricted stock and stock options as at December 31, 2016 under the LTI for Executives.
Restricted Stock
As of December 31, 2016
Award Year
Value attributable to Stock Grant
Awards Made
and in Effect
Vested
Not Vested
Vested in 2016
2006 – 2008
2009
2010
2011
2012
2013
2014
2015
2016
US$
US$
US$
US$
US$
US$
US$
US$
US$
1.98, 2.01, 2.50
1.58, 2.50
1.60
1.48
1.53
1.15
1.075
1.05
0.86
1,302,161
1,033,058
760,026
625,787
1,024,879
1,507,918
2,601,230
2,802,877
3,552,266
1,302,161
1,033,058
760,026
625,787
1,024,879
1,507,918
1,618,824
1,521,637
720,969
0
0
0
0
0
0
982,406
1,281,240
2,831,297
15,210,202
10,115,259
5,094,943
0
0
0
0
0
147,654
330,169
526,749
720,969
1,725,541
Allocated for settlement of tax 2016
(543,017)
Total converted to shares 2016
1,182,524
2016 ANNUAL REPORT
229
Award Year
Exercise Price
of Stock Option
Awards Made
and in Effect
Vested
Exercised
Not Exercised
Not Vested
Vested in 2016
Stock Options
As of December 31, 2016
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
120,443
120,443
1,124,022
1,124,022
120,443
72,839
US$ 1.98
US$ 2.01
US$ 2.50
US$ 2.50
US$ 1.60
US$ 1.48
US$ 1.53
US$ 1.15
818,009
973,711
1,295,616
1,784,430
1,138,545
1,742,489
US$ 1.075
2,891,066
US$ 1.05
3,180,486
US$ 0.86
4,927,360
818,009
973,711
1,295,616
1,784,430
1,138,545
1,306,853
1,445,523
795,108
0
0
0
0
0
0
0
0
0
0
468,852
1,051,183
818,009
973,711
1,295,616
1,784,430
1,138,545
1,306,853
1,445,523
795,108
0
0
0
0
0
0
0
435,636
1,445,523
2,385,378
0
4,927,360
0
0
0
0
0
0
284,647
435,617
722,771
795,108
0
19,996,177
10,802,260
193,282
11,077,830
9,193,917
2,238,143
230
SAGICOR FINANCIAL CORPORATION LIMITED
ANALYSIS OF COMMON SHAREHOLDING
Common Shareholders by Size of Holding
Number of Common Shareholders by Size of Holding as at December 31, 2016 (with 2015 Comparison)
Size of Holding
Number of
Shareholders
Percentage of
Shareholders
Total Shares Held
Percentage of
Shares Held
1 - 1,000
1,001 - 2,500
2,501 - 5,000
5,001 - 10,000
10,001 - 25,000
25,001 - 100,000
100,001 - 1,000,000
1,000,001 & above
2016
2015
2016
2015
2016
2015
2016
2015
6,476
14,962
6,932
3,922
2,829
644
222
31
6,338
15,012
6,986
3,961
2,878
666
226
26
17.98
41.53
19.25
10.89
7.85
1.79
0.62
0.09
17.56
41.59
3,816,930
3,783,419
24,843,507
24,933,801
19.36
24,040,879
24,239,516
10.97
27,991,237
28,276,741
7.97
1.85
0.63
0.07
40,753,105
41,452,604
29,974,552
31,271,160
62,695,447
66,788,027
90,378,474
83,748,863
1.25
8.16
7.90
9.19
13.38
9.84
20.59
29.69
1.24
8.19
7.96
9.29
13.61
10.27
21.93
27.51
Total
36,018
36,093
100.00
100.00
304,494,131
304,494,131
100.00
100.00
2016 ANNUAL REPORT
231
Common Shareholders by Country of Residence
Number of Common Shareholders by Country of Residence and by Type as at December 31, 2016
Country
Directors, Management,
Staff, Advisors
Companies
Individuals
Total
Shareholders
Trinidad and Tobago
Barbados
Eastern Caribbean
Other Caribbean
Other
Total
96
583
104
35
60
878
%
0.27
1.62
0.26
0.10
0.17
2.42
Shareholders
585
248
35
36
5
909
%
1.62
0.69
0.10
0.10
0.01
2.52
Shareholders
%
Shareholders
%
14,725
11,113
6,963
169
1,261
34,231
40.88
30.85
19.33
0.47
3.50
95.03
15,406
11,944
7,102
240
1,326
42.77
33.16
19.72
0.67
3.68
36,018
100.00
Common Shares held by Country of Residence
Number of Common Shares Held by Country of Residence and by Type as at December 31, 2016
Country
Directors, Management,
Staff, Advisors
Companies
Individuals
Total
Shares
Trinidad and Tobago
2,130,253
Barbados
Eastern Caribbean
Other Caribbean
Other
Total
6,662,838
216,500
1,401,703
3,808,800
14,220,094
%
0.70
2.19
0.07
0.46
1.25
4.67
Shares
70,471,865
38,855,889
1,787,965
3,681,588
12,805,249
%
23.14
12.76
0.59
1.21
4.21
Shares
81,087,021
55,355,194
19,617,970
1,312,876
5,298,420
%
26.63
18.18
6.44
0.43
1.74
Shares
153,689,139
100,873,921
21,622,435
6,396,167
21,912,469
%
50.47
33.13
7.10
2.10
7.20
127,602,556
41.91
162,671,481
53.42
304,494,131
100.00
232
SAGICOR FINANCIAL CORPORATION LIMITED
ADVI SORS AND BANKER S
APPOINTED ACTUARY
Sylvain Goulet, FCIA, FSA, MAAA, Affiliate Member of the (British) Institute of Actuaries and Affiliate Member of the Caribbean Actuarial Association
AUDITOR
PricewaterhouseCoopers SRL
LEGAL ADVISORS
Allen & Overy LLP, London, United Kingdom
Carrington & Sealy, Barbados
Conyers Dill & Pearman Limited, Bermuda
Barry L V Gale, QC, LLB (Hons), Barbados
Patterson K H Cheltenham, QC, LLM, Barbados
M Hamel Smith & Co, Trinidad and Tobago
Hobsons, Trinidad and Tobago
Holman Fenwick Willan LLP, London, United Kingdom
Paul Hastings LLP, USA
Shutts & Bowen LLP, Florida, USA
BANKERS
First Citizens Bank (Barbados) Limited
CIBC FirstCaribbean International Bank Limited
RBC Royal Bank (Trinidad & Tobago) Limited
RBC Royal Bank (Barbados) Limited
The Bank of Nova Scotia
2016 ANNUAL REPORT
233
OF FICES
Sagicor Registered Office
Sagicor Life Inc.
SAGICOR FINANCIAL CORPORATION LIMITED
Sagicor Financial Centre
Clarendon House
2 Church Street
Hamilton HM11
Bermuda
Tel: (441) 295-1422
Fax: (441) 292-4720
Sagicor Corporate Head Office
1st Avenue
Belleville, St Michael
Tel: (246) 467-7500
Fax: (246) 436-8829
Antigua
Sagicor Financial Centre
#9 Sir Sydney Walling Highway
SAGICOR FINANCIAL CORPORATION LIMITED
St John’s
Cecil F de Caires Building
Wildey, St Michael, Barbados
Tel: (246) 467-7500
Fax: (246) 436-8829
Email: info@sagicor.com
Website: www.sagicor.com
Subsidiaries
SAGICOR LIFE INC
Cecil F de Caires Building
Wildey, St Michael, Barbados
Tel: (246) 467-7500
Fax: (246) 436-8829
Email: contactus@sagicor.com
Website: www.sagicorlife.com
Tel: (268) 480-5550
Fax: (268) 480-5520
Email: info_antigua@sagicor.com
Belize
Coney Drive
Belize City, Belize
Tel: (501)223-3147
Fax: (501) 223-7390
Email: info@sagicor.com
Curaçao
Schottegatweg Oost #11
Tel: (599) 9 736-8558
Fax: (599) 9 736-8575
Sagicor Life Inc Branch Offices
Email: info_curacao@sagicor.com
Barbados
Sagicor Life Inc.
Sagicor Financial Centre
Collymore Rock
St Michael
Tel: (246) 467-7500
Fax: (246) 436-8829
Grenada
TransNemwil Complex
The Villa
St George’s
Tel: (473) 440-1223
Fax: (473) 440-4169
Email: info_grenada@sagicor.com
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SAGICOR FINANCIAL CORPORATION LIMITED
SAGICOR
SSAAGGIICCOORR FINANCIAL CORPORATION LIMITED
St Lucia
Sagicor Financial Centre
Choc Estate, Castries
Tel: (758) 452-3169
Fax: (758) 450-3787
Email: info_stlucia@sagicor.com
Trinidad and Tobago
Sagicor Financial Centre
16 Queen’s Park West, Port of Spain
Tel: (868) 628-1636/7/8
Fax: (868) 628-1639
Email: comments@sagicor.com
Sagicor Life Inc Agencies
Anguilla
Manico Headquarters
Cosley Drive, The Valley
Tel: (264) 497-3712
Fax: (264) 497-3710
Curaçao
Guillen Insurance Consultants
P O Box 4929
Kaya E, Salas No 34
Tel: (599) 9 461-2081
Fax: (599) 9 461-1675
Email: chris-guillen@betlinks.an
Dominica
WillCher Services Inc
44 Hillsborough Street
Corner Hillsborough & Independence Streets
Roseau
Tel: (767) 440-2562
Fax: (767) 440-2563
Coney Drive Business Plaza
Malliouhana Anico Insurance Co Ltd
St Vincent
Sagicor Life Inc.
St Lucia
Sagicor Life Inc
C/o Incorporated Agencies Limited
Sagicor Financial Centre
Frenches
Kingstown
Tel: (784) 456-1159
Fax: (784) 456-2232
SAGICOR LIFE (EASTERN CARIBBEAN) INC.
Sagicor Financial Centre
Choc Estate Castries, St Lucia
Tel: (758) 456-1700
Tel: (758) 450-3787
Choc Estate
Castries
St Lucia
Tel: (758) 452-0994
Fax: (758) 450-4870
Trinidad and Tobago
122 St Vincent Street
Port of Spain
Tel: (868) 623-4744
Fax: (868) 628-1639 or (868) 625-1927
SAGICOR GENERAL INSURANCE INC.
P. O. Box 150
Sagicor General Insurance Agencies
Beckwith Place, Lower Broad Street
HHV Whitchurch & Company Limited Old Street
Haiti
Cabinet d’Assurance
Fritz de Catalogne
Angles Rues de Peuple et des Miracles
Port-au-Prince
Tel: (509) 3701 1737
Montserrat
Sagicor Life Inc
C/o V. Yvette Fenton-Ryan
Ryan Investments
P. O. Box 280
Brades
Montserrat
Tel: (664) 491-3403
Fax: (664) 491-7307
St Maarten
C/o Charlisa NV,
Walter Nisbeth Road #99B
Phillipsburg
Tel: (721) 542-2070
Fax: (721) 542-3079
Email: capital@sintmaarten.net
St Kitts
Sagicor Life Inc
Bridgetown, Barbados
Tel: (246) 431-2886
Fax: (246) 228-8266
Email: sgi-info@sagicorgeneral.com
Sagicor General Insurance Inc
Haggatt Hall
St Michael
Tel: (246) 431-2800
Fax: (246) 426-0752
C/o The St Kitts Nevis Anguilla Trading and
Email: sgi-info@sagicorgeneral.com
Development Co. Ltd
Central Street, Basseterre
Tel: (869) 465-9476
Fax: (869) 465 6437
Antigua
Sagicor Life Inc
Sagicor Financial Centre
#9 Sir Sydney Walling Highway
St John’s
Tel: (268) 480-5555
Fax: (268) 480-5550
Email: info_dominica@sagicor.com
P O Box 771
Roseau
Dominica
Tel: (767) 448-2182
Fax: (767) 448-5787
Willcher Services Inc
44 Hillsborough Street
Corner Hillsborough & Independence Streets
Roseau, Dominica
Tel: (767) 440-2562
Fax: (767) 440-2563
JE Maxwell & Company Limited
Linmores Building
Castries
St Lucia
Tel: (758) 451-7829
Fax: (758) 451-7271
Email: jemax@candw.lc
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SAGICOR FUNDS INCORPORATED
BARBADOS FARMS LIMITED
GLOBE FINANCE INC
Cecil F de Caires Building, Wildey, St Michael
Barbados
Tel: (246) 467-7500
Fax: (246) 436-8829
Email: info@sagicor.com
Bulkeley
St George
Barbados
Tel: (246) 427-5299
Fax: (246) 437-8873
SAGICOR ASSET MANAGEMENT INC
SAGICOR PANAMA SA
Shirley House
Hastings Main Road
Christ Church
Tel: (246) 426-4755
Fax: (246) 426-4772
Website: www.globefinanceinc.com
Cecil F de Caires Building
Wildey, St Michael Barbados
Tel: (246) 467-7500
Fax: (246) 426-1153
Email: info@sagicor.com
SAGICOR FINANCE INC
Sagicor Financial Centre
Choc Estate
Castries
St Lucia
Tel: (758) 452-4272
Fax: (758) 452-4279
Trinidad
Tel: (868) 628-1636/7/8
Fax: (868) 628-1639
SAGICOR ASSET MANAGEMENT (TRINIDAD AND
Email: info@familyguardian.com
TOBAGO) LIMITED
Sagicor Financial Centre
SAGICOR LIFE ARUBA NV
16 Queen’s Park West, Port of Spain
Fergusonstraat #106
NATIONWIDE INSURANCE COMPANY LIMITED
Email: calico@setarnet.aw
Sagicor Financial Centre
16 Queen’s Park West
Port of Spain, Trinidad
Tel: (868) 628-1636
Fax: (868) 628-1639
Email: comments@sagicor.com
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SAGICOR
SAGICOR FINANCIAL CORPORATION LIMITED
SAGICOR FINANCIAL CORPORATION LIMITED
SAGICOR
Lyder Insurance Consultants
Seroe Blanco 56A
Tel: (297) 582-6133
Ave Samuel Lewis y Calle Santa Rita
LOJ HOLDINGS LIMITED
Edificio Plaza Obarrio
3er Piso Oficina 201
Panama City, Panama
Tel: (507) 223-1511
28-48 Barbados Avenue
Kingston 5, Jamaica
Tel: (876) 929-8920(-9)
Fax: (876) 960-1927
CAPITAL LIFE INSURANCE COMPANY BAHAMAS
SAGICOR GROUP JAMAICA LIMITED
LIMITED
C/o Family Guardian Insurance Company Limited
No 1 Shirley Street & Village Road
P O Box SS-6232
Nassau, NP Bahamas
Tel: (242) 393-4000
Fax: (242) 393-1100
AHMO Plaza Building, Suites 1 and 2
Website: www.sagicorjamaica.com
Oranjestad, Aruba
Tel: (297) 582-3967
Fax: (297) 582-6004
28-48 Barbados Avenue
Kingston 5, Jamaica
Tel: (876) 929-8920(-9)
Fax: (876) 960-1927
Website: www.sagicorjamaica.com
SAGICOR LIFE JAMAICA LIMITED
28-48 Barbados Avenue
Kingston 5, Jamaica
Tel: (876) 929-8920(-9)
Fax: (876) 960-1927
SAGICOR LIFE OF THE CAYMAN ISLANDS LTD
Global House, 198 North Church Street
George Town, Grand Cayman
Cayman Islands
Tel: (345) 949-8211
Fax: (345) 949-8262
Email: global@candw.ky
SAGICOR INSURANCE MANAGERS LIMITED
SAGICOR INVESTMENTS JAMAICA LIMITED
SAGICOR FINANCE (2015) LIMITED
1st Floor Harbour Place
103 South Church Street
George Town
Grand Cayman
Tel: (345)-949-7028
Fax: (345)-949-7457
SAGICOR PROPERTY SERVICES LIMITED
78a Hagley Park Road
Kingston 10
Jamaica
Tel: (876) 929-9182
Fax: (876) 929-9187
SAGICOR RE INSURANCE LTD
Global House, 198 North Church Street
George Town, Grand Cayman
Cayman Islands
Tel: (345) 949-8211
Fax: (345) 949-8262
Email: global@candw.ky
Sagicor Bank Building
60 Knutsford Boulevard
Kingston 5, Jamaica
Tel: (876) 929-5583
Fax: (876) 926-4385
Email: options@sagicor.com
Website: www.sagicorjamaica.com
Maples Corporate Services Limited
Ugland House
South Church Street
George Town, Grand Cayman
Cayman Islands
Associated Companies
FAMGUARD CORPORATION LIMITED
SAGICOR BANK JAMAICA LIMITED
No.1 Shirley Street & Village Road
Sagicor Bank Building
60 Knutsford Boulevard
Kingston 5, Jamaica
Tel: (876) 929-5583
Fax: (876) 926-4385
Website: www.sagicorjamaica.com
SAGICOR USA, INC
4010 W. Boy Scout Blvd, Suite 800
Tampa, Florida 33607, USA
Tel: (813)-287-1602
Fax: (813)-287-7420
P O Box SS-6232
Nassau, NP Bahamas
Tel: (242) 396 4000
Fax: (242) 393 1100
Website: www.famguardbahamas.com
RGM LTD
Albion Plaza Energy Centre
22-24 Victoria Avenue
Port of Spain
Trinidad
Tel: (868) 625-6505
Fax: (868) 624-7607
SAGICOR INSURANCE BROKERS LIMITED
SAGICOR LIFE INSURANCE COMPANY
28-48 Barbados Avenue
Fax: (507) 264-1949
Email: capital1@sinfo.net
Website: www.sagicorjamaica.com
4010 W. Boy Scout Blvd, Suite 800
Tampa, Florida 33607, USA
Tel: (813) 287-1602
Fax: (813) 287-7420
4343 N. Scottsdale Road, Suite 300
EMPLOYEE BENEFITS ADMINISTRATORS LIMITED
Scottsdale, Arizona, 85251, USA
28-48 Barbados Avenue
Kingston 5, Jamaica
Tel: 1-800-531-5067
Fax: (480) 425-5150
Tel: (876) 929-8920(-9) Fax: (876) 960-1927
Website: www.sagicorlifeusa.com
Website: www.sagicorjamaica.com
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