STRENGTH
STABILITY
TRUST
201 7
ANNUAL
REPORT
Sagicor Financial Corporation Limited
STRENGTH STABILITY TRUST
For over 177 years, Sagicor has been a symbol of
strength in the Caribbean. Operating in over 23 countries,
Sagicor has total assets of $6.8 billion with capital
of $932 million. A publicly listed company with over 36,000
shareholders and listed on the Barbados Stock Exchange,
the Trinidad & Tobago Stock Exchange and the
London Stock Exchange — Sagicor is one of the most
highly regulated financial institutions in the Caribbean.
It is upon this foundation of stability and trust that we are
creating the building blocks of a better future for our team,
clients, friends and neighbours.
OUR VISION
To be a great company committed to improving the lives
of people in the communities in which we operate.
Our Values
Sagicor is Timeless, Borderless, and Colourless. These values speak to the all-
encompassing nature of our company, guiding our behaviour, procedures, business
decisions and relationships.
We are building a company for today, which, while relevant to the current time, will
continue to remain relevant for all times. Therefore we will always be innovative and
embrace change, never allowing ourselves to become staid or obsolete so that we can
retain our edge to compete in the future.
Timeless
Borderless
We view ourselves as members of one organisation, and will not be constrained by any
self-imposed physical, intellectual or cultural limitations. We will conduct our business in
a way that truly reflects this philosophy.
Colourless
We conduct our business and interpersonal relationships on that consciously high level
which creates an environment characterised by a philosophy of equitable treatment and
equal opportunity for all.
CONTENTS
06
10
14
18
22
44
58
74
82
96
106
236
About Sagicor
Chairman’s Statement
Financial Highlights
Technology & Innovation
Corporate Social Responsibility
Human Capital Report
Operating and Financial Review
Board of Directors
Corporate Governance
Executive Management
Index to the Financial Statements
• Financial Statements & Notes
Shareholder Information
• Advisors & Bankers
• Offices
2017 ANNUAL REPORT
3
ABOUT
SAGICOR
Our name and reputation draw on
strength, stability and financial prudence…
that is our heritage.
Sagicor has followed a carefully crafted business
strategy, which has seen the company transform
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. Today, operating in 23 countries,
including the USA and Latin America, Sagicor has
total assets of US $6.8 billion, and $932 million
in capital. The Sagicor Group offers a wide range
of products and services including life insurance,
annuities and group and individual health, and has
an insured base in the region of two (2) million.
Sagicor is a widely-held publicly-traded company
with over 36,000 Shareholders, and is listed on
the stock exchanges of Barbados, Trinidad and
Tobago and London.
ABOUT SAGICOR
SAGICOR –
WISE FINANCIAL THINKING FOR LIFE
traditional studies and education for those
with special needs.
“Wise Financial Thinking for Life” is far more
than a tagline. It is the heart and soul of Sagicor,
and summates why we do, what we do and how
we do it. More importantly, it is the reason our
clients choose Sagicor and stay with us. Sagicor
means “wise judgment” and has derived out of an
inspirational framework that has supported the
company for 177 years.
• Our vision outlines our commitment to
initiatives and developments which will
enhance the long-term quality of life in the
communities in which we operate. From this
perspective, we have made health a priority
area of our corporate support. As a regional
leader in the industry, we lead by example,
both within and outside of the organisation.
Sagicor’s business is based on long-term
relationships with its clients 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 clients throughout their
lives. Through local expertise and in partnership
with world-class asset managers and reinsurers,
together with sound risk management practices,
Sagicor is able to provide wise financial advice
that meets the needs of its clients.
Sagicor provides financial support and voluntary
assistance, primarily in the areas of health,
education, youth and community development
and sports, to a number of organisations
and institutions.
• We consider the value of education to be
immeasurable. We offer strong support
across the region to learning institutions
from primary to tertiary, catering to
• Our footprint spans over 23 countries
worldwide. As we grow and develop,
our presence is mirrored in each local
community. Our support for the growth
and development of people and social
infrastructure is unwavering. This is a legacy
of which we are proud.
• Nations and companies alike are built on
teamwork and sportsmanship. Sagicor
views these traits as character-building, and
through our support of sporting events,
seeks to nurture their importance across all,
races, ages and genders.
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”.
6
SAGICOR FINANCIAL CORPORATION LIMITED
2001
Acquisition of Life of Jamaica in Jamaica and
Allnation in the US
2007
OUR HISTORY
1840
Establishment of the Barbados Mutual Life
Assurance Society
2000
The acquisition of 23% interest in Life of
Barbados
1849
St Vincent branch opened
1858
Branches in Trinidad and Tobago & Grenada
opened
1861
St Kitts branch opened
1863 Antigua & Montserrat branches opened
1866 Demerara (Guyana) branch opened
2002
1868 Dominica branch opened
1896
Jamaica branch opened
1987
1993
1994
1996
1997
1998
1999
Mutual Finance Company Ltd established
• Acquisition of Travellers Portfolio and
the rebranding of Aruba, Bahamas, Belize,
Cayman Islands, Curacao, St Maarten and
Haiti to Capital Life
Establishment of the Mutual Bank of the
Caribbean, the first indigenous bank to
Barbados
Mutual Financial Services and Caribbean
Caricard Services established
Capital International Management Services
established
Establishment of Mutual Asset Management
Inc and Mutual Funds Inc
Acquisition of the Panama branch of Atlantic
Southern Insurance Company
2006
Acquisition of Island Life in Jamaica and
Nationwide Insurance Company in Trinidad
and Tobago. • The acquisition of shares in
Life of Jamaica • First AM Best Rating ‘A’
Excellent received by BMLAS and maintained
by Sagicor Life Inc
Acquisition of majority shares in Life
of Barbados. • Resolution for the
demutualisation of Barbados Mutual Life
Assurance Society was passed. • Conversion
from Barbados Mutual Life Assurance Society
to Sagicor Life Inc. • The establishment of
the holding Company, Sagicor Financial
Corporation (SFC). 45,000 policyholders
awarded shares as a result of demutualisation.
• The Initial Public Offering of Sagicor Shares,
increasing shareholders to 49,000
2003
SFC Lists on the Barbados Stock Exchange
• Sale of the Mutual Bank
2004
SFC Lists on Trinidad and Tobago Stock
Exchange
2005
Acquisition of majority interest in Pan
Caribbean Financial Services. • Acquisition of
Laurel Life and its wholly-owned subsidiary,
American Founders Life Insurance Company
in the US • Life of Jamaica acquires Cayman
General Insurance • Acquisition of 20%
of FamGuard • Acquisition of First Life
Insurance portfolio
Successful US$150 million Bond Offering on
the US market • Sagicor Life Inc assigned a
Standard and Poor’s (S&P) financial strength
rating of “BBB+” • American Founders Life
Insurance Company rebrands as Sagicor Life
Insurance Company Limited
SFC Lists on the London Stock Exchange
• Establishment of Sagicor Europe Ltd
• Acquisition of Gerling at Lloyd’s Group
in the UK • Gerling at Lloyd’s rebranded as
Sagicor at Lloyd’s • Acquisition of Byrne and
Stacey Underwriting in the UK
Rebranding of Life of Jamaica to Sagicor Life
Jamaica Limited • SFC Lists on the Jamaica
Stock Exchange • Rebranding of Byrne and
Stacey Underwriting to Sagicor Underwriting
• Acquisition of controlling interest in
Barbados Farms Limited
Sagicor Life Jamaica agrees to participate in
the Government of Jamaica National Debt
Exchange Programme • Sagicor Life acquires
the traditional life insurance policies of British
American Insurance Company Limited in the
Eastern Caribbean
SFC sells Sagicor Europe and its subsidiaries
to AmTrust Financial Services • Sagicor
Group Jamaica enters into a Sale and
Purchase Agreement to acquire RBC Jamaica
2008
2012
2013
2014
• Central Bank of Jamaica approves Sagicor
Group Jamaica’s acquisition of RBC Jamaica
• Rebranding of RBC Jamaica to Sagicor
Bank
2015
• Sagicor Celebrates its 175th Anniversary
• Successful US $320 million Bond Offering
on the international market
2016
SFC redomiciles in Bermuda and the
company name is changed to Sagicor
Financial Corporation Limited
2017 ANNUAL REPORT
7
CHAIRMAN’S
STATEMENT
Our guiding principle has always been to act wisely.
Wise financial thinking for life is what we do.
CHAIRMAN’S STATEMENT
US $932.3 million, compared to US $795.4 million
in the prior year, an increase of US $136.9 million.
Net income attributable to shareholders was
US $72.2 million, compared to US $61.7 million
in the prior year, an increase of US $10.5 million.
Earnings per common share was US 23.7¢, and
represented an annualised return on common
shareholders’ equity of 13.3% compared to 12.6%
for the prior year.
Total revenue increased to US $1,220.9 million,
compared to the prior year amount of US $1,134.1
million, an increase of US $86.8 million or 7.7%.
Net premium revenue reached US $745.6 million,
compared to US $664.0 million, an improvement
of US $81.6 million or 12.3%. Premium income
increased in all segments and benefited from the
issuance of a single premium annuity relating to
our Jamaica segment.
contracts amounting to US $19.8 million,
reflecting commissions net of gains due to
reinsurers on supporting assets in our USA
segment. Exchange gains/(losses) also showed
a loss of US $4.2 million, compared to gains of
US $12.6 million in the prior year, a reduction of
US $16.8 million. Foreign exchange movements
were affected by a strengthening of the Jamaica
dollar when compared to the United States dollar
in 2017, resulting in foreign exchange declines
in financial assets denominated in United States
dollars in our Jamaica segment. Overall, the
company experienced a gain on translation of
the Jamaica segment, which is reported in other
comprehensive income. In addition, the prior year
included exchange gains relating to declines in
the Trinidad dollar, when compared to the United
States dollar, there was no significant foreign
exchange movement, relative to this currency
in 2017.
Net investment income was US $379.2 million,
compared to US $353.4 million in the prior year,
an improvement of US $25.8 million and benefited
from higher investment gains in our international
investment portfolios.
Fees and other revenue closed the year
at US $93.7 million, compared to the prior
year amount of US $116.8 million, a decline
of US $23.1 million. There was a reduction in
commissions income on insurance and reinsurance
Total benefits closed at US $660.8 million, up
from the prior year amount of US $560.4 million.
The growth in benefits is consistent with that
of the growth in premium revenue and partially
represents increased provisions for future
benefits. Included in benefits were net costs of
US $8.5 million relating to claims exposure from
hurricane activity during the year, along with an
increase of US $14.2 million relating to the impact
of the Tax Cuts and Jobs Act rate reduction in the
United States, which came into effect in 2017.
Dr Stephen D R McNamara, CBE, LLD (Hon)
Chairman
The Sagicor Group experienced a good
performance for the 2017 financial year, with
improvement in the key areas of revenue, net
income and equity.
This performance was in the context of
contrasting economic conditions, both regionally
and internationally, where Sagicor operates.
Regionally, the Caribbean experienced modest
economic growth, but continued to engage in
fiscal consolidation through various measures
of tax increases and public expenditure cuts to
reduce high levels of public debt. Internationally,
the USA experienced growth, increases in interest
rates and a significant, but favourable change in
its tax regime for business.
Group Net Income was US $115.3 million,
compared to US $109.3 million in the prior year,
an increase of US $6.0 million. Group Equity was
10
SAGICOR FINANCIAL CORPORATION LIMITED
Expenses (including agents’ and
brokers’ commissions) closed the year at
US $436.4 million, compared to the prior year
amount of US $424.2 million, an increase of
US $12.2 million. The Jamaica Segment incurred
some non-recurring costs, together with higher
administration costs relating to the expansion of
cards and payments business.
Income taxes were US $18.6 million, compared
to US $41.7 million in the prior year, a reduction
of US $23.1 million. This was principally related
to our USA Segment. During 2017 the Tax Cuts
and Jobs Act was signed into law in the United
States, which reduced the effective corporation
tax rate. This contributed to a decrease of
US $19.9 million in income taxes and an increase in
the provision for future benefits of US $14.2 million
in the segment.
Group comprehensive income was
US $179.3 million, compared to US $96.7 million
for the prior year, an increase of US $ 82.6
million. The principal sources of the increase
were an improvement in net gains on financial
assets of US $18.7 million, resulting from marked-
to-market gains on financial assets in our
international portfolios, a positive movement
of US $38.2 million on retranslation of foreign
currency operations, resulting from a gain in the
Jamaica dollar when compared to the United
States dollar and a positive change in gains/
(losses) on defined benefit plans for employees of
US $ 37.8 million.
The discontinued operation represents our UK
business, which was sold on December 23, 2013.
The terms of the sale required Sagicor to retain
an interest in the 2011, 2012 and 2013 underwriting
years of account, subject to a limit denominated in
pound sterling. At the end of 2015, the Company
had fully provided for the contingent exposure
relating to this business (the limit). During 2017
there were positive developments in this exposure
which resulted in net income of US $10.1 million.
our financial strength. The current ratings are
as follows:
In the statement of financial position as
at December 31, 2017, assets amounted to
US $6.8 billion, compared to US $6.5 billion in
the prior year. Liabilities closed at US $5.9 billion,
compared to US $5.7 billion in the prior year.
Sagicor’s Group equity totalled US $932.3 million,
compared to US $795.4 million in the prior year;
an increase of US$136.9 million.
The Group’s debt, which is included in other
liabilities, was US $413.8 million. The debt to
capital ratio was 30.7%, down from 33.2% for the
prior year.
Sagicor has voluntarily adopted the Canadian
international capital standard, “Minimum
Continuing Capital and Surplus Requirements”
(MCCSR), and has been following this standard
since 1991. The MCCSR seeks to demonstrate
to policyholders and shareholders the capital
strength of the life insurance companies of the
Group, as a measure of its ability to meet its
long-term obligations. Canadian regulators expect
insurance companies to maintain an MCCSR ratio
of 150% and Sagicor has consistently maintained
a ratio above 175%. As at the end of the year our
MCCSR Ratio was 258%.
Sagicor is listed on the Barbados Stock Exchange,
The Trinidad and Tobago Stock Exchange and the
London Exchange. We comply with the rigorous
requirements of these exchanges.
Sagicor is rated on an annual basis by AM Best,
Standard and Poor’s Global Ratings, and Fitch
Ratings. We have been rated by AM Best since
1998, S&P since 2006 and Fitch since 2015.
These ratings are an independent measure of
• AM Best - “A-“ Excellent
• S&P - BB- stable
• Fitch - B stable
Sagicor has embarked on a programme to
provide relief from the recent hurricanes. To date,
Sagicor has made a financial contribution of US
$300,000, as well as the provision of goods and
services. Consistent with our vision to improve
the lives of the people in the communities in
which we operate, key initiatives include a school
feeding programme to students, a mobile medical
clinic and assistance to the regional airline, LIAT.
We have also partnered with The University of
the West Indies to host a Celebrity T20 Cricket
Hurricane Relief Benefit to raise additional funds
for the islands which have suffered significant
damage during the passage of hurricanes Irma
and Maria in 2017.
During 2018, the Sagicor Group will continue to
work on the corporate re-organisation to respond
to the changing regulatory environment, while we
continue to pursue opportunities for growth.
On behalf of the Board of Sagicor, I wish to
thank our shareholders and customers for their
continued support.
Stephen McNamara
Chairman
April 4, 2018
2017 ANNUAL REPORT
11
FINANCIAL
HIGHLIGHTS
We earn the trust of our clients
by delivering a solid performance.
FINANCIAL HIGHLIGHTS
SHAREHOLDER RETURNS
Amounts in US$ millions unless otherwise stated
NET INCOME 1
COMMON DIVIDENDS
62
60
75
60
45
30
15
0
15
14
18
12
6
0
BOOK VALUE PER SHARE
Amounts in US cents
204
177
300
200
100
0
2017
2016
2017
2016
2017
2016
1 from continuing operations
Basic earnings per share 1 20.4¢
19.5¢
Return on shareholder’s equity 1
11.3%
12.3%
2017
2016
NET INCOME1
REVENUE
BENEFITS
GROUP RESULTS 1
105
108
125
100
75
50
25
0
1,221
1,134
1500
1000
500
0
661
561
1000
500
0
2017
2016
2017
2016
2017
2016
1 from continuing operations
14
SAGICOR FINANCIAL CORPORATION LIMITED
ASSETS 1
OPERATING LIABILITIES
EQUITY & DEBT CAPITAL (TOTAL CAPITAL)
GROUP FINANCIAL POSITION
Amounts in US$ millions unless otherwise stated
6,805
6,532
8000
6000
4000
2000
0
5,469
5,341
8000
6000
4000
2000
0
1,346
1,190
1500
1000
500
0
2017
2016
2017
2016
2017
2016
1 from continuing operations
2017
2016
Debt to Capital 30.7% 33.2%
MCCSR 258% 249%
SAGICOR LIFE INC - NET INCOME
SAGICOR GROUP JAMAICA- NET INCOME
SAGICOR USA - NET INCOME
SEGMENT RESULTS
80
60
40
20
0
63
64
100
94
90
50
0
13
11
20
10
0
2017
2016
2017
2016
2017
2016
2017
2016
Revenue
421
411
Assets
1,953
1,928
2017
2016
Revenue
592
524
Assets
2,836 2,674
2017
2016
Revenue
159
149
Assets
1,982
1,901
2017 ANNUAL REPORT
15
TECHNOLOGY &
INNOVATION
Investing in technology to bring real value
to our clients.
TECHNOLOGY & INNOVATION
DIRECT TO CONSUMER
Direct to Consumer is a programme that
introduces innovative change to our industry.
Initially designed for the US marketplace,
SagicorNow is a new way for consumers to secure
life insurance. It is a fast, fully online experience.
US consumers can obtain life insurance coverage
up to US $1,000,000 on term or up to US
$250,000 on whole life in just 20 minutes. With
SagicorNow, getting life insurance has never
been easier. This initiative will be rolled out to the
Caribbean in 2018.
Sagicor’s investment in Information Technology
(IT) is a key component in supporting customer
satisfaction, growth, and profitability goals.
Sagicor’s IT strategy is focused on accelerating
all facets of our business and enhancing our
reputation for quality. The following are a few of
2017’s technology highlights.
ELECTRONIC APPLICATION
At Sagicor USA, the new Accelewriting platform
is a state-of-the-art automated underwriting
system for Simplified Issue products. Recognised
by Celent as the winner in the Digital and
Omnichannel category, the technical platform
provides real-time underwriting decisions within
minutes. Building on the successful introduction
in the US, this capability was deployed across
all Sagicor territories in the Southern Caribbean.
Its real-time underwriting brings the value of
insurance to our customers. In the Caribbean
context, the total elapsed time required to create
an insurance application, and move it through the
entire review and approval process is experiencing
reductions of up to 50%, with additional
improvements to come.
MOBILE APPLICATION
Sagicor Go is a new service that enables
customers to access their policy information as
well as general information on insurance from
smartphones and tablets. Available in Apple’s App
Store and Google’s Play store, Sagicor Go allows
customers and policyholders to view details and
balances for life insurance policies, view general
product information, and locate a Sagicor branch.
18
SAGICOR FINANCIAL CORPORATION LIMITED
CORPORATE &
SOCIAL
RESPONSIBILITY
We are honoured to support
the people and places in our communities.
CORPORATE &
SOCIAL RESPONSIBILITY
raise awareness of prevalent gynaecological diseases and the importance
of regular screening. Persons were further engaged with an online social
media campaign, resulting in an additional $10,000 being raised towards the
purchase of additional equipment for the hospital’s gynaecological unit.
HEALTH
SAGICOR LIFE INC, BARBADOS
HEALTHY CARIBBEAN COALITION PARTNERSHIP
In May 2017, Professor Sir Trevor Hassell, President of the Healthy Caribbean
Coalition (HCC) presented the organisation’s Strategic Plan 2017 – 2021 to
its major funder, Sagicor. The Plan assessed the work of the organisation
and regional NGOs, and also put forth strategies on how to better combat
non-communicable diseases (NCD’s) over the next five years. Since 2008,
the HCC has worked primarily with regional, non-governmental organisations
(NGOs) to align civil society action with the mandates of the Port–of-Spain
Declaration, which was ratified to address the NCD epidemic affecting the
Caribbean. September 2017 marked the 10th anniversary of the Declaration.
BREAST CANCER AWARENESS PINK WEEK
In October, as the Barbados Cancer Society marked Breast Cancer Awareness
month, Sagicor did its part to raise awareness by encouraging women to
undergo breast examinations. During “Pink Ribbon Week” the Mobile Breast
Health Clinic was hosted by Sagicor Life Inc’s Collymore Rock office in
Barbados, and both staff and customers were encouraged to visit and receive
free manual breast examinations from nurses who also provided guidance on
the technique and stressed the importance of early detection.
SAGICOR LIFE INC & SAGICOR GENERAL INSURANCE INC,
BARBADOS
GLOBE-A-THON 5K WALK & RUN TO END
GYNAECOLOGICAL CANCERS
Sagicor was the title sponsor of this initiative in 2017, launching the event
with a donation of ultrasound equipment to the Queen Elizabeth Hospital’s
Gynaecological Cancer & Diagnostic Unit. The equipment had been
purchased with funds raised from the previous year’s event. Held on the
first Sunday in September, the event saw over 2,000 Barbadians complete
the five kilometer course through the island’s capital, Bridgetown to help
SAGICOR GROUP JAMAICA
SAGICOR SIGMA CORPORATE RUN
The first quarter of the year saw the 19th staging of the Sagicor Sigma
Corporate Run with a record 25,320 participants, raising over USD $387,596
in cash and kind. Proceeds were divided among three beneficiaries. Medical
equipment valued at USD $170,542 was presented to the Spanish Town
Hospital Special Care Unit and the Mandeville Regional Hospital Neonatal
Intensive Care Unit in November and December, respectively, while the
handing over ceremony for the Bethlehem Home for Abandoned Children,
is slated for late 2018. Proceeds from the event also funded a number of
refurbishment projects, improving the ambiance at all three locations,
and a much-needed vehicle was purchased for The Bethlehem Home for
Abandoned Children.
COMMUNITY HEALTH TOUR
In keeping with its health mandate, the Sagicor Foundation impacted
eight parishes in Jamaica with its annual Community Health Tour. Utilising
the Sagicor Mobile Wellness Units, the exercise aims to provide basic and
essential healthcare services to Jamaicans who ordinarily are neither able
to access, nor afford them. Free health checks were provided to over 6,000
persons, inclusive of blood pressure, blood sugar and blood cholesterol tests,
as well as vision and eye checks.
SICKLE CELL DONATION
In August, the Sagicor Foundation donated JAD $2 million to support
the Sickle Cell Trust in its research efforts, enabling the continuation of a
research project that had generated much awareness about the disease some
years ago.
KEEPING ABREAST LUNCHEON
In October, the Sagicor Foundation also continued its support of the Jamaica
Cancer Society’s premier fundraiser, the annual “Keeping Abreast” luncheon,
which honours cancer survivors. Sagicor’s support was given in both cash and
kind. Held during Breast Cancer Awareness Month, proceeds helped support
the Cancer Society’s ongoing programme of screening and education. In
previous years, funds raised have also been used to assist women undergoing
cancer treatments.
22
SAGICOR FINANCIAL CORPORATION LIMITED
SAGICOR LIFE INSURANCE COMPANY, TAMPA, USA
WALK TO CURE ARTHRITIS
Sagicor was once again a General Sponsor of the Walk to Cure Arthritis,
held in May by the Tampa Bay chapter of the Arthritis Foundation. The Walk
to Cure Arthritis takes place annually in a number of cities throughout the
United States and the proceeds help fund research aimed at finding a cure
for the condition, America’s leading cause of disability. This was the 9th
consecutive year for Sagicor’s corporate support of the event, with a further
$2,745 being raised by staff who were inspired to form a team and participate
in the walk. Sagicor was recognised as being the #1 Corporate Fundraising
Team for 2016, taking the spotlight during the Night of Heroes Awards
Reception at the picturesque Westshore Yacht Club in July.
1
2
3
4
1. Ready Set Go! Participants at the 19th staging of the 2017 Sagicor Sigma Corporate
Run in Jamaica.
2. Journalist Janet Silvera (left) gets a health check from nurse Marlene Cox on the
Sagicor Foundation’s Health Tour in St James, Jamaica. The Sagicor Mobile Unit
toured across the island, doing free health checks at nine (9) Sagicor locations.
3. Team Sagicor, recognised as the #1 Corporate Fundraising Team at the Walk To Cure
Arthritis in Tampa.
4. Sagicor Foundation presents its JAD $2 million donation to the Sickle Cell Trust’s
former Chairman, Professor Graham Serjeant.
2017 ANNUAL REPORT
23
EDUCATION
SAGICOR LIFE INC, BARBADOS
SAGICOR ADOPT-A-SCHOOL
Sagicor continued its Adopt-A-School programme, offering support to
eleven primary schools across the island. Assistance was offered to students,
parents and teachers in the areas of financial and personal mentorship, and
beautification projects included renovations to the schools’ surroundings.
Supplies and stationery were also provided over the course of the school year,
and students benefitted from a special campaign promoting good health
and nutrition.
1
2
GIRLS IN INFORMATION COMMUNICATION TECHNOLOGY
(ICT) DAY - CARIBBEAN HACKATHON
Sagicor recognised April 27, 2017 as “Girls in Information Communication
Technology (ICT) Day”. A Gold Sponsor of the Barbados segment of the
Caribbean Hackathon, Sagicor Life Inc sponsored a team of students for the
event, which was held simultaneously in Jamaica and Trinidad. Participants
were young women from various Barbadian secondary schools and the
University of the West Indies, Cave Hill, and they assembled at the Sagicor
Cave Hill School of Business and Management to learn more about current
areas of technology and participate in activities such as app development,
coding and programming.
HEALTHY BODY INITIATIVE
In June, an initiative to raise awareness of childhood obesity and its
physiological consequences was rolled out to students participating in the
Sagicor Adopt-A-School programme. Each adopted school was given health-
related activity books at the start of the new year, and were encouraged
to start health clubs for their students. Later in the school year, a full day
of activities was held at the Usain Bolt Sports Complex at the University of
the West Indies (UWI), with the ultimate hope of inspiring a new generation
of young athletes and sports enthusiasts. Under the guidance of the UWI
Academy of Sport’s professional coaches, the students participated in cricket,
football and track and field drills and were given tours of the newly built
facilities, before wrapping up the day with a seminar on diet and nutrition.
1. Representatives from Sagicor Life Eastern Caribbean Dominica with recipients of the
Student Education Grants.
2. Children from the Adopt-A-School initiative presented with their Healthy Body Books.
3. GSAT and tertiary scholarship recipients at the Sagicor Scholarship Awards Ceremony.
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aims to foster greater understanding and appreciation of the region’s deep-
sea environment. It is based on the experiences of Dr Judith F. Gobin, lecturer
in the Department of Life Sciences, the University of the West Indies, St
Augustine, and part of the team of the EV Nautilus.
SAGICOR GENERAL INSURANCE INC, BARBADOS
WORKMANS PRIMARY
During an address at the 2017 graduation ceremony of Workmans Primary
School, Sagicor congratulated all the students and teachers of the St.
George institution for their outstanding performance over the past year, and
pledged continued support for the school. Held at Sunbury Great House, the
graduation event was sponsored by Sagicor General Insurance Inc in keeping
with the group’s mandate to give back to the community. Having adopted the
school, Sagicor staff joined with partners, teachers and parents to complete
several projects, including the upgrade of bathrooms at the school.
SAGICOR GROUP JAMAICA
SAGICOR SCHOLARSHIP AWARDS
The Sagicor Foundation disbursed over US $155,039 in awarding sixty-eight
exemplary secondary students with new scholarships in 2017. Thirty-seven
of them were rewarded for exceptional performance in the national Grade
INNOVATE BARBADOS
Sagicor supported a seminar entitled “Imagine Tomorrow – The Blue Flame
Challenge”, as part of the Barbados Investment & Development Corporation’s
annual Innovate Barbados conference. The conference examined novel
strategies and concepts needed to propel Barbados forward in the areas of
Renewable Energy, Health, Wellness and Wellbeing, Creative Industries and
Cuisine. In the Sagicor-sponsored segment, young people were challenged
to imagine what Bridgetown 2025 would be like in terms of accessibility,
commerce, food security, green space, transportation, energy, infrastructure,
waste management and security.
SAGICOR LIFE (EASTERN CARIBBEAN) INC, DOMINICA
STUDENT EDUCATION GRANTS
At the beginning of the school year, twelve students whose parents were
Sagicor policyholders were rewarded for their hard work during the previous
term. Education grants of EC $500 were presented to the six students
advancing from primary to secondary school, while grants of EC $1,000 were
presented to the six students advancing to college. The grants encouraged
continued excellence in their academic endeavours.
SAGICOR LIFE (EASTERN CARIBBEAN) INC, ST KITTS &
NEVIS
PUBLIC LIBRARY READ-A-THON
Over the Easter school break, the Charles A. Halbert Public Library in St. Kitts
& Nevis hosted a Read-A-Thon for children and Sagicor donated prizes in the
form of gift certificates from a local book store. Students were encouraged to
read as many books as possible, and their recall and understanding of what
they read was evaluated.
SAGICOR LIFE INC, CURACAO
GIVING BACK TO BONAM
In September 2017, Sagicor donated 10 laptops to the Bonam Homework
Centre, replacing computer equipment previously stolen from the centre.
In keeping with its commitment to education, Sagicor staff partnered with
the team at the Bonam Centre to offer a computer literacy programme, and
volunteered to give their time on a weekly basis over a six-month period.
SAGICOR LIFE INC, TRINIDAD & TOBAGO
DEEP SEA WONDERS OF THE CARIBBEAN
In January 2017, Sagicor was a proud sponsor of the ‘Deep Sea Wonders of
the Caribbean’ educational video series and book, produced by the National
Institute for Higher Education, Research, Science and Technology. The series
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2017 ANNUAL REPORT
25
Six Achievement Test (GSAT), while thirty-one others received awards for
their academic performance, community involvement, volunteerism, strong
leadership potential and financial need. The GSAT scholarship recipients
included children of clients, team members and members of the Jamaica
Defence Force. Scholarships were also awarded to the 2017 Champion
boy and girl from the Jamaica Teachers’ Association/Sagicor National
Athletics Championship. Receiving almost US $2,000 each per year to cover
tuition fees, the tertiary scholars were selected from some of Jamaica’s
top institutions, including the University of the West Indies; University of
Technology Jamaica; Mico University College; the Caribbean Maritime
Institute; Northern Caribbean University; University of the Commonwealth
Caribbean, and the Edna Manley College of the Visual and Performing Arts.
ADOPT-A-SCHOOL
Sagicor Foundation’s Adopt-a-School programme was re-launched in
October in the child-friendly and festive Jamaica Pegasus Ballroom. This
initiative aided infrastructural improvements at three rural basic schools,
all with an aim of creating a comfortable environment for the toddlers. The
newly adopted schools were the Haughton Grove Early Childhood Institution
in Hanover, the AME Basic School in Clarendon, and the D’Frank Early
Childhood Institution in Manchester. The Foundation hosted various activities
at the schools throughout the academic year, and during the Christmas
season the students were feted and given toys. Students from other adopted
schools across the island were also given Christmas treats.
READING IS COOL
In May, during Child month, the Sagicor Foundation once again staged its
second “Reading is Cool” event at the Hope Zoo, working in partnership
with Lasco. Over 150 children from seven early childhood institutions and
primary schools across Jamaica enjoyed a day of fun, frolic and ‘edutainment’.
The students, aged five to twelve, hailed from the Bath Early Childhood
Institution, Westmoreland; Glendevon Primary & Junior High School, St.
James; Maranatha Basic School, Kingston; New Day Primary School, Kingston;
Rollington Town Primary School, Kingston; Small Treasures Child Care,
Kingston; and Treadlight Primary School, Clarendon.
1. A student from the AME Basic School greets Christopher Zacca, President and CEO of
Sagicor Group Jamaica, while Chairman of the Sagicor Foundation, R Danny Williams
looks on during the launch of the 2017/2018 Sagicor Foundation Adopt-a School
programme.
2. Students from Small Treasures Daycare are deeply interested in the story being read
by Sherika Nelson, a Sagicor team volunteer at Sagicor’s ‘Reading is Cool’ event.
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3. PCA Scholarship recipients with Bart Catmull (left), President and Chief Operating Officer, Sagicor USA, during the cheque
presentation at the start of the Tampa Bay Rays vs Kansas City Royals Major League Baseball game.
SAGICOR LIFE INSURANCE COMPANY, TAMPA, USA
POSITIVE COACHING ALLIANCE
Sagicor is a founding member of the Tampa Bay Chapter of the Positive
Coaching Alliance (PCA), a non-profit organisation dedicated to developing
better athletes and better people by providing resources to high school
coaches, parents, administrators and student-athletes. In February, the PCA
of Tampa Bay hosted a Triple-Impact Competitor® Scholarship event in
downtown Tampa, following which, twenty-five high school student-athlete
seniors from the area were selected as finalists and introduced to their
designated PCA mentors. The inclusion of PCA mentors is a new component
of the scholarship program.
In May, an on-field presentation was held before the start of the Tampa
Bay Rays vs Kansas City Royals Major League Baseball game, during which
Sagicor presented a cheque for US $50,000 to cover awards of $2,000
each for the 25 PCA scholarship finalists. Following the presentation, the
scholarship recipients, their families, and friends watched the game from a
fully hosted hospitality suite.
STEP UP FOR STUDENTS
Sagicor was once again a proud partner of “Step Up for Students”,
contributing US $100,000 in tax-credited contributions to expand
opportunities for underprivileged families across Florida. Seventeen
scholarships were funded for the 2016-2017 school year in support of a state-
approved non-profit Scholarship Funding Organisation that helps administer
both the Personal Learning Scholarship Account (PLSA) for special needs
students, and the Florida Tax Credit Scholarship Programme, which is an
income-based scholarship. Demand for these scholarships remains high in
Florida, due in a large measure to the effectiveness of the programme.
LUAU, LUNCH AND LOOT
The ‘Tropical Team’ from Sagicor’s Tampa office hosted a Luau-style feast
and 50/50 raffle, raising US $851.19 for the Hillsborough County Education
Foundation. Luau guests dressed in tropical attire befitting the theme, while
enjoying music and games throughout the celebration
BT WASHINGTON HOLIDAY PARTY
Sagicor held its annual holiday party for the third-grade class of BT
Washington Elementary at the public library next door to the school.
Sagicor staff members started the day by packing up gifts for the children,
transporting them and then decorating the library ballroom where the
party was held. Later in the day, the staff served lunch to approximately 105
students and their teachers, also organising a DJ for entertainment.
2017 ANNUAL REPORT
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HILLSBOROUGH EDUCATION FOUNDATION
In July, staff from the Tampa office spent time at the Hillsborough Education
Foundation’s Teaching Tools Store which provides free school supplies to
economically disadvantaged students attending designated Title I schools.
Currently, 149 of the 263 public and charter schools in Hillsborough County
qualify for the Title I designation and the store served 140 of them. The
Teaching Tools Store is stocked with donations from the community, using
dedicated volunteers to sort donations, stock shelves and assist teachers in
procuring supplies to take back to their classrooms for the children.
SAGICOR LIFE INSURANCE COMPANY, PHOENIX, USA
SAGICOR INTERNSHIPS
Sagicor continued its annual Actuary Internship programme, recruiting
Jeremy Ryan and Kimiko Inouye in 2017. They both attended the ASU
Actuarial Science Career Day in February as part of a wider recruitment
campaign, with Jeremy representing Sagicor on a panel of actuarial analysts
who shared their experiences in starting careers in Phoenix. Other Sagicor
representatives interacted with students as well, promoting the benefits of
interning with Sagicor. Sagicor interns from previous years who also took
part in the event included Shea Ingram (Sagicor intern Fall 2015); Hieu Tran
(Sagicor intern Fall 2016); and Julie Tang (Sagicor intern Spring 2016). Jeremy
Ryan is now a full-time Sagicor Actuarial Analyst.
ARIZONA LUTHERAN ACADEMY FUNDRAISING GALA
In March, Sagicor became a first-time sponsor of the Arizona Lutheran
Academy’s (ALA) 6th Annual Benefit Gala, which provides tuition assistance
and supplies non-budgetary items for the high school. Donated items such
as gift baskets, craft beer, wine, dream vacation packages and a tour of the
Samuel Adams Brewery in Boston were auctioned and outright donations
were also made, helping the charitable event to raise nearly US $40,000. The
gala was considered a tremendous success.
ANNUAL BACK TO SCHOOL CLOTHING DRIVE
Thirty-six employees from Sagicor’s Scottsdale and Mesa Riverview offices
donated over two hundred and sixteen hours to the annual Back to School
Clothing Drive for children of low-income families, held at the Grand Canyon
University Arena. During the event, staff assisted with registering students
and distributing badges; stuffing and distributing backpacks; escorting
students through the various departments; and serving as “personal
shoppers” to ensure that shoes and clothing items fit each student. The
recipients were children from the area, ranging from kindergarten through
sixth grade.
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ADOPT-A-CLASSROOM SCOTTSDALE
Staff from the Scottsdale office had their annual Adopt-a-Classroom event,
visiting a second-grade class at the Wilson Elementary School in downtown
Phoenix. Sagicor spent approximately US $90 on each student, enabling
each one to receive toys from their ‘Wish List’ to Santa along with clothes,
a coat or jacket, and a pair of shoes and socks. During the event, the pupils
received a snack and juice box while listening to Santa read stories. Most of
the students at Wilson are from low income families and some are homeless,
and each year Sagicor volunteers eagerly await the children’s letters so that
they can begin shopping.
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1. Volunteers from Sagicor’s Tampa office sorting stock for the Hillsborough Education
Foundation’s Teaching Tools Store.
2. Students trying out their new laptops donated by the Giving Back to Bonam initiative
in Curaçao.
3. School Children are assisted by a Sagicor volunteer at the annual Back to School
Clothing Drive in Arizona.
4. Sagicor Interns at the ASU Actuarial Science Career Day in Arizona.
2017 ANNUAL REPORT
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YOUTH & COMMUNITY DEVELOPMENT
SAGICOR LIFE INC, BARBADOS
CLASSICAL BEST OF YOUTH CONCERT
Sagicor’s investment in youth development and culture in Barbados was
demonstrated through its sponsorship of the “Classical Best of Youth Concert
V” event in December. Organised by the Rotary Club of Barbados South, this
was the fifth installment of the classical music concert and was entitled. “Pan
and A Minor”. Musical selections by the Barbados National Youth Symphony
Orchestra were featured, along with those from a number of trained vocalists
and steel pannists.
SAGICOR LIFE (EASTERN CARIBBEAN) INC, ST LUCIA
TELEVISION TRIBUTE TO GOVERNOR GENERAL OF SAINT
LUCIA
In March, Sagicor sponsored the television premiere of a locally-produced
biography on Dame Pearlette Louisy, Governor General of St Lucia. At the
time of her retirement on December 31, 2017, Dame Louisy was the longest
serving Governor General in the Commonwealth. The television programme
aired on four local stations, and was also broadcast over additional stations in
the region, the United States and the United Kingdom.
SAGICOR LIFE (EASTERN CARIBBEAN) INC, DOMINICA
PHENOMENAL WOMAN
In January, Sagicor participated in the 8th Phenomenal Caribbean Women
Symposium, held in Cabrits National Park. This occasion provided a unique
opportunity for Sagicor representatives to engage participants, and share
financial solutions available to them in their professional environment.
SAGICOR LIFE (EASTERN CARIBBEAN) INC, CURAÇAO
VILLA HELENA
In December, Sagicor helped the Villa Helena guest house to complete work
on their greenhouse. Villa Helena provides accommodation for people with
mental and/or physical disabilities, enabling them to receive short-term care
away from home thereby giving their caregivers a brief respite. Through the
efforts of Sagicor staff, a brick path was installed, a water-resistant wooden
table was built, and fruits and vegetables were planted. Staff also cleaned a
birdcage and donated new birds, bringing joy to residents of the guest house.
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SAGICOR FINANCIAL CORPORATION LIMITED
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SAGICOR GROUP JAMAICA
LABOUR DAY
On May 23rd more than 400 Sagicor volunteers were involved in various
Labour Day projects across the island. The teams successfully enhanced
the learning environment in ten schools, undertaking structural repairs
to buildings; fencing; painting; landscaping, and generally beautifying
the compounds. Projects were completed at Bigswood Primary School,
Mountainside District, St. Elizabeth; Rollington Town Primary School,
Kingston; Colin’s Close Basic School, Kingston; D’Frank Early Childhood
Institute, Greenvale, Mandeville, Manchester; May Pen Unit for the Deaf, May
Pen, Clarendon; Montego Bay Autism Centre, Montego Bay, St. James; Vision
Academy, Tucker District, Montego Bay, St. James; Naggo Head Primary
School, Portmore, St. Catherine; Chantilly Gardens Early Childhood, Chantilly
Gardens, Savanna-Lar-Mar, Westmoreland, and Ocho Rios Primary School,
Ocho Rios, St. Ann.
RELAY FOR LIFE
In July, the Jamaica Cancer Society’s annual Relay for Life event was
supported, with more than 300 Sagicor team members and their relatives
numbering among the participants. The event recognises and pays tribute
to cancer victims and survivors, fostering awareness about the disease. The
event was held at the Police Officer’s Club.
IMAGINE AWARDS
The inaugural “Sagicor Imagine Awards” were introduced in 2017 to assist
promising young Jamaican entrepreneurs who either own an existing
business, or who have developed a new business idea. It aimed to encourage
creativity and entrepreneurial aptitude and entrants were asked to submit a
well-articulated business plan outlining their business idea or concept, growth
strategy and the funds required. Winners were presented with trophies and
money to invest in their businesses. First place winner, Invitokens received
a Sagicor Bank SME account valued at JAD $500,000, while second place
winner, Billodex Limited received JAD $300,000. Third place finisher Castor
Field Farms received JAD $150,000. The contestants made pitches to a
judging panel which included some of Jamaica’s leading business minds, such
as Sagicor Group Jamaica’s former President and CEO, Richard Byles, and
Chairman Emeritus R Danny Williams.
2017 ANNUAL REPORT
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SAGICOR LIFE INC & SAGICOR GENERAL INSURANCE INC,
TRINIDAD AND TOBAGO
FLOOD RELIEF
Sagicor Life Inc and Sagicor General Insurance partnered to launch “Our
Brother’s Keeper”, a campaign devoted to assist families affected by the
unprecedented rains and floods that affected southern and north-eastern
Trinidad during the week of October 15th. The initiative saw care packages
of cleaning supplies being delivered later that month to 160 families in
the affected communities of Avocat, Vega de Oropouche, Sangre Grande,
and Mayaro.
1. A Sagicor staff member pots soil to begin replanting the greenhouse at Villa Helena.
2. Volunteers from Sagicor’s Trinidad office handing over a cleaning supplies package to
Sangre Grande residents affected by floods.
3. Team Sagicor excitedly complete laps around the track at the 2017 staging of Relay for
Life.
JAMAICA ASSOCIATION FOR THE DEAF
The Sagicor Foundation also donated JAD $4 million to the Jamaica
Association for the Deaf (JAD) in September, helping to establish a
scholarship fund in honour of the late Herbert Hall. Hall served the association
for over 50 years prior to his death last year. Having also served as chairman
of the JAD in the 1960’s, Hall is widely recognised as one of the insurance
industry’s stalwarts, having co-founded Life of Jamaica, now Sagicor
Life Jamaica.
SAGICOR LIFE INSURANCE COMPANY, TAMPA, USA
CATHOLIC FOUNDATION EVENT
The Tampa Career Agency participated in the Tampa Bay Catholic
Foundation’s, “A Gift from the Heart” celebration. The purpose of the event
was to raise scholarship funds for the benefit of students attending Tampa
Bay area Catholic Schools. A formal dinner and presentation was held at the
Hilton Hotel in Downtown Tampa, featuring Herm Edwards, former NFL star
and current sports announcer, as the keynote speaker. The Tampa Career
Agency worked with the Catholic Foundation to provide Sagicor products to
those parishioners who made donations to the church.
pallets of sod and planting various shrubs to adorn the property. The Jeon-
Kim family, originally from North Korea, was scheduled to move into their new
home at the end of the month.
One early October morning, a team of Sagicor staff members also helped
Habitat for Humanity by doing some landscaping and touch ups on the new
home being prepared for Leo Mejia on Kesler Lane. The team shoveled piles
of stones, dug holes for plants, installed and repaired irrigation and covered
the front yard with landscaping rocks. Over six trees and several plants were
installed. Work was also done in the kitchen, where painting was done, and a
new countertop and vent covers installed.
JOHNS HOPKINS ALL CHILDREN’S HOSPITAL
Each year Sagicor staff members join with Rays players to conduct a series of
hospital visits to the Johns Hopkins All Children’s Hospital in St. Petersburg,
Florida, giving away Sagicor-branded baseball pillows on each occasion. Rays
players also take the opportunity to give out autographed baseball cards to
the young patients. These “Kids Spirit Day” visits bring smiles to the brave
young patients and are always appreciated by the parents and hospital staff.
HABITAT FOR HUMANITY
In June, a group of volunteers from the Tampa office met at a Habitat build
site in the Citrus Park area of the city to work on the future home of the
Jeon-Kim family. The home was approaching the final stages of construction
and the team of Sagicor volunteers focused on landscaping, laying seven
In May, Sagicor staff members joined with Tampa Bay Rays shortstop Daniel
Robertson and catcher Wilson Ramos for the first of the year’s four hospital
visits. The second visit took place in June, where Rays pitchers Tommy Hunter
and Danny Farquhar, along with Raymond the mascot, visited with children,
parents and staff for approximately two hours. During this visit, some patients
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received complimentary Rays’ tickets, and Tommy Hunter played some make-
shift baseball with an eager young patient anxious to show off her skills.
On the third occasion, shortstop Matt Duffy, outfielder Mikie Mahtook and
Raymond the mascot were accompanied by Sagicor staff members, spending
approximately two hours at the hospital. Mahtook made special visits to
children who had recently undergone bone marrow transplants, donning a
fresh disposable gown, mask and rubber gloves before entering each room.
In August, the Rays made their final visit for the year, and Sagicor staff
members, Rays pitchers Nathan Eovaldi and Jake Faria made their rounds
in the hospital, leaving gifts, autographs, and big smiles with the patients,
families, and nurses. Raymond the mascot posed for selfies with Faria and
friends, while Eovaldi interacted with as many patients as possible, while
observing the strict no-contact policies.
4
In December, Sagicor participated in the 10th Annual “US 103.5 FM Cares
for Kids” radiothon, raising a total of $406,488 for the Johns Hopkins All
Children’s Hospital. The 2017 event saw several Tampa staff members working
the phone banks, accepting donations and pledges from callers. One Sagicor
employee went on air to present the company’s $10,000 donation, also taking
the opportunity to talk about Sagicor and its community activities. This
was the ninth consecutive year that Sagicor had participated in either the
hospital’s telethon or radiothon, donating an accumulated total of $90,000.
The hospital is part of the Children’s Miracle Network.
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Tampa staff members attending their Sagicor holiday party were asked to
donate an unwrapped gift appropriate for a teenager. The gifts were then
delivered to Johns Hopkins All Children’s Hospital just before the holidays
and added to other gifts being collected by the hospital for distribution to
patients on Christmas Day.
RAYS PARTNER LUNCH
Sagicor is a proud partner of the Tampa Bay Rays, and as Sagicor’s largest
partnership, the Tampa Bay Rays provides Sagicor with consistent exposure
for seven months out of the year. The Tampa Bay Rays hosted a Partner
Lunch aboard the Yacht StarShip, which featured an address by Rays
President, Brian Auld. He thanked the attendees for their partnerships and
gave an update on what might be expected from the team moving forward.
A Q&A session followed, and there was a meet-and-greet with players Steven
Souza Jr., Chase Whitley and Álex Colomé. The highlight of the event came
when a member of the Sagicor team had the winning raffle ticket and was
presented with the top prize of a baseball jersey signed by former Rays third
baseman Evan Longoria.
1. Team Sagicor under instruction for the landscaping of a home for the Jeon-Kim Family
as part of a Habitat for Humanity Project.
2. Sagicor Group Jamaica’s President and Chief Executive Officer, Christopher Zacca
(left) and Sagicor Foundation Chairman, R Danny Williams (second left) present a
cheque for JAD $4 million to Iris Soutar, Executive Officer at the Jamaica Association
for the Deaf and Christopher Williams (right), Chairman of the Jamaica Association for
the Deaf.
3. Tampa Bay Rays player, Nathan Eovaldi, sharing a warm hug during a visit to Johns
Hopkins All Children’s Hospital.
4. Team Sagicor USA at the Rays Partner Lunch.
2017 ANNUAL REPORT
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the ‘Bagel Blowout’ in the second week. As an added bonus to buying the
delicacies, for every dollar donated, participants chose a raffle ticket from one
of six different raffle options.
HABITAT FOR HUMANITY
All Sagicor locations in the USA are active in their local Habitat for Humanity
chapters. Over the years, volunteers have performed many different jobs and
the tradition was continued in April, when staff worked on a new-build project
of three-story townhouses, wearing hard hats and carrying hammers and
electric drills. Their task for the day was to install dry-wall on various levels of
the units.
SALVATION ARMY WATER DRIVE
‘Team 2’ from the Scottsdale office raised money for the Salvation Army
Water Drive through its 50/50 raffle, with the grand prize winner taking
home half of the pot. USD $1,024 was collected as a result of the raffle, with
USD $512.00 being donated to the Salvation Army. The Salvation Army’s
Extreme Heat Emergency Project was launched in the summer of 2005,
after a prolonged heat wave resulted in the deaths of twenty people in the
Metropolitan Phoenix area. During the summer months, eleven hydration
stations were set up to provide bottled water, sunscreen, moisturiser with
SPF, lip balm, hats, bandanas, cooling towels and sun safety information for
the homeless and less fortunate. Monetary donations were also provided
through the project.
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TAMPA CHAMBER OF COMMERCE
Tampa Career Agents attended a networking reception organised by the
Tampa Chamber of Commerce to honor the contributions of senior enlisted
members of the military residing in the area. A member of the Chamber of
Commerce, Sagicor purchased ten tickets to support the event, held on the
MacDill Air Force Base. For each civilian ticket purchased, a senior enlisted
member received a complimentary ticket.
METROPOLITAN MINISTRIES
In August, a group of Tampa staff made its way to Metropolitan Ministries to
sort a warehouse full of donated school supplies and prepare back-to-school
packs for local low-income Hillsborough children. The Sagicor volunteers
ensured the quality of the items and assisted with the distribution to those
in need.
99.5 WQYK GUITAR PULL
Sagicor was a sponsor of the 3rd annual Guitar Pull concert presented by
Tampa country radio station, 99.5 WQYK FM at the Straz Center for the
Performing Arts in downtown Tampa. The Guitar Pull was a unique concert
experience, featuring a host of artists on stage at the same time, taking turns
performing songs and swapping stories about the unique experiences they
have had during their careers. Featured artists included Big & Rich, Jon Pardi,
Chris Jenson, Joe Nichols, High Valley and Danielle Bradbery. As part of its
sponsorship, Sagicor provided free valet parking for the first 500 persons
arriving by car, and Tampa Career Agents were able to promote Sagicor
and its products prior to the show and during intermission. Sagicor also
organised a draw, with the prize being a free Martin Guitar autographed by
the performers.
COMMUNITY SERVICE WALL
The Tampa office recently established a community service wall to highlight
the corporate and social responsibility activities undertaken in their
community. Displayed on the wall were certificates and plaques presented to
Sagicor for its participation in various community events and its corporate
donations to organisations. Another feature of the wall was a collection of
photos featuring staff members involved in community service projects.
SAGICOR LIFE INSURANCE COMPANY, PHOENIX, USA
BREAKFAST BONANZA STAFF FUNDRAISER
The Scottsdale office kicked off their staff fundraising efforts with a series
of breakfast-themed events. The ‘Sagicor Bakery Store’ team offered Dunkin
Donuts and homemade cookies during the first week of March, followed by
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PHOENIX CHILDREN’S HOSPITAL GIVE-A-THON
Now in its 17th year, the annual Phoenix Children’s Hospital (PCH) Give-A-
Thon remains the top fundraiser of its kind in the whole country, successfully
collecting over US $1.66 million in donations over a nineteen-hour period.
Sagicor maintained its usual support to PCH in 2017, donating both funds and
volunteer time to the event. Staff from the Scottsdale office volunteered to
work as greeters, also manning the phone bank, answering calls and taking
donations. The funds raised were donated to the hospital’s Hope Fund which
helps finance research projects, new clinical programmes and technology.
It also enables the hospital to recruit world-renowned physicians, funds
child- and family-friendly services and provides healthcare to children in the
community who are in need.
PHOENIX CHILDREN’S HOSPITAL GOLF TOURNAMENT
Sagicor was a proud sponsor of the 19th Annual Phoenix Children’s Hospital
Golf Tournament Fundraiser. The tournament was a 4-person scramble with
fun activities at every hole. Additionally, Sagicor sponsored a hole to help in
support of this great cause.
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SAGICOR LIFE INSURANCE COMPANY, OKLAHOMA, USA
OKLAHOMA REGIONAL FOOD BANK
Volunteers from the Oklahoma City office gave two days of service to
the Oklahoma Regional Food Bank, helping to assemble meals for the
Food Bank’s Kids Café. Students across the Oklahoma City metro area
enrolled in after-school programmes received meals from the Kids Café,
representing more than 37 percent of the Regional Food Bank’s emergency
food recipients. In previous years, the Regional Food Bank’s Food for Kids
programme distributed almost 3 million meals to more than 37,700 children.
1. Sagicor USA’s Community Service Wall in the Tampa office.
2. Team Sagicor Arizona at the Phoenix Children’s Hospital Give-a-Thon.
3. Sagicor volunteers from the Oklahoma office at the Regional Food Bank.
2017 ANNUAL REPORT
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SPORT
SAGICOR LIFE INC, BARBADOS
UNIVERSITY OF THE WEST INDIES (UWI) GAMES
In May 2017, Sagicor sponsored the 2017 University of the West Indies
(UWI) Student Games at the Usain Bolt Sports Complex. The nine days of
competitive events, in which the region’s top student athletes showcased
their talents, attracted hundreds of athletes, officials and supporters from
across the Caribbean.
NATIONAL SPORTS COUNCIL SUMMER CAMP
During the months of July and August, the Barbados National Sports Council
once again hosted a Sagicor sponsored summer camp for children aged eight
to sixteen, offering over twenty sports disciplines at various locations across
the island. The camp featured workshops and special visits, and in 2017 there
was a special session with former Barbadian Olympian and swimmer, Lani
Cabrera. Cabrera, who represented Barbados at the 2016 Summer Olympics
in Rio, Brazil, shared her journey to the Olympics with enthusiastic campers,
stressing the importance of setting goals, sacrifice and determination to
achieve one’s dreams. Campers also benefited from a session with recognised
sports nutritionist, Kimberley Rudder, who educated the children about
proper diet and nutrition.
NATIONAL SPORTS COUNCIL YOUTH BASKETBALL TOUR
Sagicor provided financial support to assist twenty-four junior basketballers
in reaching their fund-raising goal so they could attend the Dwight &
Sheryl Howard Foundation Basketball Summer Camp in Atlanta, Georgia.
Participants in the National Sports Council’s basketball development
programme, the junior players received training, mentorship and personal
enrichment during the seven day summer camp which was founded by the
parents of current NBA player, Dwight Howard Jr. Although the National
Sports Council covered part of the cost, additional fund-raising efforts had to
be undertaken to meet the full cost of the trip.
SAGICOR LIFE (EASTERN CARIBBEAN) INC, ST KITTS &
NEVIS
INTERSCHOOL ATHLETIC CHAMPIONSHIPS
Sagicor continued its commitment to youth athletics with the sponsorship of
the 41st edition of the Inter-School Championships at the Kim Collins Stadium
in St Kitts. Top secondary school athletes competed, as close to 431 athletes
from twelve tertiary and secondary institutions came together to create the
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SAGICOR FINANCIAL CORPORATION LIMITED
largest inter-school event ever to take place in the twin-island nation. The
annual athletic competition is the preeminent national event for amateur
student athletes in the federation.
SAGICOR LIFE INC, BELIZE
SAGICOR PHOENIX WALK AND RUN
In September, the Sagicor Phoenix Walk/Run was held, with the 5K course
beginning and ending at Sagicor’s offices at Coney Drive, Belize City. The
event supported both the Kidney Association of Belize, and the Belize
Diabetes Association, giving participants an opportunity for personal
rejuvenation. The event also served to sensitise Belizeans to ways to avoid
kidney disease, while also promoting proper management and care of
persons living with diabetes.
SAGICOR LIFE INC, TRINIDAD & TOBAGO
SAGICOR ST ANDREWS TOURNAMENT
The Sagicor St Andrews 17th Invitational Golf Tournament took place in April,
attracting over 100 golfers to the greens. Proceeds from the event supported
the Downs Syndrome Family Network (DSFN), whose focus is on providing
parents or caregivers of persons with Downs Syndrome with the resources,
support and answers they need to educate and develop the full potential of
these individuals over their lifetime.
1
2
3
1. Olympian swimmer, Lani Cabrera, with
swimming students at the National Sports
Council Summer Camp in Barbados.
2. Athletes sprinting for the finish line at the
Interschool Athletic Championships in St Kitts.
3. The Sagicor management team flank the
winners of the seven flights of the two-day
Sagicor St Andrews Invitational Golf
Tournament in Trinidad.
4.. And they’re off! Runners at the starting line for
the second annual Phoenix Walk Run, outside
Sagicor’s Coney Drive office, Belize City.
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2017 ANNUAL REPORT
37
SAGICOR PHOENIX WALK AND RUN
In April 2017, thousands participated in the second annual Sagicor Phoenix
Walk and Run which raised TTD $100,000 for the Dyslexia Association and the
Downs Syndrome Family Network, with each charity receiving $50,000. His
Worship, The Mayor of Port-of-Spain, Joel Martinez, blew the starting horn for
the one lap around the Queen’s Park Savannah. Runners were treated to lighting
displays and the sounds of tassa and steelpan at various points along the route,
SAGICOR JUNIOR LAWN TENNIS TOURNAMENT
In June, Sagicor continued its sponsorship of the 15th Sagicor Junior Lawn
Tennis Tournament at the Trinidad Country Club, Maraval, where more than
90 junior players took part.
1
2
RED STAR UNDER-10 TOURNAMENT
Sagicor hosted the fourth annual Red Star under-10 Tournament, in addition
to the Junior Lawn Tennis Tournament. This competition is an introductory
beginners’ tournament, whereby the siblings of participants from the junior
competition are encouraged to enter.
SAGICOR GROUP JAMAICA
JTA/SAGICOR PRIMARY, ALL-AGE AND JUNIOR HIGH
CHAMPIONSHIPS
Through a partnership with the Jamaica Teachers’ Association (JTA), the
Sagicor Foundation provided approximately US $62,015 in sponsorship toward
the 34th staging of the Primary, All-Age and Junior High School National
Athletics Championships. An energetic, two-day athletics competition, the
June meet allowed over 1200 students in fifty-two track and field activities to
showcase their athletic prowess at the National Stadium. Sagicor also provided
over 200 team member volunteers to ensure the smooth execution of the two-
day event, with the Sagicor Foundation offering two five-year scholarships at
the secondary level to the Champion boy and girl of the meet.
SAGICOR LIFE INSURANCE COMPANY, TAMPA, USA
RAYS FAN FEST
As a major sponsor of the Tampa Bay Rays, Sagicor featured prominently
during their annual Fan Fest at Tropicana Field, drawing approximately
20,000 fans. In addition to Sagicor’s branded signage behind-the-plate, in
the concession stand and on the outfield wall, Sagicor also conducted the
“Salute to Education” in-game promotion, while the Tampa Career Agents
in the Sagicor-branded tent registered individuals for their chance to win an
autographed Kevin Kiermaier game jersey, major league baseball memorabilia,
38
SAGICOR FINANCIAL CORPORATION LIMITED
3
and Sagicor-branded items. Sagicor sponsored other aspects of the Fan
Fest, such as the Coaches’ Clinic, the High Five Station and a Run the
Bases competition.
LIGHTNING BOLT RUN
Sagicor was the proud sponsor of the Tampa Bay Lightning’s 16th Annual
Bolt Run in March, which saw approximately 2,200 runners taking part in
the 5K, 5 Mile, and 1 Mile Family Fun events. Career Agents Morris Windless
and Magnos Beckett represented Sagicor at the event, manning the
Sagicor-branded tent and giving out Sagicor branded foam hockey pucks
and water bottles. They also were available to discuss Sagicor products
and services with interested persons. Proceeds from the race were shared
between the Lightning Foundation and local charities. Runners enjoyed a
post-race party on the arena’s plaza and received tickets to the Lightning’s
NHL Hockey game played later that evening.
1. Host, Sunny Bling, engages runners and walkers at the Sagicor Phoenix Walk Run, at
the Queen’s Park Savannah, Port-of-Spain.
2. A young tennis player gets ready to return a volley during the 14th edition of the
Sagicor Junior Tennis Tournament in Trinidad.
3. The Sagicor Booth at the Rays Fan Fest, Tropicana Field in Tampa.
4. Young athletes race to the finish line at the JTA/Sagicor National Athletic
Championships in Jamaica.
5. Tampa Career Agents engaging visitors to the Sagicor Booth before the 16th Annual
Lightning Bolt Run.
4
5
2017 ANNUAL REPORT
39
GOLFING WITH THE KNIGHTS OF COLUMBUS
Sagicor supported the Knights of Columbus charitable golf outing, raising
funds to support the less fortunate in the community. The outing raised over
$10,000 and an initial $5,000 cheque was provided to the St Vincent de Paul
charitable organisation, one of the groups supported by the fundraising.
BIG LEAGUER FOR THE DAY
During April, two members of Sagicor USA were in a group of approximately
50 Tampa Bay Rays corporate sponsors, and participated in what has become
the annual “Big Leaguer for a Day” event. Participants experience a day in
the life of a Major League ballplayer, starting off by dressing out in an official
Tampa Bay Rays uniform, complete with their last name on the back of the
jersey. Throughout the day, the group visited several skills stations where
they benefitted from hitting drills; batting practice; pitching; fielding pop-
ups and fly balls in the outfield, and taking infield grounders. After a lunch of
traditional ballpark food favourites, the participants were divided into teams
and played a game just like the pros.
SAGICOR LIFE INSURANCE COMPANY, PHOENIX, USA
SAGICOR KICKOFF KID
For the fifth consecutive year, Sagicor partnered with Arizona State Football
to sponsor the Kickoff Kid contest which saw one young Sun Devil fan,
between six and twelve years old, receive tickets to the game, as well as a
t-shirt and an autographed football. The lucky winner also got the privilege of
running onto the field and retrieving the kicking tee after the opening kickoff.
They were also featured on the big video board in the stadium.
1
1
Sagicor USA’s Laura Morrison, Vice President Sales, and Shaun
Williams, Chief Financial Officer, became Big leaguers for the day
compliments of the Tampa Bay Rays.
2.
(l-r) Professor Sir Hilary Beckles, Sagicor Financial Corporation
Limited Director; Donald Austin, President and Chief Executive
Officer, Sagicor Life (Eastern Caribbean) Inc; J Edward Clarke,
Sagicor Life Inc Chief Operating Officer and General Manager;
and Brenton Hilaire, Sagicor Life Inc Dominica Agency Manager
presenting US $100,000 for hurricane relief.
3. Dominican patrons proudly wearing their national colours at the
Celebrity Tournament.
40
SAGICOR FINANCIAL CORPORATION LIMITED
SAGICOR FINANCIAL CORPORATION LIMITED
CELEBRITY T20 CRICKET HURRICANE RELIEF BENEFIT
In November, the University of the West Indies, Cave Hill Campus, and Sagicor
Financial Corporation Limited came together to host the Celebrity T20
Cricket Hurricane Relief Benefit in aid of the many Caribbean islands which
suffered significant damage during the passage of hurricanes Irma and Maria.
continued its destructive path to the Turks and Caicos Islands and the
northern border of Haiti, as well as the southeastern islands of the Bahamas.
Then, the category 5 Hurricane Maria descended on Dominica on September
18. Guadeloupe, St. Kitts and Nevis, the Virgin Islands, Puerto Rico, the
northeastern coast of the Dominican Republic, and the southeastern Bahamas
were all impacted.
Among the participating celebrities were cricketers Fidel Edwards, Sulieman
Benn, Dwayne Smith, Floyd Reifer, Vasbert Drakes, Tino Best, Ian Bradshaw,
Dale Richards, Daren Ganga, Rayad Emrit, Ramnaresh Sarwan, Curtly
Ambrose, Franklyn Rose and Yohan Blake. Vice-Chancellor of the UWI,
Professor Sir Hilary Beckles also played on the Sagicor-UWI Icons side.
The match was held at the Sagicor 3W’s Oval at the UWI Cave Hill Campus
in Barbados, and saw the Prime Ministers’ XI play against a Sagicor-UWI
Icons XI. While admission was free, members of the public were asked to
give generously by making cash donations at the match. Funds raised were
directed towards the rebuilding of hospitals and schools in the affected
Caribbean countries.
During the first week of September, Hurricane Irma hit Anguilla, Antigua and
Barbuda, Cuba, the Virgin Islands, and St. Maarten/St Martin. The system
2
3
This partnership was one initiative of a larger two-phased approach to
response efforts by The UWI. Phase 1, or the “rapid response” phase was
largely concentrated on the deployment of relief aid and experts to assist in
the areas of greatest need as identified by the impacted states, in conjunction
with the Caribbean Disaster Emergency Management Agency (CDEMA), and
regional Heads of Governments.
Phase 2, or the “recovery and rehabilitation phase”, focuses on the
mobilisation of funding and expertise to assist in the restoration of these
affected islands, with special priority, from The UWI perspective, on the
sectoral areas of education and healthcare.
2017 ANNUAL REPORT
41
HUMAN
CAPITAL
REPORT
We manage our people
to ensure we achieve our productivity
and strategic goals to better serve our clients.
ORGANISATIONAL TRANSFORMATION
The Human Resources Committee of the Board of
Directors and Executive Management continued
to guide organisational transformation through
several projects and new initiatives. At the
Executive Management level, the Sagicor Group
completed the following successful transitions,
driven by retirements, regional transfers and new
talent acquisitions.
CHANGING OF THE GUARD
SAGICOR LIFE INC, SOUTHERN
CARIBBEAN
Mr Richard Kellman retired as Group Chief
Operating Officer with responsibility for Sagicor
Life Inc Southern Caribbean on December 31,
2017, a position he had held since November
2009. During the past eight years, he provided
entrepreneurial leadership, guidance and
oversight of the Sagicor Group of Companies,
while serving as a member of the Executive
Committee and member of the Board of Directors
of Sagicor Financial Corporation Limited. He
will continue to serve on the Board of Sagicor
Financial Corporation Limited.
Mr Ravi Rambarran was appointed to the post of
Group Chief Operating Officer with responsibility
for Sagicor Life Inc Southern Caribbean on
January 1, 2018. He first joined the Sagicor Group
of Companies in 1997 in Jamaica, where he held
senior management positions with Sagicor Life
Jamaica Limited. A Director on the Sagicor
Life USA Board since 2008, he was previously
the Appointed Actuary of the Subsidiaries,
the Group’s President and Chief Executive
Officer - International Division, and most
recently, the Executive Vice President-Corporate
Strategy and Investor Relations at Sagicor
Financial Corporation.
SAGICOR GROUP JAMAICA LIMITED.
Mr Richard Byles retired as President and Chief
Executive Officer of Sagicor Group Jamaica
Limited on April 30, 2017, having held the post
since 2004. Under his leadership the Group
evolved through a series of acquisitions, the
most recent being the purchase of the banking
operations of RBC Royal Bank Jamaica. Mr Byles
will continue to serve as the Chairman of Sagicor
Group Jamaica Limited, replacing Dr the Hon R.
Danny Williams who was subsequently appointed
Director Emeritus on June 1, 2017. Mr Byles is
also Chairman of the Board of Sagicor Real
Estate X-Fund, and serves as a Director on the
Boards of Sagicor Investments Jamaica Limited,
Sagicor Life Jamaica Limited, and Sagicor Bank
Jamaica Limited.
Mr Christopher Zacca was appointed to the
post of President and Chief Executive Officer
at Sagicor Group Jamaica Limited, effective
May 1, 2017. Highly respected in the private sector
in Jamaica, he has held senior management
positions at Desnoes and Geddes, ATL Group, and
Air Jamaica Limited. He has also had two stints as
the President of the Private Sector Organisation
of Jamaica, with the most recent term ending
in 2014.
Mr Donovan Perkins retired as President and
Chief Executive Officer of Sagicor Bank Jamaica
Limited, following a career spanning some 25
years in the industry. He will continue to serve on
the Board of Sagicor Bank Jamaica.
Other Executive and Key Senior Management
Appointments
Brand Experience at Sagicor Financial Corporation
Limited. She was formerly Vice President-Group
Marketing with Sagicor Group Jamaica Limited.
Rohan Miller has been appointed to the post
of Head of Treasury with Sagicor Financial
Corporation Limited. He has formerly served
as the President and Chief Executive Officer
at Sagicor Investments Jamaica Limited. and
Sagicor Real Estate X-Fund Limited, and as
the Chief Investment Officer at Sagicor Group
Jamaica Limited.
Nari Persad has been appointed to the post
of Group Chief Actuary with Sagicor Financial
Corporation Limited, where he will assume
leadership of actuarial functions in the USA and
Southern Caribbean.
SAGICOR LIFE INC
Christian Pasea was promoted to the post
of Vice President - Finance at Sagicor Life
Inc, Trinidad and Tobago, with responsibility
for Financial, Regulatory, Investment and
Management Accounting.
SAGICOR GENERAL INC
Keston Howell was appointed to the post of
President and Chief Executive Officer of Sagicor
General Insurance Inc, on October 1, 2017.
Patrick Hinkson was appointed to the post
of Chief Financial Officer at Sagicor General
Insurance Inc, Barbados, with effect from
November 1, 2017.
TRANSFORMATIONAL PROJECTS
SAGICOR FINANCIAL CORPORATION
LIMITED.
Ingrid Card has been appointed to the post of
Vice President–Corporate Communications and
TECHNOLOGY:
SAGICOR SUCCESS PROJECT
In 2017 the Human Resources Departments across
the Sagicor Group of Companies implemented
44
SAGICOR FINANCIAL CORPORATION LIMITED
an upgrade to the existing Sagicor Success
Performance Management System, introducing
an additional platform, Employee Central. This
upgrade to the Human Resource Information
Management System will permit greater operating
efficiency, advancing the move towards a
paperless environment as team member records
are conveniently stored online. This will result
in increased data reliability, make information
on skills gaps and employees’ achievements
more accessible, and allow for a more strategic
focus from the Human Resources Team. Team
recognition should also be positively impacted as
management will have access to more complete
employee profiles.
FLEXIBLE WORKING ARRANGEMENTS
The workplace flexibility pilot program at Sagicor
Life Insurance Company continued during 2017.
As a result, workplace arrangements could
be influenced as technology and the evolving
workspace influence how, where and when work
is performed.
CHANGE MANAGEMENT INITIATIVES
Sagicor Life Inc Southern Caribbean, partnered
with the University of the West Indies Sagicor
Cave Hill School of Business and Management
to conduct a series of Change Management
Workshops in support of the organisation’s
transformation initiative – Sagicor Next.
The initiative aims to provide fora that
enhance communication and feedback on
the implementation of change and its impact
on our people and our business, therefore
strengthening commitment, engagement and
personal performance within Sagicor as we look
to the future.
A Change Management Committee chaired by
Keston Howell, formerly the Executive Vice-
President and General Manager for the Dutch
Caribbean and Central America, steered the
first phases of this project, but by the end of
year, Robert Trestrail– Executive Vice President
and General Manager in Trinidad and Tobago,
had assumed the chairmanship. Workshops will
continue in 2018, as this project moves into a
new phase.
EMPLOYEE ENGAGMENT
Employee Opinion Surveys were facilitated by the
Life Office Management Association (LOMA) in
2017, yielding impressive ratings for Sagicor Life
Inc, Southern Caribbean, Sagicor USA and Sagicor
Group Jamaica.
The surveys were confidential examining:
• Company image, organisational commitment
and job satisfaction, to assess overall
satisfaction with the company and jobs.
• The degree to which employees are involved in
the functioning of the organisation.
• Leadership provided by Executive Management
and by direct Supervisors.
• The degree of recognition and satisfaction with
salary and benefits.
• The degree to which employees feel the
company is a good place to work in terms of
demands placed on them and the more general
company environment in which they work.
Survey results for Sagicor Life Southern Caribbean
indicated a satisfaction rating of 74.12%, reflecting
a 2.3% increase over the last survey. Within this
group, Sagicor Life Eastern Caribbean achieved
top scores in all measured dimensions, increasing
its ratings by 6.36% in the satisfaction index as
compared to the last survey.
Sagicor USA earned a satisfaction rating of
80.16%, an 1.88% increase compared to the
previous survey report, while Sagicor Group
Jamaica recorded a satisfaction rating of 78.6%,
an increase of 1.2% over the previous year.
Notably, this was the highest rating ever achieved
by Sagicor Group Jamaica in the annual LOMA
Team Member Opinion Survey, with increased
levels of satisfaction in all variables of the survey,
particularly in the area of Company Image
and Recognition.
The survey results provided valuable feedback
from employees, and will guide the development
of employee engagement initiatives and corporate
branding programmes into 2018 and beyond.
ANNUAL MEETINGS
Companies throughout the Sagicor Group
held their Annual “Kick-off” meetings in the
new year, gathering employees and Sagicor
Advisors to review the past year’s performance
and present strategies for the upcoming year.
Branded with such motivational themes as “Dare
to Soar”, “Blast Off” and “Sagicor Strong”, the
upbeat meetings featured presentations from
energised motivational speakers, executives and
other business leaders who shared inspirational
stories and success strategies to help individuals
shape their personal plans for the new year. A
distinctive feature of some of the meetings in
the Southern Caribbean was a fireside chat with
Mr Ravi Rambarran, newly appointed Group
Chief Operating Officer with responsibility for the
Southern Caribbean.
2017 ANNUAL REPORT
45
NEW CORPORATE UNIFORMS
New Sagicor corporate uniforms were issued in 2017 to company employees
in Barbados, Trinidad, the Eastern and Dutch Caribbean, and Central America.
PEOPLE DEVELOPMENT
SAGICOR GROUP OF COMPANIES
The Sagicor Group of Companies saw the delivery of a robust talent
development program during 2017, reflecting its commitment to world-
class learning and development interventions to increase productivity
and engagement.
In Barbados, 301 team members were certified under the Competency Based
Training Fund project which was funded by the Inter-American Development
Bank and the Government of Barbados. Participants received training in
the areas of Customer Service, Management, Leadership and Business
Communication. Certification in the areas of Time Management, Stress
Management and Conflict Management was also achieved by an additional
group of 429 participants.
The introduction of a full business curriculum for the Sagicor University at
the Sagicor Cave Hill School of Business in Barbados, and a scholarship
programme is planned for 2018.
SAGICOR GROUP JAMAICA
In Sagicor Group Jamaica, the Learning and Development Unit developed
and facilitated “#Creating Smiles,” a client experience course which directly
aligns with the Client Experience Group Strategy. Their Middle Managers’
Development Programme provided accelerated leadership skills for
participants, equipping them to meet the strategic goals of the Organisation.
A new cross-training initiative also led to forty-three employees successfully
transitioning into new opportunities.
SAGICOR LIFE INC TRINIDAD AND TOBAGO
In Sagicor Life Inc Trinidad and Tobago, 199 Sagicor Advisors were introduced
to the Electronic Application Platform, an innovative automated application
system. In addition, 400 staff and advisors were better equipped to manage
internal and external customer encounters following their participation in the
Priority You Customer Focus Programme. The company also developed a
full curriculum comprising 120 business programmes for staff in 2017, which
covered such topics as Performance Management, Financial Empowerment,
Time Management and Entrepreneurial Skills, and Sagicor programmes and
The new Sagicor Corporate Uniforms
46
SAGICOR FINANCIAL CORPORATION LIMITED
initiatives such as the Sales Cycle and Crossroads
Pre-Management Programmes.
- Associate of the Society of Actuaries (ASA)
SAGICOR GENERAL INSURANCE INC
Sagicor General Insurance Inc introduced a
new slate of corporate cultural standards and
associated behaviours to its companies in in
Barbados, Trinidad and Tobago, Antigua and St.
Lucia. The five cultural standards are (1) Service
Excellence, (2) Teamwork, (3) Accountability,
(4) Urgency and (5) Integrity, and will be
reflected all regions, to inspire consistency in
corporate behavior and align employees with
strategic objectives.
Leadership development was the focus of in-
house training initiatives for the leadership team.
Some of the topics covered were Employee
Engagement and its link to critical business
outcomes, Managing for Results, Managing
Performance and Goal-setting. Key Performance
Indicators to be achieved by successful leaders
were also shared.
Sagicor General Insurance Inc continued to invest
in the enhanced industry knowledge of its people
through various general insurance certification
programme s. Notable professional achievements
in 2017 included:
SAGICOR GENERAL INSURANCE INC
1. Elizabeth Alleyne
- Fellow, Life Management Institute (FLMI)
2. Ingrid Brathwaite
- Fellow, Life Management Institute (FLMI)
3. Liesl Gajadhar
- Fellow, Life Management Institute (FLMI)
4. Nathalia Smith - SHRM Certified Professional
(SHRM-CP)
5. Michael Hoffman
- Fellow, Life Management Institute (FLMI)
6. Michael Morrison
ENGAGING TOMORROW’S LEADERS
YOUNG MILLENNIALS INITIATIVE
The year began with Sagicor Group President
and Chief Executive Officer Mr Dodridge Miller
hosting a series of highly engaging and interactive
meetings for the company’s young millennials
under the theme, “Engaging Tomorrow’s Leaders
Today”. Facilitated by the Sagicor Cave Hill School
of Business, the sessions provided our millennials
with a historical perspective of the company’s
development, and provided an opportunity for the
future managers and leaders to put forth ideas
pertaining to Sagicor’s business, products and
systems transformation. This pilot programme
precedes the launch of the new “Sagicor Young
Leaders Initiative” planned for the second quarter
of 2018, which will hopefully inspire the millennials
as they decide on and shape their own careers.
PRO-MILLENNIAL MENTORSHIP
SOCIETY
The Pro-Millennial Mentorship Society was
launched by Sagicor Group Jamaica in March
2017. The Society’s membership now exceeds
two hundred millennials (aged 18-35) across the
Group. The strategic objective is the development
of a team of the company’s young leaders, with
members benefitting from mentorship by Sagicor
leaders as they become more adept in Financial
Management, Personal Branding, Leadership,
Communication and Interpersonal Skills.
Community Service is also important, and the
Society is required to undertake a project annually
that will add value to Sagicor Group Jamaica.
SUMMER MENTORSHIP PROGRAMME
Also in Jamaica, the Sagicor Summer Mentorship
Programme welcomed two-hundred and
seventy-four (274) 6th-form high school and
Participants of the Summer Mentorship Programme.
university students. The programme provided
robust professional development experience,
coupled with workshops on managing emotional
intelligence, teambuilding and strategies for
critically assessing and leveraging their skills and
business competencies. Twenty-seven (27) of the
participants have since returned to fill vacant roles
in the Company.
MILLENNIALS ENGAGEMENT
COMMITTEE
Sagicor General Insurance Inc established the
Millennials Engagement Committee and the
Engagement Committee; both Committees play
a critical role in providing feedback on initiatives
to be rolled out, and are champions of the
organisational cultural changes being introduced.
2017 ANNUAL REPORT
47
INTERNSHIP PROGRAMMES
Sagicor Group Companies in Barbados, Trinidad
and Tobago and the USA supported summer
internships for five young Caribbean students
under the 2017 Student Programme for Innovation
in Science and Engineering (SPISE). The SPISE
programme targets gifted Caribbean secondary
school students interested in studying and
exploring careers in disciplines related to Science,
Technology, Engineering and Math (STEM), and
is open to students of most Caribbean countries
as well as those of Caribbean descent residing in
the United Kingdom. SPISE is an integral part of
the partnership between the Caribbean Science
Foundation and the University of the West Indies,
Cave Hill Campus in Barbados.
Funding for the SPISE Sagicor Visionaries
Challenge also continued, with five tertiary
students receiving awards.
Sagicor Life Inc Chief Operating Officer and General Manger for Barbados,
Ed Clarke, with staff at the Millenials workshop for “Engaging Tomorrow’s
Leaders Today”.
48
SAGICOR FINANCIAL CORPORATION LIMITED
1. Quilee Simeon is a St. Lucian student who has
completed an Associate Degree in Natural
Sciences at the Sir Arthur Lewis Community
College in Castries, St. Lucia, where he made
the Dean’s List and Honor Roll. He began his
studies in Neuroscience at the Massachusetts
Institute of Technology (MIT) in the Fall of 2017.
2. Kyra-Akilah Richards is a Dominican student
who has completed an Associate Degree in
Chemistry, Physics and Biology at the Dominica
State College. She will begin studies in
Medicine (Pathology) in 2018.
3. Kamau Bridgeman is a Barbadian who
received a Barbados Scholarship in 2015. He is
currently studying Electrical Engineering at the
University of Toronto, Canada.
4. David Serrant is a Trinidadian student currently
enrolled at the University of the West Indies, St.
Augustine Campus. He is studying Mechanical
Engineering and expects to complete his
degree in 2018.
5. Obe Joseph is a Dominican student who is
pursuing a Bachelor of Science degree in
Industrial Engineering at the State University of
New York at Buffalo, and anticipates graduating
in May of 2019.
SAGICOR EXPERIENCE INTERNSHIP
PROGRAMME
The Sagicor Experience Internship Programme is
now in its fourth year, and continues to support
and develop talented, bright university graduates
with at least a Bachelor’s Degree. The Programme
offers valuable work experience and helps build
confidence, and make a seamless transition to
the workforce. The interns were placed in twenty-
eight (28) different departments across all five (5)
divisions, while aligning them with opportunities
in sync with their career goals. The current cohort
of 31 interns benefitted from multiple training
sessions and meaningful work experiences during
the invigorating three-month programme, which
culminated at the end of December. A Showcase
and Mingle event was also held, where the interns
were organised into seven (7) groups and asked
to present their ideas on how to make Sagicor a
stronger organisation.
BARBADOS COMMUNITY COLLEGE
STUDENT INTERNSHIPS
Sagicor Life Inc continued its partnership with
the Barbados Community College, providing
internship opportunities to students in the
College’s Divisions of Computer Studies and
Commerce. Students from the Division of
Health Sciences who were enrolled in the Health
Information Management programme also
participated. These internships allowed students
to gain practical work experience, and in some
instances, satisify prerequisites for the completion
of their Associate Degrees.
SAGE TOASTMASTERS YOUTH
LEADERSHIP PROGRAMME
The SAGE Toastmasters Club, based at
the Sagicor Corporate Centre in Barbados,
successfully organised its inaugural Youth
Leadership Programme, hosting 25 students
between the ages of 10 and 17 years. The
programme focused on building self-
confidence and improving both written and oral
communication skills.
2017 HEART TRAINEE PROGRAMME
The Sagicor Life Jamaica Group continues
its partnership with HEART Trust NTA which
provides employment opportunities for young
Jamaicans. Graduates from these programs
provide a strong pool of talent to support the
Group’s recruitment strategy.
RECOGNISING EXCELLENCE
2016 AWARDS HIGHLIGHTS
Barbados
The Annual Awards ceremony in 2017 recognized the outstanding
performance of the following team members:
Janice Mullin-Sargeant - Most Outstanding Sagicor Advisor –
Sagicor Life Inc - Barbados
Janice Mullin Sargeant captured four (4) awards, the President’s Trophy for
the fifth consecutive year; the Honour Club Diamond; the 100 Club; and the
D.W. Allan Production Award.
Nadia Chandler-Guy - the Manager of the Year award; Samanta Pinder - the
Employee of the Year award; Russel Campbell - the Contributor of the Year
award; and Gillian De Roche-Austin - the Pioneer of the Year award.
The Leading Agency award in Barbados was won by the
Nana Agency.
2017 ANNUAL REPORT
49
Trinidad and Tobago
Sagicor General Inc - Eastern Caribbean
Contributor of the Year 2016 – Jason Edwin
Sagicor General Inc - Trinidad and Tobago
Asha Nabbie, Manager of the Year; Sergio Smith – Employee of the Year; and
Marlon De Leon – Agent of the Year
Sagicor General Inc - Barbados
Sagicor General Inc - Lisa Mahabir – Manager of the Year and Garvin Ali –
Employee of the Year
Employee of the Year 2016 – Andrea Evans and Pioneer of the Year 2016 –
Yvonne Griffith
50
SAGICOR FINANCIAL CORPORATION LIMITED
Sagicor Life Eastern Caribbean Inc
Caril Archibald- Employee of the Year
SAGICOR GROUP AWARDS:
Outstanding performance is also recognised at the Sagicor Group level.
The coveted Sagicorian Awards are presented in two categories, to an
outstanding Manager and non-managerial employee. The Contributor and
Pioneer awards are presented for personal performance, Customer service
and for innovation and creativity.
Jennifer Tross-Clarke received the President’s Trophy. This award is given
to an Advisor who is a member of the Diamond Club, or a member of the
100 club who also won the leading advisor case count and NAC awards.
Asha Nabbie – The Sagicorian – Group Manager of the Year
Asha Nabbie was a Marketing Manager at Sagicor Life Inc in Trinidad and
Tobago, who among other things, created a high-performance environment,
challenging her reports to excel, and worked assiduously to collect and
collate a myriad of documents from the relevant departments, both in
Barbados and Trinidad as Project Co-ordinator for an important acquisition.
She was an instrumental business partner on critical projects for product
development and research, as well as projects related to her substantive role.
She supported the development of two creative sales and reinstatement
campaigns, which resulted in improved persistency rates, and increased Year
on Year Annual Premium income by more than 19%. Asha has since been
promoted to the post of Assistant Vice President Marketing, Research and
Sales Support.
2017 ANNUAL REPORT
51
Garvin Ali – The Sagicorian – Employee of the Year
Garvin Ali is a Claims Specialist with Sagicor General Inc in Trinidad and
Tobago. He copped the Rookie, and Contributor of the Year awards in SGI
for the last three years and subsequently the Sagicor Group Contributor of
the Year award. In 2016, he was selected to work on a special Subrogation
project, where he recovered over $6 million in premium income. He was the
only employee to consistently make referrals, resulting in earnings of over
$83,000 in gross written premium in the ‘Road Map To 65M’ challenge for
non-underwriting staff.
Gillian De Roche-Austin – Group Pioneer of the Year
Gillian De Roche-Austin is a Customer Retention Officer with the Sales
Department in Sagicor Life Inc in Barbados. Her project to implement
strategies to mitigate lapses and surrenders, involved soliciting buy-in from
sales staff at all levels through participation at sales meetings and other fora
where she spoke on the issues impacting Sagicor Life’s overall persistency.
Gillian’s advocacy efforts improved customer retention, the quality of
customer service from our Sagicor Advisors, and the quality of business, as
well as the creation of greater value for customers.
WELLNESS INITIATIVES IN 2017
Group Companies continued a series of Wellness intiatives that provided
information on lifestyle, opportunties for Biometric testing for blood pressure,
blood glucose, cholesterol and Body Mass Indices. Programs were presented
under various themes including “Fit for Life”, and provided staff with Fitbits
to monitor physical activity. A range of programs that included Hike or Bike,
Zumba, Group Exercise sessions , Line dancing, Dancersize, Healthy Fruit day
intiative, a Womens Heath week, and Man Talk provided considerable diversity
and choice for Sagicor Employees.
Russel Campbell – Group Contributor of the Year
Russel Campbell is a Mortgages Officer with the Mortgages Department
of Sagicor Asset Management Inc in Barbados. He achieved 181% of his
annual target, or $12.7 million in underwriting in approved and accepted new
business, in an aggressive mortgage industry where competitors reduced
interest rates to approximately 4%. His personal performance pushed the
department to exceed its annual target for 2016.
These programs take a preventative approach to providing Health Care and
aim to provide information on Chronic lifestyle illnesses, influence life style
changes, and so manage the national costs of providing health care.
A full suite of staff events saw some new innovations to the substantial
calendar with the addition of the Spring Celebration, the Cinco De Mayo Salsa
Challenge, the Taste of Freedom, and Paint and Sip events.
Super Bowl functions, photographic competitions, Movie nights, Family picnics,
Thanksgiving Luncheons and themed Christmas parties are now part of the
annual calendar. Local teams join national hikes and marathons and compete
against other teams at football and cricket, and support national charities.
52
SAGICOR FINANCIAL CORPORATION LIMITED
1
STAFF COMMUNITY PROJECTS AND OTHER EVENTS
The 2017 Hurricane Season captured international attention and tested the
planning and training of the Crisis Management teams in the Caribbean, but
particularly tested the training and the resolve of the Eastern Caribbean
Crisis Management team. Since June of 2017, this team comprised of Branch
Managers, members of the EC Executive Management team and Miss Kim
Jones – Business Continuity Co-Ordinator went through the emergency plans
with every business unit, ensuring compliance with the Business Emergency
Plans (BEP). These plans were fully tested in August and September. As
hurricane Irma approached the islands the emergency plans were activated,
with office closures, landlines and mobile phones checked in the call chains,
and WhatsApp groups formed at the Branch, EC Group, and Corporate levels.
2
1. Water and other supplies ready to be shipped to Dominica.
2. Staff at Sagicor Life Inc’s Antigua office packaging urgent hurricane supplies.
2017 ANNUAL REPORT
53
1
2
1. Supplies ready to be shipped to
Dominica
2. Brenton Hilaire, Agency manager,
Sagicor Life Inc, Dominica.
Barbuda and Saint Martin suffered significant infrastructural damage from
Hurricane Irma. Hurricane Jose on August 31, caused additional destruction
in the region and on September 13, Dominica suffered a direct strike from the
category five (5) Hurricane Maria.
The Crisis Management team quickly had met with the respective personnel
from offices in Barbados and the US. The Executive team, led by Donald
Austin, Shaunita Jordan and General Manager of the Branch Office in St Lucia,
pulled together food supplies, water, and personal hygiene items for the
Dominica staff and their surrounding neighbors.
Sagicor Life Eastern Caribbean Inc commended Mr Brenton Hilaire for his
courage and commitment to Sagicor. Initially he was the primary contact on
the island of Dominica immediately after hurricane Maria, Brenton along with
Sagicor Team Dominica assisted with the distribution of relief supplies to staff
and clients of Sagicor Life Inc and Sagicor General Inc, despite challenging
personal circumstances. This team undertook the massive clean-up of
knee-high debris left behind because of the flooding of the city and made a
significant contribution to our ability to reopen offices in Roseau, Dominica to
our clients.
Cash Contributions and donations of personal supplies from employees
across the Sagicor Group of companies, as well as corporate contributions,
provided critical assistance to employees and their families, customers, local
hospitals and other community groups.
54
SAGICOR FINANCIAL CORPORATION LIMITED
While Sagicor staff in Tampa, Florida were busy raising funds to assist
Dominica’s recovery efforts, they were also helping their own neighbours
affected by hurricanes. In September, staff came together to help clean up
debris on Marco Island in Southwest Florida, an area that received heavy
damage from Hurricane Irma.
3, 4 & 5. Staff from Tampa, Florida working to clear debris on Marco Island.
3
4
5
2017 ANNUAL REPORT
55
OPERATING
& FINANCIAL REVIEW
As we continue to grow stronger and wiser into the future,
we want our clients to do the same.
OPERATING AND FINANCIAL REVIEW
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. 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 economic activity continued its rebound for 2017
as growth increased slightly to 3% based on World Bank’s
estimates. This growth was broad based; however, most
noticeable increases came within Emerging Markets and
Developing Economies which averaged growth of 4.3%.
In the USA, GDP growth of 2.3% was estimated for 2017.
Furthermore, economic indicators showed favourable improvement
as evidenced by increased consumer spending during the fourth
quarter of 2017, while the unemployment rate trended down to 4.1%
in December. The US dollar strengthened against the currencies
of all major trading partners during the year as the price of crude
oil maintained its upward trend. The US Federal Reserve Bank
continued to tighten monetary policy as short-term interest rates
were increased three times during the year from a range of 0.50%
to 0.75% as at December 2016 to a range of 1.25% – 1.5% as at
December 2017.
Europe and Japan experienced growth of 2.3% and 2.4%,
respectively as their respective Central Banks generally continued
accommodative fiscal and monetary policies throughout 2017.
The Bank of England raised its interest rates incrementally during
the period from 0.25% to 0.5% while Japan’s short-term rates
remained unchanged.
International equity markets advanced during 2017. The Nasdaq
composite gained 28.2% for the year, while the Dow Jones Industrial
Average Index and the S&P 500 Index grew 25.1% and 19.4%
respectively. The MSCI Emerging Market Index led major indices with
a gain of 34.3%. Interest rate hikes saw the yield on 10- year treasury
increased from 2.1% to 2.4%, which induced a flatter yield curve.
Regional Economic Environment
Regionally, economic growth across the Caribbean generally
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 and dwindling foreign reserves, resultant from a
decline in foreign direct investment, remained a hindrance to
the economic stability of the region. The issue of de-risking
became prevalent during the year as foreign correspondent
58
SAGICOR FINANCIAL CORPORATION LIMITED
banks withdrew their services from respondent banks, which
created an even greater strain on an already fragile foreign
exchange market.
The Barbados economy slowed during the period in the face of
multiple downgrades during the year; due to high government
deficits; limited appetite for private-sector financing and depleting
international reserves. Barbados’ economy grew by 1% during the
year while unemployment increased to 10.2% and inflation to 4%.
This moderate improvement during 2017 was buoyed by expansion
in the tourism and construction sectors.
International reserves remained worrisomely low and decreased to
$0.4 billion, which represented 6.6 weeks of import cover. The fiscal
deficit for the fiscal year 2017/2018 was projected to have decreased
to 5.7% of GDP.
The country’s debt burden remained high with the gross central
government debt decreasing slightly to 145.9%. During 2016,
Barbados’ sovereign rating was downgraded to B- and Caa1 by
Standard and Poor’s and Moody’s rating agencies. 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. S&P
further downgraded the island’s long-term local currency to CCC
during the third quarter of 2017.
Trinidad and Tobago’s economy is estimated by the Central
Statistical Office to have contracted by 1.9% for 2017. The
unemployment rate increased to 4.5% during 2017, which
contributed to the contraction in an environment of sluggish
economic activity. Headline inflation remained low during the year
at 1.3%. The Central Bank’s net foreign reserves fell to US$8,369.8
million or 9.7 months of prospective imports of goods and non-
factor services as foreign debt service requirements increased
during 2017. The declining economic conditions during the previous
two fiscal years lead to a downgrade of the country’s credit by
Standard’s and Poor rating agency. Trinidad and Tobago’s long-term
debt was downgraded to BBB+ during the second quarter of 2017.
The Jamaica economy grew between 1% and 2% facilitated by the
Bank of Jamaica expansionary policies during the 2017 fiscal year.
The bank reduced its lending rate by 50 basis points or 0.5% to
3.25% as at December 2017. This monetary policy action reflected the
Bank’s assessment that inflation for the next four to eight quarters
would remain within the target range of 4.0% to 6.0% per cent.
The economic expansion translated to gains on the Jamaica Stock
Exchange which returned 50% in local currency terms for the year.
Regulation
Insurance Regulation
The following revisions to insurance legislation have been
initiated and/or are contemplated in the near future:
• A new Insurance Act together with regulations to replace
the existing legislation in Trinidad is expected to be enacted
in 2018.
• Industry consultations have concluded on the draft
Harmonised Insurance Bill in the Eastern Caribbean which
will repeal existing legislation in the eight EC countries. The
final draft of the Harmonised Insurance Bill is projected to be
completed in the 3rd quarter of 2018. Once finalised, the Bill
will be circulated to the EC countries for enactment.
GROUP RESULTS
Revenues from continuing operations in 2017 reached US
$1,221 million and were US $87 million higher than the prior
year amount of US $1,134 million. Net premium revenue was
US $746 million, compared to US $664 million, an improvement
of US $82 million or 12.3%. Premium income increased in all
segments and benefited especially from the issuance of a single
premium annuity relating to our Jamaica segment.
Net investment income was US $379 million, compared to
US $353 million in the prior year, an improvement of US $26 million,
and benefited from higher investment gains in our international
investment portfolios.
Fees and other revenue closed the year at US $94 million,
compared to the prior year amount of US $117 million, a decline of
US $23 million. There was a reduction in commissions income on
insurance and reinsurance contracts amounting to US $20 million,
2017 ANNUAL REPORT
59
reflecting commissions net of gains due to reinsurers on supporting
assets in our USA segment. Exchange losses were US $4 million,
compared to gains of US $13 million in the prior year, a reduction
of US $17 million. Foreign exchange movements were affected
by a strengthening of the Jamaica dollar when compared to the
United States dollar in 2017, resulting in foreign exchange declines in
financial assets denominated in United States dollars in our Jamaica
segment. Overall, the Group experienced a gain on translation of
the Jamaica segment, which is reported in other comprehensive
income. In addition, the prior year included exchange gains relating
to declines in the Trinidad dollar, when compared to the United
States dollar. There was no significant foreign exchange movement,
relative to the Trinidad dollar currency in 2017.
Total benefits closed at US $661 million, up from the prior year
amount of US $561 million. The growth in benefits is consistent with
that of the growth in premium revenue and partially represented
increased provisions for future benefits. Included in benefits were
net costs of US $9 million relating to claims exposure from hurricane
activity during the year, along with an increase of US $14 million
relating to the impact of the Tax Cuts and Jobs Act rate reduction in
the United States, which came into effect in 2017.
Expenses (including agents’ and brokers’ commissions) closed
the year at US $436 million, compared to the prior year amount
of US $424 million, an increase of US $12 million. The Jamaica
Segment incurred some non-recurring costs, together with
higher administration costs relating to the expansion of cards and
payments business.
Income taxes were US $19 million, compared to US $42 million in
the prior year, a reduction of US $23 million. This was principally
related to our USA Segment. During 2017 the Tax Cuts and Jobs
Act was signed into law in the United States, which reduced the
effective corporation tax rate. This contributed to a decrease of
US $20 million in income taxes and an increase in the provision for
future benefits of US $14 million in the segment.
CONSOLIDATED INCOME 1 - $ millions
Revenue
Benefits
Expenses & taxes
Net income
COMPREHENSIVE INCOME
Other comprehensive (loss)
Total comprehensive income
1 from continuing operations
2017
1,221
2016
1,134
(661)
(561)
(455)
(466)
105
2017
64
169
107
2016
(13)
94
Other comprehensive income was US $64 million, compared
to a loss of US $13 million for the prior year, an increase of
US $ 77 million. The principal sources of the increase were an
improvement in net gains on financial assets of US $19 million,
resulting from marked-to-market gains on financial assets in our
international portfolios; a positive movement of US $38 million
on retranslation of foreign currency operations, resulting from a
gain in the Jamaica dollar when compared to the United States
dollar; and a positive change in gains/(losses) on defined benefit
plans for employees of US $ 38 million.
In December 2012, the Board and Management decided to dispose
of Sagicor Europe, which owns the Sagicor at Lloyd’s operations. In
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
60
SAGICOR FINANCIAL CORPORATION LIMITED
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 2017 financial year US $62 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 20.4 cents. The
comparative amounts for 2016 were US $60 million of net income
and earnings per share of US 19.5 cents. The respective annual
returns on shareholders’ equity were 11.3% for 2017 and 12.3%
for 2016.
Dividends declared to common shareholders in respect of 2017
totalled US $15 million and represented US 5.0 cents per share.
Dividends of US 4.5 cents per share were declared for 2016.
COMMON SHAREHOLDER RETURNS 1
2017
2016
Net income - $ millions
Dividends - $ millions
Earnings per share - cents
Dividends per share - cents
Return on equity - %
62
15
20.4
5.0
11.3
60
14
19.5
4.5
12.3
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
2017
2016
Net insurance premiums:
Life and annuity
Health
Property & casualty
Net investment income
Fees and other revenues
Gain arising on disposal
568
149
29
746
379
94
2
496
150
18
664
353
117
-
1,221
1,134
Premium revenue from life insurance and annuity was
US $568 million and represented 76% of total premium revenue.
The comparative amounts for 2016 were US $496 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.
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 higher by US $82 million when compared
to the prior year. Premium income increased in all segments and
benefited from the issuance of a single premium annuity relating to
our Jamaica segment.
The Group also markets annual renewable health insurance
contracts to employers and associations. These provide benefits
against medical costs incurred by insured persons. Premium
2017 ANNUAL REPORT
61
revenue from health insurance totalled US $149 million, and stood at
approximately the same level as the prior year.
the United States dollar, there was no significant foreign exchange
movement, relative to this currency in 2017.
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 $29 million. The Group increased its retention
on this business in 2017 when compared to the prior year.
Income is generated from the investments made by the Group. Net
investment income closed the year at US $379 million compared
to US $353 million in 2016 an improvement of US $26 million
and benefited from higher investment gains in our international
investment portfolios.
INTEREST YIELDS
2017
2016
Debt securities
Mortgage loans
Policy loans
Finance loans & finance leases
Securities purchased for resale
Deposits
6.1%
5.7%
7.2%
11.6%
5.1%
2.3%
6.2%
6.1%
6.9%
12.6%
9.2%
1.0%
Income from fees and other revenues totalled US $94 million
compared to US $117 million in the prior year, a reduction of
US $23 million.
There was a reduction in commissions income on insurance and
reinsurance contracts amounting to US $20 million, reflecting
commissions net of gains due to reinsurers on supporting assets in
our USA segment. Exchange gains/(losses) also showed a loss of
US $4 million, compared to gains of US $13 million in the prior year,
a reduction of US $17 million. Foreign exchange movements were
affected by a strengthening of the Jamaica dollar when compared
to the United States dollar in 2017, resulting in foreign exchange
declines in financial assets denominated in United States dollars in
our Jamaica segment. In addition, the prior year included exchange
gains relating to declines in the Trinidad dollar, when compared to
Benefits
The table below summarises the expense incurred by the Group
in providing benefits.
BENEFITS - $ millions
2017
2016
Net insurance benefits:
Life and annuity
Health
Property and casualty
Interest expense
465
114
27
606
55
661
376
116
8
500
61
561
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 $465 million in 2017, of which
US $343 million related to current benefits and US $122 million
related to future benefits. The corresponding amounts for 2015 were
a total of US $373 million, of which US $346 million were for current
benefits and US $27 million were in respect of future benefits.
62
SAGICOR FINANCIAL CORPORATION LIMITED
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.
The corresponding amounts for 2016 were a total of US $376 million,
of which US $331 related to current benefits and US $45 million
related to future benefits.
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.
Total health insurance benefits were US $114 million representing
an overall claims to premium ratio of 77%. The comparative 2016
amounts were US $116 million and an overall claims to premium ratio
of 77%.
Property and casualty claims amounted to US $27 million in 2017,
compared US $8 million from the 2016 an increase of US $19. The
company decided to increase its retention of this business in 2017.
Property and casualty claims also Included $9 million relating to
claims exposure from hurricane activity during the year.
The interest returns the Group has provided to investment contract-
holders and financial institutions which have advanced funds are
summarised in the following table:
Expenses and taxes
EXPENSES & TAXES - $ millions
Administrative expenses
Commissions
Finance costs, depreciation and
amortisation
Premium, asset and income taxes
2017
267
99
57
32
2016
255
99
60
52
455
466
Expenses and taxes totalled US $455 million for 2017 down from
US $466 million for 2016.
Expenses of administration represent the largest expense category
and totalled US $267 million in 2017 compared to US $255 million in
2016 an increase of US $12 million. The Jamaica Segment incurred
some non-recurring costs, together with higher administration costs
relating to the expansion of cards and payments business.
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.
INTEREST YIELDS
Investment contracts
Other funding instruments
Customer deposits
Securities sold for repurchase
2017
2016
5.6%
2.1%
2.0%
3.6%
6.1%
1.9%
2.1%
4.5%
Premium assets and income taxes was US $32 million compared
to US $52 million in the prior year, a reduction of US $20 million.
Of the total taxes, income taxes were US $19 million, compared to
US $42 million in the prior year, a reduction of US $23 million. This
was principally related to our USA Segment. During 2017 the Tax
Cuts and Jobs Act was signed into law in the United States, which
reduced the effective corporation tax rate. This contributed to a
decrease of US $20 million in income taxes and an increase in the
provision for future benefits of US $14 million in the segment.
Comprehensive income
Gains and losses recorded within other comprehensive income
arise from fair value changes of certain classes of assets and
from the retranslation of foreign currency operations.
2017 ANNUAL REPORT
63
Other comprehensive income was US $64 million, compared
to a loss of US $13 million for the prior year, an increase of
US $77 million.
The principal sources of the increase were an improvement in net
gains on financial assets of US $19 million, resulting from marked-
to-market gains on financial assets in our international portfolios,
a positive movement of US $38 million on retranslation of foreign
currency operations, resulting from a gain in the Jamaica dollar
when compared to the United States dollar and a positive change
in gains/(losses) on defined benefit plans for employees of
US $38 million.
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 $179 million for 2017 compared to US $97 million for 2016.
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, 2017 and 2016.
STATEMENT OF FINANCIAL POSITION -
$ millions
2017
2016
Assets
Liabilities arising from operations
Borrowings
Equity
6,815
5,469
414
932
6,532
5,342
395
795
6,815
6,532
Assets
Invested assets and cash balances as of December 31 are
summarised in the table below.
INVESTMENTS & CASH - $ millions
2017 1
2016 1
Debt securities
Mortgage loans
Policy loans
Finance loans and finance leases
Securities purchased for re-sale
Deposits
Cash
Investment property and other items
1 continuing operations
3,498
3,441
342
142
564
17
111
360
456
332
138
509
5
139
279
417
5,490
5,260
Debt securities are the largest class of invested assets, and
represented 64% of total investments and cash as of December
31, 2017 (65% as of December 31, 2016). These securities are
very suitable instruments to back long-term insurance liabilities
because of their medium to long term duration, the regular
interest payments received, and the relatively low credit risk.
64
SAGICOR FINANCIAL CORPORATION LIMITED
The Group’s liabilities which arise from issuing investment contracts,
accepting deposits and funding are as follows.
FINANCIAL LIABILITIES - $ millions
2017
2016
Investment contracts
Securities sold for re-purchase
Customer deposits
Other funding instruments and other items
379
476
751
285
378
321
915
353
1,891
1,967
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.
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.
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.
The discontinued operation (Sagicor at Lloyds) was sold on
December 23, 2013. At the end of 2017 there was a receivable of
US $10 million due to the company.
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
2017 1
2016 1
Future benefits - individual contracts
2,473
2,349
Future benefits - group contracts
Current benefits and other payables
1 continuing operations
477
269
428
245
3,219
3,022
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, property and casualty.
2017 ANNUAL REPORT
65
On July 18, 2016, the Company redeemed the 6.5% convertible
redeemable preference shares due 2016.
On March 2, 2017, Sagicor Bank Jamaica Limited issued:
i Cumulative redeemable preference shares with a tenor of three
(3) years at 8.25% interest per annum.
ii Cumulative redeemable preference shares with a tenor of
eighteen (18) months at 7.75% interest per annum.
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 30.7%, down from 33.2% for
the prior 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
of the Group’s life insurers was 258% as of December 31, 2017
compared to 249%, at December 31, 2016, 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
2017
Common shareholders’ equity
Preference shareholders’ balances
Minority interest shareholders’ balances
8.875% senior notes due 2022
4.6% notes due 2015
Participating accounts & other
623
16
309
317
75
6
2016
536
-
258
315
75
6
Classified as:
Equity
Borrowings
1,346
1,190
932
414
795
395
1,346
1,190
306,555,644 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 $320.0 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).
On March 22, 2016, the Company repaid, before maturity, the
$43.4 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. 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).
66
SAGICOR FINANCIAL CORPORATION LIMITED
SAGICOR GROUP
SUMMARY ORGANISATIONAL CHART
SAGICOR FINANCIAL CORPORATION LIMITED
- 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
BARBADOS,
TRINIDAD &
TOBAGO,
EASTERN
BARBADOS,
TRINIDAD &
TOBAGO,
U.K.
&
EASTERN
WORLDWIDE
CARIBBEAN
CARIBBEAN
2017 ANNUAL REPORT
67
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 2017 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 2017, this segment generated revenues of US $421 million. The
main revenue component was premium income which totalled
US $309 million. Investment income totalled US $77 million while
other items totalled US $35 million.
Benefits totalled US $222 million, and were higher than the
prior year by US $9 million. Current insurance benefits were
US $210 million, while amounts recognised for future insurance
benefits amounted to US $12 million.
Total expenses and taxes in 2017 closed the year at US $131 million
compared to US $129 million in 2016.
SAGICOR LIFE INC
INCOME - $ millions
Revenue
Benefits
Expenses and taxes
Inter-segment reinsurance expense
Segment income
Segment income attributable to
shareholders
FINANCIAL POSITION - $ millions
Assets
Liabilities
Net assets
2017
421
(222)
(131)
(5)
63
65
2017
1,953
2016
411
(213)
(129)
(5)
64
64
2016
1,928
(1,413)
(1,399)
540
529
Net segment income for the year was US $63 million compared
to US $64 million for the prior year. After accounting for income
allocated to policyholders, the net income attributable to
shareholders for the segment totalled US $65 million in 2017,
compared to US $64 million in 2016.
Financial investments comprised 71% of segment assets and policy
liabilities comprised 92% of segment liabilities at the end of 2017.
Sagicor Jamaica Segment
This segment comprises subsidiaries in Jamaica and Cayman
Islands. 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 $592 million in 2017, an
increase of US $68 million over the 2016 total. The main revenue
component was premium income which totalled US $320 million
compared to US $268 million in 2016 an increase of US $52 million.
The Jamaica segment benefited from the issuance of a significant
single premium annuity during 2017.
68
SAGICOR FINANCIAL CORPORATION LIMITED
Investment income totalled US $207 million compared to
US $201 million in the prior year and benefited from significant
investment gains.
Financial investments comprised 81% of the segment’s assets at the
end of 2017. The liabilities of this segment were distributed 33% to
policy liabilities and 66% to deposit and security liabilities at the
end 2017.
Benefits totalled US $292 million and was higher than the prior
year amount of US $249 million an increase of US $43 million. This
is consistent with the growth in premium revenue and represents
partially the impact of the provision for future benefits on the single
premium annuity.
Expenses and taxes incurred totalled US $206 million in 2017
compared to US $185 million in 2016, and increase of US $21 million
over the prior year. The Jamaica segment incurred some non-
recurring costs, together with higher administration costs relating to
the expansion of cards and payments business.
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 $159 million in 2017 compared to
US $149 million in 2017.
INCOME - $ millions
2017
2016
SAGICOR USA
SAGICOR JAMAICA
INCOME - $ millions
Revenue
Benefits
Expenses and taxes
Segment income
Segment income attributable to
shareholders
FINANCIAL POSITION - $ millions
Assets
Liabilities
Net assets
2017
592
(292)
(206)
94
46
2017
2,836
2016
524
(249)
(185)
90
44
2016
2,674
(2,276)
(2,223)
560
451
Net segment income for the year was US $94 million, compared
to a total of US $90 million recorded for 2016. As the Sagicor
Jamaica segment is owned 49% by the Group, the resulting net
income attributable to shareholders was US $46 million in 2017.
(US $44 million in 2016).
Revenue
Benefits
Expenses and taxes
Inter-segment reinsurance expense
Segment income
Segment income attributable to
shareholders
FINANCIAL POSITION - $ millions
Assets
Liabilities
Net assets
159
(117)
(34)
5
13
13
149
(86)
(57)
5
11
11
2017
1,982
2016
1,901
(1,742)
(1,682)
240
219
Total benefits amounted to US $117 million in 2017 compared
to US $86 million in 2016, an increase of US $31 million. Current
insurance benefits were US $88 million while the expense for future
insurance benefits in 2017 was US $27 million. The passage of Tax
Cuts and Jobs Act in the United States, which reduced the effective
corporation tax rate contributed to a decrease of US $20 million in
income taxes and an increase in the provision for future benefits of
US $14 million in the segment.
2017 ANNUAL REPORT
69
Expenses and taxes totalled US $34 million in 2017 compared to
US $57 million in 2016 a reduction of US $23 million, Income taxes
showed a reduction of US $20 million when compared to the prior
year and was principally related to the passage during 2017 of the
Tax Cuts and Jobs Act in the United States as previously noted.
Net income of the segment for 2017 was US $13 million, compared
to the US $11 million recorded for 2016.
As of December 31,2017, financial investments comprised 56% of
the segment assets and policy liabilities comprised 86% 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.
• If the experience is better than expected during the financial
period 2016 to 2018, then Sagicor may receive a portion of the
favourable experience. If there is no improvement, no payment
is expected.
DISCONTINUED OPERATION
INCOME - $ millions
2017
2016
Movement in price adjustment
Net income
10
10
1
1
FINANCIAL POSITION - $ millions
2017
2016
Assets
Liabilities
Net assets
10
-
10
-
-
-
LOOKING FORWARD
The International Monetary Fund (IMF) projects that the
momentum in global growth experienced in 2017, is expected to
continue throughout 2018 with expected growth of 3.9% based
on expected lower unemployment, higher trade levels and higher
commodity prices. The Economic Commission for Latin America
and the Caribbean has projected economic growth within the
Caribbean to increase slightly to 2.2% in 2018 following average
growth of 1.3% in 2017.
Central Banks within developed economies are expected
to maintain the generally accommodative monetary policy
environment for the foreseeable future with moderate tightening
supported by improved fundamentals, particularly within the USA.
This policy stance favours risk seeking asset classes and therefore
supports the favourable performance outlook for international
markets led by emerging market equities for 2017.
Emerging market economies led by the BRIC’s (Brazil, Russia, India
and China) are expected to maintain the lead in spurring economic
growth. Despite expected moderate monetary policy tightening to
restrain inflationary pressures, many emerging market economies,
are expected to maintain strong fundamentals, sound policy
frameworks and prudent macro-economic policies, which should
position them to outperform their developed market counterparts.
• Sagicor Europe made income of US $10 million in 2017
compared to income of US $1 million in 2016.
We remain cautiously optimistic about the Caribbean’s economic
recovery, which hinges on the economic stability of developed
70
SAGICOR FINANCIAL CORPORATION LIMITED
economies. In light of the expected economic strengthening within
the developed world, the region is expected to experience modest
expansion, in tourism and related industries which remain the
primary drivers of growth for regional economies.
During 2018 the company will continue to work on the corporate
re-organisation to respond to the changing regulatory environment,
while we continue to pursue opportunities for growth.
2017 ANNUAL REPORT
71
BOARD OF
DIRECTORS
We look to the future, committed to
oversight and leadership towards greatness.
BOARD OF DIRECTORS
DR STEPHEN D R MCNAMARA , Barrister-at-law; CBE, LLD (Hon)
Chairman
Appointed as Chairman in January 2010. Appointed to the Board in December 2002
Citizen of St. Lucia and Ireland
Dr McNamara was called to the Bar at Lincoln’s Inn, and in St Lucia in 1972. He is the senior partner
of McNamara & Company, Attorneys-at-Law of St. Lucia. The barrister/solicitor specialises in the
representation of foreign investors in St Lucia in the Tourism, Manufacturing and Banking sectors.
He served as Chairman of the St Lucia Tourist Board for nine years. Dr Mcnamara is the Chairman
of the Group’s main operating subsidiaries, Sagicor Life Inc, Sagicor USA and Sagicor Finance
Inc, and formerly served as Vice Chairman, Sagicor Financial Corporation Limited, between June
2007 and January 2010. He is a Director of Sagicor Group Jamaica Limited and a number of other
subsidiaries within the Group.
Dr McNamara’s St Lucia-based service includes the Board of St Lucia Electricity Services Ltd,
where he was elected Chairman in December 2015, and served until his retirement at the end of
2017, and as President of the St Lucia Tennis Association. Dr McNamara was made a Commander
of the Order of the British Empire (CBE) in the 2015 Queen’s Birthday Honours for public service
and services to the legal profession. Also in 2015 he was awarded an honorary doctorate from the
University of the West Indies for his outstanding achievements and contribution to the region in
the areas of business, sport and general philanthropy for more than forty years.
ANDREW ALEONG, MBA
Appointed June 2005
Citizen of Trinidad and Tobago
Mr Aleong holds an MBA from the Richard Ivey School of Business, University of Western Ontario,
Canada. He is Group Managing Director of the Albrosco Group of Companies, Trinidad and Tobago,
and has served the Trinidad and Tobago manufacturing industry for over 30 years. Mr Aleong is
a former President of the Trinidad and Tobago Manufacturers’ Association. He also serves as a
Director of a number of private companies. Mr Aleong was elected a Director of Sagicor Life Inc in
2005, and is also a Director of a number of other subsidiaries within the Group.
74
SAGICOR FINANCIAL CORPORATION LIMITED
PROFESSOR SIR HILARY MCD BECKLES, KA, BA, PhD
Appointed June 2005
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 Chairman of the Caribbean
Examinations Council. He is a member of the Secretary General of the UN, Advisory Board on
Science and Sustainable Development, a member of UNDP’s Advisory Panel on the Caribbean
Human Development Report, Vice President of UNESCO’s Slave Route Project, and also Vice
President of the Commonwealth Ministers’ Advisory Board on Sport.
PETER E CLARKE, Barrister-at-Law, BA (History), BA (Law)
Appointed June 2010
Citizen of Trinidad and Tobago
Mr Clarke 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 the Chairman of Guardian Media Ltd in Trinidad and Tobago, as well as a director of
a number of companies including the Trinidad and Tobago Stock Exchange. He is also a member
of 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.
2017 ANNUAL REPORT
75
DR L JEANNINE COMMA, BA, MA, EDD
Appointed June 2007
Citizen of Trinidad and Tobago and Barbados
Dr Comma is Chairman of the Human Resources Committee for Sagicor Financial Corporation
Limited. She holds a PhD from George Washington University, Washington, DC, USA, and is also
a graduate of the University of the Virgin Islands. Formerly the 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.
Dr Comma 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). She was elected a Director of
Sagicor Life Inc in 2006.
MONISH K DUTT, BA, MBA, FCA
Appointed June 2012
Citizen of India and Permanent resident of the United States of America
Mr Dutt holds an MBA 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. A Consultant on Emerging Markets, Mr Dutt is a seasoned investment
professional who serves as a non-executive director on several Boards including Ecobank, a pan-
African bank with assets of US$22 billion; Peak Reinsurance of Hong Kong, controlled by the Fosun
Group of China together with Prudential of the US; and FINCA Microfinance USA, with operations
in around 20 countries in emerging markets. Within the Sagicor Group, Mr Dutt serves as a Director
of Sagicor Bank Jamaica Limited, and Sagicor Life Insurance Company USA.
Prior to 2011, Mr Dutt was employed for 25 years 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, structuring and managing investments in financial
institutions and private equity funds globally. Mr Dutt has also represented IFC on the boards of
investee companies.
76
SAGICOR FINANCIAL CORPORATION LIMITED
DR MARJORIE M FYFFE-CAMPBELL, BSc, MSc, DBA
Appointed June 2005
Citizen of Jamaica
Dr Fyffe-Campbell is a Management Consultant with over 30 years’ experience in Finance,
Accounting and Executive Management, and holds a Doctorate in Business Administration (DBA)
from Mona School of Business and Management, with emphasis in Corporate Governance, an
MSc in Accounting and a BSc (Hons) from the University of the West Indies. She is a Fellow of
the Institute of Chartered Accountants of Jamaica, a member of the Hospitality, Financial and
Technology Professionals, and is a Justice of the Peace/Lay Magistrate in Jamaica. She is a former
President and Chief Executive Officer of the Urban Development Corporation, Jamaica.
Dr Fyffe-Campbell possesses extensive experience in Finance and Accounting, Corporate
Governance, Risk Management and Property Development and Management. She is a former
Adjunct Lecturer in Financial and Managerial Accounting and 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.
RICHARD M KELLMAN, BSc
Appointed June 2009
Citizen of Guyana
Mr Kellman was appointed Group Chief Operating Officer in June 2009 and retired from this
position on December 31, 2017.
Mr Kellman holds a BSc degree in Statistics from University College, London University, and is a
retired Fellow of the Institute of Actuaries. His career in the financial services industry spans 43
years, during which time, he has held senior actuarial and management positions with several
leading regional insurance companies, and served on a number of industry boards.
2017 ANNUAL REPORT
77
WILLIAM P LUCIE-SMITH, MA,FCA
Appointed June 2005
Citizen of Trinidad and Tobago
Mr Lucie-Smith 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 DODRIDGE D MILLER, FCCA MBA, LLM, LLD (Hon)
Appointed December 2002
Citizen of Barbados
Dr Miller was appointed Group President and Chief Executive Officer of Sagicor Financial
Corporation Limited in July 2002. He has been a Director since December 2002. He 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. Dr Miller has more
than 30 years’ experience in the banking, insurance and financial services industries.
Dr Miller joined the Group in 1989. 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. He is a Director of Sagicor Life Inc, Sagicor
USA, Sagicor Group Jamaica Limited, Sagicor Life Jamaica, Sagicor Investments Jamaica Limited
and a number of other subsidiaries within the Group.
78
SAGICOR FINANCIAL CORPORATION LIMITED
JOHN F SHETTLE, JR, BA, MBA
Appointed June 2008
Citizen of the United States of America
Mr Shettle 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, Mr Shettle has 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, 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, FCCA
Appointed January 2014
Citizen of Trinidad and Tobago
Mr Young 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.
2017 ANNUAL REPORT
79
CORPORATE
GOVERNANCE
We take our responsibility seriously,
to make each day better than the last.
CORPORATE GOVERNANCE
DIRECTORS’ INTERESTS
Directors’ interests as at December 31, 2017, and as at the record date, April 17, 2018, are as follows:
Shares as at 31-Dec-17
Shares as at 17-Apr-18
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
Dodridge Miller
John Shettle, Jr
Richard P. Young
23,993
553,358
9,579
25,000
22,300
1,000
50,850
638,988
150,338
2,505,696
1,000
34,266
0
0
0
0
0
0
0
0
0
0
0
0
23,993
553,358
9,579
25,000
22,300
1,000
50,850
638,988
150,338
2,505,696
1,000
34,266
0
0
0
0
0
0
0
0
0
0
0
0
Restricted Stock Grants
As at 31-Dec-17*
Vested
Unvested
Richard Kellman
1,037,898
0
Dodridge Miller
3,501,089
1,542,446
* These remained unchanged at April 17, 2018
82
SAGICOR FINANCIAL CORPORATION LIMITED
Stock options
As at 31-Dec-17*
Vested
1,380,624
3,865,278
Exercised
Expired
Unvested
1,145,787
1,954,366
234,837
455,754
0
3,120,465
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 two 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, 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.
2017 ANNUAL REPORT
83
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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
84
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 2017 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.
Stephen McNamara, Dr Marjorie Fyffe-Campbell, Richard Kellman and William
Lucie-Smith, having been designated as Class III Directors, will retire at the
fifteenth Annual Meeting, and all being qualified, have offered themselves
for re-election. Profiles of the nominees will be provided in the Management
Proxy Circular accompanying the Notice of the Meeting sent to shareholders.
The Director nomination process is 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. All Directors who
have served on the Board for nine or more years are subject to enhanced
evaluation by an independent Corporate Governance professional 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.
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 corporate
governance, risk, actuarial movements, cyber security, reinsurance, regulatory
changes 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,
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.
2017 ANNUAL REPORT
85
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
and 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.
The mandate of the Audit Committee is to oversee the external
audit process, and manage all aspects of the relationship with the
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:
• Stephen McNamara (appointed a Member on March 9, 2004 and
Chairman on February 17, 2010);
• 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).
86
SAGICOR FINANCIAL CORPORATION LIMITED
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
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.
2017 ANNUAL REPORT
87
BOARD OPERATIONS
8
During 2017, Management engaged the Board of Directors (BOD) 13 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 4 times; the Corporate Governance
and Ethics Committee (CGC) met 4 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:
DIRECTOR
Stephen McNamara
Andrew Aleong
Prof Sir Hilary Beckles
Peter Clarke
Dr Jeannine Comma
Monish Dutt
BOD
13 of 13
12 of 13
12 of 13
13 of 13
12 of 13
13 of 13
Dr Marjorie Fyffe-Campbell
13 of 13
Richard Kellman
William Lucie-Smith
Dr Dodridge Miller
John Shettle, Jr
Richard P Young
12 of 13
13 of 13
13 of 13
12 of 13
12 of 13
AC
3 of 4
3 of 4
4 of 4
4 of 4
4 of 4
CGC
4 of 4
3 of 4
4 of 4
4 of 4
4 of 4
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 2017
was to:
88
SAGICOR FINANCIAL CORPORATION LIMITED
HRC
4 of 4
4 of 4
4 of 4
4 of 4
IRC
3 of 3
2 of 3
3 of 3
2 of 3
1 of 3
3 of 3
Total
24 of 24
18 of 20
15 of 17
19 of 20
19 of 21
21 of 21
21 of 21
12 of 13
19 of 20
13 of 13
17 of 20
19 of 20
%
100
90
88
95
90
100
100
92
95
100
85
95
•
•
•
•
•
•
•
•
•
•
•
•
consider and approve the Group strategic plan, capital plan and
projections for the period 2018 to 2020;
review proposal to increase authorized share capital;
review proposal to extend term of Executive Long Term
Incentive Plan;
review causes of postponement of Annual General Meeting
consider acquisition opportunities;
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;
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.
9
COMMITTEE OPERATIONS
AUDIT COMMITTEE REPORT:
The 2017 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;
reviewing the External Auditors’ 2016 Management Letter and
Report on the 2016 audit;
approving the 2017 Audit Engagement Letter;
reviewing and recommending for approval by the Board interim
and annual audited financial statements;
• making dividend recommendations to the Board;
•
•
•
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 2017 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 2017 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
conflicts of interest;
overseeing the Director self and peer performance
evaluation process;
• monitoring Director attendance;
•
•
reviewing Corporate Governance structure of subsidiaries;
conducting its annual review of the adequacy of the Code of
Business Conduct and Ethics;
generally monitoring the operation of Corporate Governance
policies and practices and
assessing the adequacy of the Committee’s mandate, and
evaluating its effectiveness in fulfilling same.
•
•
HUMAN RESOURCES COMMITTEE REPORT:
During 2017, activities of the Human Resources Committee included:
•
reviewing executive performance, compensation and terms
of engagement;
• monitoring succession planning and leadership and development
•
•
plans at the executive level;
considering succession planning needs across the Group for
senior employees below the executive level;
granting 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;
2017 ANNUAL REPORT
89
•
•
•
reviewing aspects of the rules of the Company’s annual long-term
incentive plans;
reviewing ESOP financial statements, and
assessing the adequacy of the Committee’s mandate and
evaluated its effectiveness in fulfilling same.
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 $6,920,096. 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.
INVESTMENT AND RISK COMMITTEE REPORT:
In 2017, 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
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 Balanced Scorecard. 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)
90
SAGICOR FINANCIAL CORPORATION LIMITED
Restricted Stock Grants
Stock options
For the financial year ended 31-Dec-17 For the financial year ended 31-Dec-17
Top 5 Members of the Group Executive
Management Team
Vested
2,055,528
Vested
2,353,355
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.
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 $631,000.
Directors receive no additional benefits, but are reimbursed reasonable and
customary out-of-pocket expenses associated with their attendance at
meetings, and the performance of their role as Directors. Executives who are
Directors are not paid fees.
2017 ANNUAL REPORT
91
FEES PAID TO EXTERNAL AUDITORS
11
PricewaterhouseCoopers is the Group’s external auditor. Following is a
statement of the fees paid to the external auditors for audit and non-audit
services during 2016 and 2017:
Services
Fees Paid US$ ‘000
Audit
Non-Audit
Statutory Returns
Other
Total
2016
2,950
273
944
454
4,621
2017
3,675
349
952
244
5,220
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 44 to
the 2017 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.
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
and determined that further enhancements will be made in 2018.
92
SAGICOR FINANCIAL CORPORATION LIMITED
INVESTOR RELATIONS AND COMMUNICATIONS
16
During 2017, 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
April 30, 2018
2017 ANNUAL REPORT
93
EXECUTIVE
MANAGEMENT
We deliver growth to our stakeholders
through leadership and sound business strategies.
EXECUTIVE MANAGEMENT
DR 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 (Retired December 31, 2017)
• 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.
96
SAGICOR FINANCIAL CORPORATION LIMITED
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.
RAVI C RAMBARRAN BSc, MSc, FIA
Chief Operating Officer with responsibility for Sagicor Life Inc, Southern Caribbean
Operations (Effective January 1, 2018)
• In January 2018 he was appointed Chief Operating Officer with responsibility for Sagicor Life Inc,
Southern Caribbean Operation.
• 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 pensions, 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.
2017 ANNUAL REPORT
97
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, FICA
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.
98
SAGICOR FINANCIAL CORPORATION LIMITED
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 30 years in the insurance industry.
2017 ANNUAL REPORT
99
NARI T PERSAD BSc Biochemistry, BSc Actuarial Science, FSA, FCIA
Group Chief Actuary
• Appointed Group Chief Actuary in August 2017.
• Holds a BSc Specialist in Actuarial Science and Biochemistry from the University of Toronto.
• Fellow of the Canadian Institute of Actuaries, Fellow of the Society of Actuaries.
• Affiliate member of the Caribbean Actuarial Association.
• Previously served as Partner – Canadian Life Actuarial Practice Leader with Ernst & Young and
Principal of Eckler Ltd.
• More than 25 years in the insurance industry including positions at Crown Life Insurance
Company, Canada Life Assurance Company, Toronto Dominion Life Insurance Company, Swiss
Re Life and Health and Dion Durrell + Associates.
DONALD S AUSTIN BSc, MBA, FCCA
Chief Executive Officer, 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 degree (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.
100
SAGICOR FINANCIAL CORPORATION LIMITED
RICHARD O BYLES BSc, MSc
President and Chief Executive Officer, Sagicor Group Jamaica Limited (retired
April 2017)
• Appointed Chairman of Sagicor Group Jamaica Limited on May 1, 2017.
• Appointed President and CEO of Sagicor Life Jamaica Limited in 2004.
• In February 2016 he reached retirement age and was employed on a short-term contract until
the new Chief Executive Officer assumed 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.
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.
2017 ANNUAL REPORT
101
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 (seconded to Sagicor General Insurance Inc as President & CEO (AG) in
October 2017)
• 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.
102
SAGICOR FINANCIAL CORPORATION LIMITED
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 industries.
• Promoted to Vice President – Administration in 2004, and became Executive Vice President and
General Manager Designate in 2006.
CHRISTOPHER W ZACCA, CD, BSc, MBA
President and Chief Executive Officer, Sagicor Group Jamaica Limited
• Appointed President and CEO of Sagicor Group Jamaica Limited in May 2017.
• Holds a BSc in Engineering from the Massachusetts Institute of Technology and an MBA from the
University of Florida.
• More than 30 years of experience in public and private sector management, in particular, during
the period 1982-2009 where he held various Senior Management positions in the private sector
namely:-
• Vice President, Engineering - Desnoes & Geddes Limited (t/a Red Stripe), Brewers of Red Stripe
Beer and Manufacturers of Soft Drinks.
• Managing Director - Caribrake Products Limited, Manufacturers and Distributors of Automotive
Parts and Accessories.
• Managing Director - Appliance Traders Limited, Dealers in Air Conditioning, Appliance and
Commercial Equipment.
• Chief Executive Officer - Air Jamaica Limited, former National Airline of Jamaica.
• Served as President of the Private Sector Organisation of Jamaica from December 2006 to June
2009 and from June 2012 to December 2014.
• Former Chairman of the Development Bank of Jamaica and the National Health Fund and has
also served on numerous State boards, including the Factories Corporation, National Education
Trust and JAMPRO.
• Served as special advisor to the Prime Minister of Jamaica from 2009 to 2011.
• In 2014, he was conferred with the National Honour of the Order of Distinction in the rank of
Commander (CD) for his invaluable contribution to the private and public sectors in Jamaica.
2017 ANNUAL REPORT
103
INDEX TO
FINANCIAL
STATEMENTS
We continue to operate
with integrity, honesty and transparency.
INDEX TO THE FINANCIAL STATEMENTS AND NOTES
Page
Page
Independent Auditor’s Report
108
10 Reinsurance Assets
Appointed Actuary’s Report
113
11
Income Tax Assets
Consolidated Statement of Financial Position
114
12 Miscellaneous Assets and Receivables
Consolidated Statement of Income
115
13 Actuarial Liabilities
Consolidated Statement of Comprehensive Income
116
14 Other Insurance Liabilities
Consolidated Statement of Changes in Equity
117
15
Investment Contract Liabilities
Consolidated Statement of Cash Flows
118
16 Notes and Loans Payable
1
Incorporation and Principal Activities
119
17 Deposit and Security Liabilities
2 Accounting Policies
119
18 Provisions
3 Critical Accounting Estimates and Judgements
144
19
Income Tax Liabilities
4 Segments
146
20 Accounts Payable and Accrued Liabilities
5
Investment Property
156
21 Common and Preference Shares
6 Associates and Joint Ventures
157
22 Reserves
7 Property, Plant and Equipment
161
23 Participating Accounts
8
Intangible Assets
162
24 Premium Revenue
9 Financial Investments
165
25 Net Investment Income
167
167
167
168
171
172
172
173
173
174
174
175
177
178
178
179
106
SAGICOR FINANCIAL CORPORATION LIMITED
Page
26 Fees and Other Revenue
180
42 Insurance Risk - Property & Casualty Contracts
27 Policy Benefits & Change in Actuarial Liabilities
180
43 Insurance Risk - Life, Annuity & Health Contracts
28 Interest Expense
29 Employee Costs
180
44 Fiduciary Risk
181
45 Statutory Restrictions on Assets
30 Equity Compensation Benefits
181
46 Capital Management
31 Employee Retirement Benefits
184
47 Related Party Transactions
Page
222
224
229
229
230
233
32 Income Taxes
188
48 Breach of Insurance Regulations – Related Party Balances
233
33 Deferred Income Taxes
189
49 Events after December 31, 2017
233
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
193
194
195
196
196
198
199
200
2017 ANNUAL REPORT
107
AUDITOR’S REPORT
108
SAGICOR FINANCIAL CORPORATION LIMITED
2017 ANNUAL REPORT
109
110
SAGICOR FINANCIAL CORPORATION LIMITED
2017 ANNUAL REPORT
111
112
SAGICOR FINANCIAL CORPORATION LIMITED
ACTUARY’S REPORT
2017 ANNUAL REPORT
113
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As of December 31, 2017
Sagicor Financial Corporation Limited
Amounts expressed in US $000
Note
2017
2016
Note
2017
2016
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
Assets of discontinued operation
Total assets
5
7
6
8
9
10
11
12
38
80,816
165,560
97,223
81,714
80,662
167,723
87,293
83,487
LIABILITIES
Actuarial liabilities
Other insurance liabilities
Investment contract liabilities
Total policy liabilities
4,953,241
4,813,748
Notes and loans payable
797,391
39,980
228,543
360,064
10,110
777,344
59,575
183,018
279,070
-
6,814,642
6,531,920
These financial statements have been approved for issue by the Board of Directors on April 4, 2018.
………………………………………………
Director
………………………………………………
Director
Deposit and security liabilities
Provisions
Income tax liabilities
Accounts payable and accrued liabilities
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
21
21
22
23
2,950,820
2,776,362
224,159
379,018
3,553,997
413,805
1,559,232
80,027
28,277
246,976
207,122
377,576
3,361,060
395,213
1,623,325
101,292
50,641
204,975
5,882,314
5,736,506
3,059
300,470
(47,482)
367,327
623,374
865
308,089
932,328
3,029
297,050
(64,795)
300,865
536,149
1,291
257,974
795,414
Total liabilities and equity
6,814,642
6,531,920
114
SAGICOR FINANCIAL CORPORATION LIMITED
2
CONSOLIDATED STATEMENT OF INCOME
Year ended December 31, 2017
Sagicor Financial Corporation Limited
Amounts expressed in US $000
Note
2017
2016
Note
2017
2016
REVENUE
Premium revenue
Reinsurance premium expense
Net premium revenue
Net investment income
Fees and other revenue
Gain arising on disposal
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 from discontinued operation
38
NET INCOME FOR THE YEAR
105,169
10,110
115,279
107,897
1,412
109,309
898,354
(152,722)
745,632
379,236
93,740
2,261
833,918
(169,962)
663,956
353,352
116,839
-
Net income/(loss) is attributable to:
Common shareholders:
From continuing operations
1,220,869
1,134,147
From discontinued operation
Participating policyholders
Non-controlling interests
Basic earnings per common share:
34
From continuing operations
From discontinued operation
Fully diluted earnings per common share:
34
From continuing operations
From discontinued operation
720,651
(114,839)
605,812
54,949
660,761
693,173
(194,262)
498,911
61,448
560,359
267,427
255,326
98,749
13,569
34,746
21,871
436,362
123,746
(18,577)
105,169
98,570
10,679
38,333
21,283
424,191
149,597
(41,700)
107,897
62,123
10,110
72,233
(1,044)
44,090
60,259
1,412
61,671
110
47,528
115,279
109,309
20.4 cents
3.3 cents
23.7 cents
19.9 cents
3.2 cents
23.1 cents
19.5 cents
0.5 cents
20.0 cents
18.7 cents
0.4 cents
19.1 cents
2017 ANNUAL REPORT
115
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended December 31, 2017
Sagicor Financial Corporation Limited
Amounts expressed in US $000
OTHER COMPREHENSIVE INCOME
Note
2017
2016
TOTAL COMPREHENSIVE INCOME
2017
2016
Items net of tax that may be reclassified subsequently
to income:
35
Available for sale assets:
Gains on revaluation
(Gains) / losses 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
(Losses) / gains on revaluation of owner-occupied property
Gains/ (losses) on defined benefit plans
Other items
57,900
(12,259)
(13,475)
9,721
41,887
(1,759)
23,914
-
22,155
39,183
2,675
(17,090)
(28,481)
(3,713)
5,145
(13,875)
(128)
(8,858)
OTHER COMPREHENSIVE GAIN / (LOSS) FROM
CONTINUING OPERATIONS
64,042
(12,571)
Net income
Other comprehensive income / (loss)
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
Total comprehensive income / (loss) is attributable to:
Common shareholders:
From continuing operations
From discontinued operation
Participating policyholders
Non-controlling interests
115,279
64,042
179,321
96,141
10,110
106,251
(210)
73,280
179,321
109,309
(12,571)
96,738
45,811
1,412
47,223
132
49,383
96,738
116
SAGICOR FINANCIAL CORPORATION LIMITED
4
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Year ended December 31, 2017
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
2017
Balance, beginning of year
3,029
297,050
(64,795)
300,865
Total comprehensive income from continuing operations
Total comprehensive income from discontinued operation
Transactions with holders of equity instruments:
Allotments of common shares
Movements in treasury shares
Changes in reserve for equity compensation benefits
Dividends declared (note 21.3)
Transfers and other movements
-
-
21
9
-
-
-
-
-
2,021
1,399
-
-
-
21,432
-
-
-
(6,270)
74,709
10,110
-
-
-
-
(15,216)
2,151
(3,141)
Balance, end of year
3,059
300,470
(47,482)
367,327
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
(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
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
5
536,149
96,141
10,110
2,042
1,408
(6,270)
(15,216)
(990)
623,374
506,046
45,811
1,412
-
759
2,132
(18,880)
(1,131)
536,149
1,291
(210)
257,974
73,280
-
-
-
-
-
(216)
865
1,383
132
-
-
-
-
-
(224)
1,291
-
-
-
(75)
(19,861)
(3,229)
308,089
231,735
49,383
-
-
-
(50)
(17,684)
(5,410)
257,974
795,414
169,211
10,110
2,042
1,408
(6,345)
(35,077)
(4,435)
932,328
739,164
95,326
1,412
-
759
2,082
(36,564)
(6,765)
795,414
2017 ANNUAL REPORT
117
CONSOLIDATED STATEMENT OF CASH FLOWS
Year ended December 31, 2017
Sagicor Financial Corporation Limited
Amounts expressed in US $000
Note
2017
2016
Note
2017
2016
OPERATING ACTIVITIES
Income before taxes
123,746
149,597
Movement in treasury shares
FINANCING ACTIVITIES
Adjustments for non-cash items, interest and dividends
36.1
(110,518)
(188,098)
Interest and dividends received
Interest paid
Income taxes paid
305,810
(83,627)
(43,352)
299,968
(93,620)
(24,948)
Net increase in investments and operating assets
Net increase in operating liabilities
Net cash flows - operating activities
36.1
36.1
(157,602)
(100,362)
18,052
52,509
83,793
126,330
INVESTING ACTIVITIES
Property, plant and equipment, net
36.2
(13,385)
(17,996)
Associates and joint ventures
Intangible assets
Changes in ownership of associate, net of cash and cash
equivalents
Net cash flows - investing activities
(6,908)
(6,182)
7,766
(18,709)
(188)
(4,272)
-
(22,456)
Redemption of SFCL preference shares
Shares issued to non-controlling interest
Other notes and loans payable, net
36.3
Dividends received from associates
(203)
-
(5,504)
16,182
2,561
(98)
(119,991)
(6,634)
34,008
1,788
Dividends paid to common shareholders
(14,950)
(13,381)
Dividends paid to preference shareholders
Dividends paid to non-controlling interests
Net cash flows - financing activities
-
(19,861)
(21,775)
(5,256)
(17,824)
(127,388)
Effects of exchange rate changes
1,595
(4,645)
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
13,620
(28,159)
-
(44,614)
312,106
325,726
384,879
312,106
118
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, 2017 have been approved
by the Board of Directors on April 4, 2018. 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
2017 ANNUAL REPORT
119
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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, 2017, 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.
120
SAGICOR FINANCIAL CORPORATION LIMITED
8
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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, 2017, 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
2017 ANNUAL REPORT
121
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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.
2017 closing
2017 average
2016 closing
2016 average
2.4 Segments
Barbados dollar
2.0000
Eastern Caribbean dollar
2.7000
2.0000
2.7000
2.0000
2.7000
2.0000
2.7000
Jamaica dollar
124.5754
128.0938
127.9824
124.7554
Trinidad & Tobago dollar
6.7628
Pound sterling
0.74020
6.7428
0.77496
6.7458
0.81280
6.6190
0.73444
Reportable operating segments have been defined on the basis of performance and resource allocation
decisions of the Group’s Chief Executive Officer.
122
SAGICOR FINANCIAL CORPORATION LIMITED
10
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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 the 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.
11
2017 ANNUAL REPORT
123
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 Amounts expressed in US $000
124
SAGICOR FINANCIAL CORPORATION LIMITED
12
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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.
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
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.
Fair value amounts represent the price (or estimates thereof) that would be agreed upon in an orderly
transaction between market participants at the valuation date.
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.
13
2017 ANNUAL REPORT
125
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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.
126
SAGICOR FINANCIAL CORPORATION LIMITED
14
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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.
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.
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:
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
2017 ANNUAL REPORT
127
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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.
128
SAGICOR FINANCIAL CORPORATION LIMITED
16
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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 directly 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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2017 ANNUAL REPORT
129
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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.
130
SAGICOR FINANCIAL CORPORATION LIMITED
18
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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 Group 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.
19
2017 ANNUAL REPORT
131
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 Amounts expressed in US $000
2.12 Financial liabilities (continued)
2.14 Derivative financial instruments and hedging activities (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
Fair value amounts represent the price (or estimates thereof) that would be agreed upon in an orderly
transaction between market participants at valuation date.
2.13 Provisions
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.
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.
2.15 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
2.16 Presentation of current and non-current assets and liabilities
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.
132
SAGICOR FINANCIAL CORPORATION LIMITED
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.
20
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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 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 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.
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.
(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.
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.
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 a minimum funding requirement exists, the Group assesses the obligation, to determine whether
the additional contributions would affect the measurement of the defined benefit asset or liability.
(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 other comprehensive
income and retained earnings or non-controlling interest in the period in which they arise.
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
2017 ANNUAL REPORT
133
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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 0.35% 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.
134
SAGICOR FINANCIAL CORPORATION LIMITED
22
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 Amounts expressed in US $000 2.18 Taxes (continued)
2.19 Common and preference shares
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)
Registered
annuities
Other lines of
business
Nil
Nil
Nil
25% of
net income
25% - 33.33 % of
profit before tax
25%
of net income
(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
35% of net income
21%
of net income
21%
of net income
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.
Income tax rates
Barbados
Jamaica
Trinidad and
Tobago
United States of
America
(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.
23
The redemption value was recognised as a contractual liability, and was measured initially at its
discounted fair value. The discount rate reflected 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 preference shareholders’ rights to receive dividends were recognised within shareholders’ equity,
and were 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 was initially recorded as a
preference share reserve in note 22.
Incremental costs directly attributable to the issue of the preference shares were 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 was 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 was transferred to retained earnings pro-
rata to the dividends declared over the period to redemption.
No preference shares were converted to common shares prior to the redemption.
2017 ANNUAL REPORT
135
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 Amounts expressed in US $000
2.19 Common and preference shares (continued)
2.20 Participating accounts (continued)
(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.
136
SAGICOR FINANCIAL CORPORATION LIMITED
24
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 Amounts expressed in US $000 2.20 Participating accounts (continued)
2.23 Fees and other revenue
(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.
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 and excluded restricted cash.
25
2017 ANNUAL REPORT
137
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 Amounts expressed in US $000
2.25 Future accounting developments and reporting changes
IFRS (Effective Date)
Subject / Comments
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 (Effective Date)
Subject / Comments
IFRS 9 –
Financial Instruments
(January 1, 2018)
(continued)
Investments in equity instruments are always measured at fair value.
However, management can make an irrevocable election to present
changes in fair value in other comprehensive income, provided the
instrument is not held for trading. If the equity instrument is held for trading,
changes in fair value are presented in profit or loss.
IFRS 9 –
Financial Instruments
(January 1, 2018)
‘Financial
instruments’, addresses
IFRS 9,
the classification,
measurement and recognition of financial assets and financial liabilities.
The complete version of IFRS 9 was issued in July 2014. The standard is
effective for accounting periods beginning on or after January 1, 2018.
IFRS 9 replaces the guidance in IAS 39, ‘Financial instruments:
recognition and measurement’. IFRS 9 retains but simplifies the mixed
measurement model and establishes
three primary measurement
categories for financial assets: amortized cost, fair value through other
comprehensive income (“FVOCI”) and fair value through profit and loss
(“FVPL”). The basis of classification depends on the entity’s business
model and the contractual cash flow characteristics of the financial asset.
Classification for debt instruments is driven by the entity’s business model
for managing the financial assets and whether the contractual cash flows
represent solely payments of principal and interest (“SPPI”). If a debt
instrument is held to collect, it may be carried at amortised cost if it also
meets the SPPI requirement. Debt instruments that meet the SPPI
requirement that are held in a portfolio where an entity both holds to collect
assets’ cash flows and sells assets may be classified as FVOCI. Financial
assets that do not contain cash flows that are SPPI must be measured at
FVPL. Embedded derivatives are no longer separated from financial
assets but will be included in assessing the SPPI condition.
Management is in the process of assessing how the Group’s business
model will impact the classification and measurement of financial assets
in scope of IFRS 9. An Implementation Committee was created to oversee
the implementation project. The project involves three phases:
•
•
•
Phase 1: Key decisions; this includes identification of key decisions,
deciding on the measurement and classification for all products,
determining stage migration and cure rate thresholds;
Phase 2: Assessing availability of data, defining and determining
detailed credit modelling methodology based on available data,
resources and infrastructure, defining and developing methodology
to estimate unadjusted credit losses and defining methodology to
incorporate forward looking information;
Phase 3: Implementation; this includes finalizing forward-looking
information, applying multiple scenarios and determining the weight
for each scenario to calculate the expected credit losses (“ECL”).
Currently management has completed Phase 1 and Phase 2 and
management is in the process of completing Phase 3.
Most of the requirements in IAS 39 for classification and measurement of
financial liabilities were carried forward unchanged to IFRS 9. The key
change is that an entity will be required to present the effects of changes
in own credit risk of financial liabilities designated at fair value through
profit or loss in other comprehensive income.
138
SAGICOR FINANCIAL CORPORATION LIMITED
26
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 Amounts expressed in US $000 2.25 Future accounting developments and reporting changes (continued)
IFRS (Effective Date)
Subject / Comments
IFRS (Effective Date)
Subject / Comments
IFRS 9 – Financial
Instruments
(January 1, 2018)
The new standard is not expected to impact the Group’s consolidated
financial liabilities as there are no financial liabilities which are currently
designated at fair value through profit or loss without off-setting assets
carried at fair value.
IFRS 9 – Financial
Instruments
(January 1, 2018)
The assessment of whether credit risk has increased significantly since
initial recognition is performed on an ongoing basis by considering the
change in the risk of default occurring over the remaining life of the
financial instrument, rather than by considering an increase in ECL.
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. Contemporaneous documentation is still required
but is different to that currently prepared under IAS 39. The new standard
relating to hedge accounting is not expected to impact the Group’s
consolidated financial statements, as the Group does not use hedge
accounting.
lease receivables and certain
The impairment requirements apply to financial assets measured at
amortised cost and FVOCI,
loan
commitments and financial guarantee contracts. At initial recognition, an
allowance is required for expected credit losses (‘ECL’) resulting from
default events that are possible within the next 12 months (’12-month
ECL’). In the event of a significant increase in credit risk, allowance is
required for ECL resulting from all possible default events over the
expected life of the financial instrument (‘lifetime ECL’). Financial assets
where 12-month ECL is recognised are considered to be ‘stage 1’;
financial assets which are considered to have experienced a significant
increase in credit risk are in ‘stage 2’; and financial assets for which there
is objective evidence of impairment are considered to be in default or
otherwise credit impaired are in ‘stage 3’.
The assessment of a significant increase in credit risk is done on a relative
basis. To assess whether the credit risk on a financial asset has increased
significantly since origination, the Group compares the risk of default
occurring over the expected life of the financial asset at the reporting date
to the corresponding risk of default at origination, using key risk indicators
that are used in the Group’s existing risk management processes. At each
reporting date, the assessment of a change in credit risk will be individually
assessed for those considered individually significant. This assessment is
symmetrical in nature, allowing credit risk of financial assets to move back
to Stage 1 if the increase in credit risk since origination has reduced and
is no longer deemed to be significant.
When measuring ECL, the Group must consider the maximum contractual
period over which the Group is exposed to credit risk. All contractual terms
should be considered when determining the expected life, including
prepayment options and extension and rollover options. For certain
revolving credit facilities that do not have a fixed maturity, the expected life
is estimated based on the period over which the Group is exposed to credit
risk and where the credit losses would not be mitigated by management
actions.
27
2017 ANNUAL REPORT
139
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 Amounts expressed in US $000
2.25 Future accounting developments and reporting changes (continued)
IFRS (Effective Date)
Subject / Comments
IFRS (Effective Date)
Subject / Comments
IFRS 9 – Financial
Instruments
(January 1, 2018)
The objective of the impairment requirements is to recognize lifetime
expected credit losses for all financial instruments for which there have
been a significant increase in credit risk since initial recognition –
whether assessed on an individual or collective basis – considering all
reasonable and supportable information, including that which is forward
looking.
The ECL is required to be unbiased and probability-weighted, and should
incorporate all available information which is relevant to the assessment
including
information about past events, current conditions and
reasonable and supportable forward looking information specific to the
counterparty as well as forecasts of economic conditions at the reporting
date.
In addition, the estimation of ECL should take into account the time value
of money. As a result, the recognition and measurement of impairment is
intended to be more forward-looking than under IAS 39. It will also tend
to result in an increase in the total level of impairment allowances, since
all financial assets will be assessed for at least 12-month ECL and the
population of financial assets to which lifetime ECL applies is likely to be
larger than the population for which there is objective evidence of
impairment in accordance with IAS 39. Any adjustment on initial adoption
of this standard will impact retained earnings.
The new standard also introduces expanded disclosure requirements and
changes in presentation. These are expected to change the nature and
extent of the Group’s disclosures about its financial instruments
particularly in the year of the adoption of the new standard.
IFRS 15 - Revenue from
contracts with customers
(January 1, 2018)
The IASB has issued a new standard for the recognition of revenue. This
will replace IAS 18 which covers contracts for goods and services and IAS
11 which covers construction contracts.
IFRS 15 - Revenue from
contracts with customers
(January 1, 2018)
The new standard is based on the principle that revenue is recognised
when control of a good or service transfers to a customer – so the notion
of control replaces the existing notion of risks and rewards.
A new five-step process must be applied before revenue can be
recognised:
•
•
•
•
identify contracts with customers
identify the separate performance obligation
determine the transaction price of the contract
allocate the transaction price to each of the separate
performance obligations, and
recognise the revenue as each performance obligation is
satisfied.
•
Key changes to current practice are:
•
•
•
•
•
Any bundled goods or services that are distinct must be
separately recognised, and any discounts or rebates on the
contract price must generally be allocated to the separate
elements.
Revenue may be recognised earlier than under current
standards if the consideration varies for any reasons (such as
for incentives, rebates, performance fees, royalties, success of
an outcome etc.) –minimum amounts must be recognised if
they are not at significant risk of reversal.
The point at which revenue is able to be recognised may shift:
some revenue which is currently recognised at a point in time
at the end of a contract may have to be recognised over the
contract term and vice versa.
licenses, warranties,
There are new specific rules on
nonrefundable upfront fees and, consignment arrangements,
to name a few.
As with any new standard,
disclosures.
there are also
increased
140
SAGICOR FINANCIAL CORPORATION LIMITED
28
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 Amounts expressed in US $000 2.25 Future accounting developments and reporting changes (continued)
IFRS (Effective Date)
Subject / Comments
IFRS (Effective Date)
Subject / Comments
IFRS 15 - Revenue from
contracts with customers
(January 1, 2018)
Entities will have a choice of full retrospective application, or prospective
application with additional disclosures.
IFRS 16 - Leases
(January 1, 2019)
The Group’s primary activities are insurance and banking. Insurance
product revenue recognition is defined in IFRS 4.
Banking revenue primarily arises from the recognition of income on
financial assets and liabilities in accordance with the provisions of IFRS 9.
IFRS 16 will affect primarily the accounting by lessees and will result in
the recognition of almost all leases on balance sheet. The standard
removes the current distinction between operating and financing leases
and requires recognition of an asset (the right to use the leased item) and
a financial liability to pay rentals for virtually all lease contracts. An optional
exemption exists for short-term and low-value leases.
The income statement will also be affected because the total expense is
typically higher in the earlier years of a lease and lower in later years.
Additionally, operating expense will be replaced with interest and
depreciation, so key metrics like Earnings before Interest Tax Depreciation
and Amortization will change.
Operating cash flows will be higher as cash payments for the principal
portion of the lease liability are classified within financing activities. Only
the part of the payments that reflects interest can continue to be presented
as operating cash flows.
The accounting by lessors will not significantly change. Some differences
may arise as a result of the new guidance on the definition of a lease.
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 fully assess the impact of this standard.
Classification and
Measurement of
Share-based Payment
Transactions –
Amendments to
IFRS 2
(January 1, 2018)
The amendments made to IFRS 2 in July 2016 clarify the measurement
basis for cash-settled share-based payments and the accounting for
modifications that change an award from cash-settled to equity-settled.
They also introduce an exception to the classification principles in IFRS 2.
Where an employer is obliged to withhold an amount for the employee’s
tax obligation associated with a share-based payment and pay that
amount to the tax authority, the whole award will be treated as if it was
equity-settled provided it would have been equity-settled without the net
settlement feature.
Entities with the following arrangements are likely to be affected by these
changes:
•
equity-settled awards that include net settlement features relating
to tax obligations
cash-settled share-based payments that include performance
conditions, and
cash-settled arrangements that are modified to equity-settled
share-based payments.
•
•
Applying IFRS 9 Financial
Instruments with IFRS 4
Insurance Contracts -
Amendments to IFRS 4
(January 1, 2018)
The Group does not expect the adoption of these improvements to have
any material impact.
In September 2016, the IASB published an amendment to IFRS 4 which
addresses the concerns of insurance companies about the different
effective dates of IFRS 9 Financial instruments and the forthcoming new
insurance contracts standard. The amendment provides two different
solutions for insurance companies: a temporary exemption from IFRS 9
for entities that meet specific requirements (applied at the reporting entity
level), and the ‘overlay approach’. Both approaches are optional. The
Group has assessed its eligibility for deferral and has concluded that it will
adopt IFRS 9 on January 1, 2018.
29
2017 ANNUAL REPORT
141
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 Amounts expressed in US $000
2.25 Future accounting developments and reporting changes (continued)
IFRS (Effective Date)
Subject / Comments
IFRS (Effective Date)
Subject / Comments
Applying IFRS 9 Financial
Instruments with IFRS 4
Insurance Contracts -
Amendments to IFRS 4
(January 1, 2018)
Annual improvements
2014-2016 cycle
(January 1, 2018)
Transfers of Investment
Property – Amendments
to IAS 40
(January 1, 2018)
IFRS 4 (including the amendments) will be superseded by the forthcoming
new insurance contracts standard. Accordingly, both the temporary
exemption and the ‘overlay approach’ are expected to cease to be
applicable when the new insurance standards becomes effective.
Transfers of Investment
Property – Amendments
to IAS 40
(January 1, 2018)
Interpretation 22
Foreign Currency
Transactions and
Advance Consideration
(January 1, 2019)
The overlay approach will give 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 the new insurance contracts standard is issued.
The Group is currently assessing the impact of this approach on its
financial statements.
The following improvements were finalised in December 2016:
•
•
IFRS 1 - deleted short-term exemptions covering transition
provisions of IFRS 7, IAS 19 and IFRS 10 which are no longer
relevant.
IAS 28 - clarifies
that the election by venture capital
organisations, mutual funds, unit trusts and similar entities to
measure investments in associates or joint ventures at fair
value through profit or loss should be made separately for each
associate or joint venture at initial recognition.
The Group does not expect the adoption of these improvements to have
any material impact.
The amendments clarify that transfers to, or from, investment property
can only be made if there has been a change in use that is supported by
evidence. A change in use occurs when the property meets, or ceases to
meet, the definition of investment property. A change in intention alone is
not sufficient to support a transfer.
The list of evidence for a change of use in the standard was
recharacterized as a non-exhaustive list of examples to help illustrate the
principle.
142
SAGICOR FINANCIAL CORPORATION LIMITED
•
•
The Board provided two options for transition: prospectively,
with any impact from the reclassification recognized as
adjustment to opening retained earnings as at the date of initial
recognition, or
retrospectively - only permitted without the use of hindsight
Additional disclosures are required if an entity adopts the requirements
prospectively.
The Group does not expect the adoption of this amendment to have any
material impact.
The interpretation clarifies how to determine the date of transaction for the
exchange rate to be used on initial recognition of a related asset, expense
or income where an entity pays or receives consideration in advance for
foreign currency-denominated contracts.
For a single payment or receipt, the date of the transaction should be the
date on which the entity initially recognises the non-monetary asset or
liability arising from the advance consideration (the prepayment or
deferred income/contract liability).
If there are multiple payments or receipts for one item, a date of
transaction should be determined as above for each payment or receipt.
Entities can choose to apply the interpretation:
•
•
•
•
retrospectively for each period presented
prospectively to items in scope that are initially recognised on
or after the beginning of the reporting period in which the
interpretation is first applied, or
prospectively from the beginning of a prior reporting period
presented as comparative information.
The Group is yet to assess the impact of this interpretation.
30
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 Amounts expressed in US $000 2.25 Future accounting developments and reporting changes (continued)
IFRS (Effective Date)
Subject / Comments
IFRS (Effective Date)
Subject / Comments
Sale or contribution of
assets between an
investor and its associate
or joint venture –
Amendments to IFRS 10
and IAS 28
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
of
recognised
the
other
venture.
The amendments apply prospectively.
only
to
associate
investor
the
extent
joint
investment
the
or
the
by
in
** In December 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.
IFRS 17 Insurance
Contracts
(January 1, 2021)
IFRS 17 was issued in May 2017 as replacement for IFRS 4 Insurance
Contracts. It requires a current measurement model where estimates are
re-measured each reporting period. Contracts are measured using the
building blocks of:
•
•
•
discounted probability-weighted cash flows
an explicit risk adjustment, and
a contractual service margin (“CSM”) representing
the
unearned profit of the contract which is recognised as revenue
over the coverage period.
The standard allows a choice between recognising changes in discount
rates either in the income statement or directly in other comprehensive
income. The choice is likely to reflect how insurers account for their
financial assets under IFRS 9.
An optional, simplified premium allocation approach is permitted for the
liability for the remaining coverage for short duration contracts, which are
often written by non-life insurers.
There is a modification of the general measurement model called the
‘variable fee approach’ for certain contracts written by life insurers where
policyholders share in the returns from underlying items. When applying
the variable fee approach the entity’s share of the fair value changes of
the underlying items is included in the contractual service margin. The
results of insurers using this model are therefore likely to be less volatile
than under the general model.
The new rules will affect the financial statements and key performance
indicators of all entities that issue insurance contracts or investment
contracts with discretionary participation features.
The Group is yet to assess the impact of IFRS 17.
31
2017 ANNUAL REPORT
143
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 Amounts expressed in US $000
3 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
3.3 Impairment of intangible assets
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.
The Sagicor Group invests in a number of sovereign financial instruments that are not quoted in an
active market, these assets are classified as loans and receivables and are carried at amortised cost
less provision for impairment in the financial statements. At December 31, 2017 there were significant
holdings in instruments of Government of Jamaica, Government of Trinidad and Tobago and
Government of Barbados carried at amortised cost. The Group has assessed these instruments for
impairment and concluded that based on all information currently available, that no impairment exists
at December 31, 2017 in accordance with the accounting policies of the Group.
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.
(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.
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.
144
SAGICOR FINANCIAL CORPORATION LIMITED
32
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 Amounts expressed in US $000 3.4 Fair value of securities not quoted in an active market (continued)
(b) Best estimate reserve assumptions & provisions for adverse deviations
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.
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.
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, 2017, the asset of the discontinued operation is the estimated residual amount due
from 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
asset 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.
33
2017 ANNUAL REPORT
145
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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. Until 2015, the segments were (i) Barbados,
Eastern Caribbean, Dutch Caribbean, Bahamas and Central America and (ii) Trinidad and Tobago.
During 2016, 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%
146
SAGICOR FINANCIAL CORPORATION LIMITED
34
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 Amounts expressed in US $000 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%
LOJ Holdings Limited
Insurance holding
company
Jamaica
100%
Sagicor Securities Jamaica Limited
Securities trading
Jamaica
49.11%
Associates
Sagicor Real Estate X-Fund Limited
(note 37)
Investment in real
estate activities
St. Lucia
14.39%
Control of Sagicor Group Jamaica Limited is established through the following:
The Group’s effective shareholder’s interest gives it the power to appoint 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
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 subsidiaries operating in Jamaica are now wholly owned by Sagicor Group Jamaica Limited. The
companies comprising this segment are as follows.
Sagicor Jamaica
Segment Companies
Sagicor Group Jamaica
Limited
Principal Activities
Country of
Incorporation
Effective
Shareholders’
Interest
Group holding company
Jamaica
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
Employee Benefits
Administrator Limited
Sagicor Re Insurance
Limited
Sagicor Insurance Brokers
Limited
Life insurance
The Cayman
Islands
Pension fund management
Jamaica
Pension administration
services
Property and casualty
insurance
Jamaica
The Cayman
Islands
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%
35
2017 ANNUAL REPORT
147
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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
Other Group Companies
Principal Activities
Country of
Incorporation
Effective
Shareholders’
Interest
Life insurance and annuities
USA - Texas
100%
Sagicor Finance Inc
Sagicor Life Insurance
Company
Sagicor USA Inc
Insurance holding company
USA - Delaware
100%
Sage Distribution, LLC
Life insurance and annuities
USA - Delaware
100%
Sage Partners, LLC
Life insurance and annuities
USA - Delaware
100%
Sagicor Benfell, LLC
Life insurance and annuities
USA - Delaware
90%
Sagicor Financial Partners,
LLC
Life insurance and annuities
USA - Delaware
51%
(d) Head office function and other operating companies
These comprise the following:
Other Group Companies
Principal Activities
Country of
Incorporation
Effective
Shareholders’
Interest
Group parent company
Bermuda
100%
Sagicor Financial Corporation
Limited (1)
Sagicor General Insurance Inc
Loan and lease financing,
and deposit taking
St. Lucia
70%
Investment management
Trinidad & Tobago
100%
Investment management
Barbados
100%
Investment management
Barbados
100%
Sagicor Asset Management
(T&T) Limited
Sagicor Asset Management
Inc
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
Group financing vehicle
Barbados
77%
Barbados
100%
Barbados
Barbados
The Cayman
Islands
The Cayman
Islands
51%
73%
100%
100%
Property and casualty
insurance
Barbados
53%
(1)
On July 20, 2016, Sagicor Financial Corporation continued as an exempted company under the
laws of Bermuda under the name Sagicor Financial Corporation Limited.
148
SAGICOR FINANCIAL CORPORATION LIMITED
36
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 Amounts expressed in US $000 4.1 Statement of income by segment
2017
Net premium revenue
Interest income
Other investment income
Fees and other revenues
Gain arising on business combinations, acquisitions and divestitures
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
308,602
77,450
10,350
11,895
-
12,931
421,228
197,716
11,908
12,217
68,113
45,613
-
6,437
5,647(1)
347,651
73,577
(9,868)
63,709
64,753
320,067
159,462
47,459
62,580
2,261
-
591,829
171,038
83,338
37,501
127,855
42,967
1,089
9,219
1,858
474,865
116,964
(22,824)
94,140
46,235
86,719
48,842
26,160
(2,539)
-
-
159,182
87,606
27,081
2,144
28,298
15,071
156
2,491
(3,031)(1)
159,816
(634)
14,127
13,493
13,493
30,244
8,987
669
21,836
-
71,150
132,886
27,125
-
3,087
41,320
8,667
(251)
3,724
12,582
96,254
36,632
(12)
36,620
6,683
-
-
(143)
(32)
-
(84,081)
(84,256)
-
-
-
1,841
-
33,752
-
(17,056)
18,537
(102,793)
-
(102,793)
(69,041)
745,632
294,741
84,495
93,740
2,261
-
1,220,869
483,485
122,327
54,949
267,427
112,318
34,746
21,871
-
1,097,123
123,746
(18,577)
105,169
62,123
59,864
75,876
21,555
6,564
(67,718)
96,141
(1) During 2015, Sagicor Life USA entered into a reinsurance agreement with Sagicor Life; included in the inter-segment expenses is $4,700 relating to this transaction.
37
2017 ANNUAL REPORT
149
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 Amounts expressed in US $000
4.1 Statement of income by segment (continued)
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)
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
(57,523)
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.
150
SAGICOR FINANCIAL CORPORATION LIMITED
38
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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 $44,090 (2016 - $47,528), Sagicor
Jamaica contributed $47,905 (2016 - $45,876).
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. Similarly on
sale if the consideration received exceeds the carrying value of the business or portfolio a gain is
recognised in the statement of income.
39
2017 ANNUAL REPORT
151
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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
2017
2016
Investment gains
Impairment of financial investments
Foreign exchange gains / (losses)
Gains on acquisitions/ divestitures
Decrease / (increase) in actuarial
liabilities from changes in assumptions
5,136
56
514
-
47,768
(8,251)
(4,864)
2,261
24,815
-
-
-
23,602
27,417
(11,120)
696
(166)
172
-
-
78,415
(8,361)
(4,178)
2,261
39,899
999
(328)
8,725
-
42,669
(4,652)
3,566
-
15,586
(4,488)
-
-
21,682
3,805
(18,176)
2,882
(153)
273
-
-
Total
62,136
(9,621)
12,564
-
7,311
29,308
64,331
13,695
702
108,036
31,078
45,388
(7,078)
3,002
72,390
152
SAGICOR FINANCIAL CORPORATION LIMITED
40
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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 and losses
Fair value investment gains and losses 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.
2017
Unrealised investment gains
Changes in actuarial liabilities
Retranslation of foreign currency operations
Gains on defined benefit plans
2016
Unrealised investment (losses) / gains
Changes in actuarial liabilities
Retranslation of foreign currency operations
Losses on defined benefit plans
41
Variations in other comprehensive income by segment
Sagicor Life
Sagicor Jamaica
Sagicor Life
USA
Head Office
and other
Adjustments
Total
6,873
(4,122)
(444)
99
(2,474)
961
(7,490)
(4,924)
26,143
5,135
11,405
22,249
32,226
(5,647)
(21,058)
(7,369)
22,147
(14,488)
-
-
11,034
(12,404)
-
-
194
-
(1,139)
1,566
(137)
-
10
(1,582)
2,543
-
(101)
-
(1,466)
-
57
-
57,900
(13,475)
9,721
23,914
39,183
(17,090)
(28,481)
(13,875)
2017 ANNUAL REPORT
153
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 Amounts expressed in US $000
4.4 Statement of financial position by segment
2017
Financial investments
Other external assets
Assets of discontinued operation
Inter-segment assets
Total assets
Policy liabilities
Other external liabilities
Inter-segment liabilities
Total liabilities
Net assets
2016
Financial investments
Other external assets
Inter-segment assets
Total assets
Policy liabilities
Other external liabilities
Inter-segment liabilities
Total liabilities
Sagicor Life
Sagicor
Jamaica
Sagicor Life USA
Head office
and other
Adjustments
Total
1,386,182
351,871
-
214,767
1,952,820
1,296,525
89,643
27,285
1,413,453
2,291,191
531,671
-
13,347
2,836,209
766,550
1,505,444
4,098
2,276,092
1,123,623
856,271
-
2,505
1,982,399
1,495,300
194,836
51,587
1,741,723
152,245
182,468
10,110
62,101
406,924
66,612
538,394
209,750
814,756
539,367
560,117
240,676
(407,832)
1,403,870
324,570
199,858
1,928,298
1,272,500
86,871
39,434
1,398,805
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
-
(70,990)
-
(292,720)
(363,710)
(70,990)
-
(292,720)
(363,710)
-
-
(76,198)
(268,178)
(344,376)
(76,198)
-
(268,178)
(344,376)
4,953,241
1,851,291
10,110
-
6,814,642
3,553,997
2,328,317
-
5,882,314
932,328
4,813,748
1,718,172
-
6,531,920
3,361,060
2,375,446
-
5,736,506
Net assets
529,493
450,427
218,447
(402,953)
-
795,414
154
SAGICOR FINANCIAL CORPORATION LIMITED
42
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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
$308,089 (2016 - $257,974), Sagicor Jamaica contributed $274,211 (2016 - $219,361).
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
2017
9,822
17,297
3,175
1,649
31,943
2016
4,534
8,922
5,782
5,565
24,803
Barbados
Jamaica
Trinidad & Tobago
Other Caribbean
USA
External revenue
Non-current assets
2017
2016
2017
2016
169,135
560,906
173,027
158,759
159,042
170,271
188,005
495,476
133,275
166,066
152,161
150,173
65,559
28,465
10,009
193,522
120,178
66,115
30,025
9,325
1,220,869
1,134,147
425,313
419,165
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
2017
2016
678,849
635,289
307,046
276,893
42,026
162,497
30,451
36,621
157,573
27,772
1,220,869
1,134,147
43
2017 ANNUAL REPORT
155
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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
2017
2016
80,662
79,172
-
-
-
-
74
80
7
555
846
(825)
1,847
(940)
80,816
80,662
Investment property includes $9,971 (2016 - $10,603) 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
25% -33%
Percentage
ownership
50%
Trinidad & Tobago
Freehold office building
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.
156
SAGICOR FINANCIAL CORPORATION LIMITED
44
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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 Limited(2)(3)
Trinidad & Tobago
Bahamas
Barbados
Costa Rica
St. Lucia
2017
33%
20%
38%
50%
29%
2016
33%
20%
38%
50%
29%
Nature of
relationship
Measurement
Method
Carrying Amount
2017
2016
Associate
Associate
Associate
Equity Method
Equity Method
Equity Method
Joint Venture
Equity Method
Associate
Equity Method
22,348
15,088
330
2,860
56,597
97,223
22,346
13,700
355
3,107
47,785
87,293
(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 $6.00 per share
was $12,000 (2016 – $11,000).
(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 $0.12 (J$15.00) per share
was $78,895 (2016 - $66,508).
(3) The Group both acquired and sold shares in Sagicor Real Estate X-Fund Limited during the year. These movements and the resulting gain on disposal are disclosed in note 37.
6.2 Commitments
Commitments at the year-end if called are $374 (2016 – Nil).
45
2017 ANNUAL REPORT
157
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 Amounts expressed in US $000
6.3 Summarised Financial Information
RGM Limited
FamGuard Corporation
Limited
Primo Holding Limited
Sagicor Costa Rica SCR, S.A.
Sagicor Real Estate X-Fund
Limited
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
ASSETS
Financial investments
Cash resources
Other investments and assets
Total assets
-
4,077
126,423
130,500
-
283,967
269,154
6,688
126,117
132,805
15,402
62,678
15,685
61,288
362,047
346,127
LIABILITIES
Policy liabilities
Other liabilities
Total liabilities
-
63,457
63,457
-
65,771
65,771
225,334
13,216
238,550
220,829
13,073
233,902
Net Assets
67,043
67,034
123,497
112,225
-
-
1,000
1,000
-
219
219
781
-
-
1,050
1,050
-
204
204
846
8,581
3,612
11,357
23,550
1,067
16,761
17,828
9,765
3,561
4,950
18,276
3,761
8,299
12,060
129,115
7,756
241,075
377,946
-
195,739
195,739
122,129
9,478
214,553
346,160
-
190,669
190,669
5,722
6,216
182,207
155,491
158
SAGICOR FINANCIAL CORPORATION LIMITED
46
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 Amounts expressed in US $000 6.3 Summarised Financial Information (continued)
RGM Limited
FamGuard Corporation
Limited
Primo Holding Limited
Sagicor Costa Rica SCR, S.A.
Sagicor Real Estate X-Fund
Limited
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
Reconciliation to carrying amounts:
Investment, beginning of year
22,346
23,199
13,700
14,059
355
362
Additions
Transfers/Disposals
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
-
-
-
-
-
-
(1,281)
(470)
(480)
1,531
1,158
1,683
-
(191)
-
-
(402)
-
(57)
(1,139)
(72)
-
257
-
-
-
(580)
240
(72)
-
53
-
(25)
(7)
(76)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,107
152
-
-
-
-
77
6,326
188
(2,886)
-
66
-
-
47,785
6,756
(6,221)
(800)
40,584
-
-
(738)
6,736
3,968
-
-
-
-
(400)
(264)
828
6,762
(323)
3,107
1,513
(2,791)
56,597
47,785
Investment, end of year
22,348
22,346
15,088
13,700
330
355
2,860
47
2017 ANNUAL REPORT
159
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 Amounts expressed in US $000
6.3 Summarised Financial Information (continued)
RGM Limited
FamGuard Corporation
Limited
Primo Holding Limited
Sagicor Costa Rica SCR, S.A.
Sagicor Real Estate X-Fund
Limited
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
Summarised statement of comprehensive income
REVENUE
Net premium revenue
Net investment and other
income
-
-
92,705
90,753
24,768
23,522
23,331
28,593
Total revenue
24,768
23,522
116,036
119,346
BENEFITS AND
EXPENSES
Benefits
Expenses
Total benefits and expenses
INCOME BEFORE TAXES
Income taxes
NET INCOME FOR THE
PERIOD
Other comprehensive
income
Total comprehensive
income
Dividends
from
associates and joint ventures
received
-
19,663
19,663
5,105
(572)
4,533
-
19,916
19,916
3,606
(1,195)
2,411
71,701
36,092
78,106
36,762
107,793
114,868
8,243
-
8,243
4,478
-
4,478
-
-
1,413
634
4,533
2,411
9,656
5,112
1,281
470
480
580
-
-
-
-
66
66
(66)
-
(66)
-
(66)
-
-
-
-
-
18
18
(18)
-
(18)
-
(18)
12,735
1,029
13,764
9,118
4,269
13,387
377
(529)
(152)
(632)
(784)
5,785
668
-
101,547
6,453
101,547
-
77,986
77,986
23,561
(2,087)
21,474
3,393
2,626
6,019
434
(301)
133
(670)
(537)
-
82,865
82,865
-
67,411
67,411
15,454
(1,916)
13,538
2,824
23,070
24,298
36,608
-
-
-
800
738
160
SAGICOR FINANCIAL CORPORATION LIMITED
48
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 Amounts expressed in US $000 7 PROPERTY, PLANT AND EQUIPMENT
2017
Owner-occupied property
Lands
Land &
buildings
Office
furnishings,
equipment &
vehicles
Operating
lease
vehicles &
equipment
Owner-occupied properties
Total
Land
Land &
buildings
2016
Office
furnishings,
equipment &
vehicles
Operating
lease
vehicles &
equipment
Total
Net book value, beginning of year
37,185
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
-
-
-
-
-
-
(1,953)
-
-
Net book value, end of year
35,232
Represented by:
Cost or valuation
Accumulated depreciation
35,232
-
35,232
-
-
(121)
(1,575)
-
(274)
(1,098)
503
78,465
81,697
(3,232)
78,465
77,855
3,175
41,179
15,101
11,504
167,723
38,031
577
18,853
-
-
(1,368)
-
(729)
(1,539)
-
(1,575)
(3,282)
-
(3,631)
(2,227)
(1,865)
(12,174)
-
859
-
(846)
-
-
-
-
-
-
-
80,694
2,680
-
-
-
-
(753)
(1,583)
(1,105)
(2,078)
5,566
165,560
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)
-
(846)
(2,885)
613
-
(2,873)
(1,583)
(2,967)
(12,442)
-
(2,846)
11,504
167,723
-
(729)
(50)
-
(349)
-
(9,211)
356
46,297
134,103
11,897
262,929
37,185
81,004
120,299
18,755
257,243
(87,806)
(6,331)
(97,369)
-
(3,149)
(79,120)
(7,251)
(89,520)
46,297
5,566
165,560
37,185
77,855
41,179
11,504
167,723
Owner-occupied lands are largely utilised for farming operations.
Owner-occupied land and buildings consist largely of commercial office buildings.
49
2017 ANNUAL REPORT
161
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 Amounts expressed in US $000
8 INTANGIBLE ASSETS
8.1 Analysis of intangible assets and changes for the year
Goodwill
2017
Customer &
broker
relationships
Software
Total
Goodwill
2016
Customer &
broker
relationships
Net book value, beginning of year
43,911
13,737
45,272
16,441
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
-
-
-
-
323
44,234
44,234
-
44,234
25,839
6,182
729
83,487
6,182
729
-
-
(1,674)
(7,951)
(9,625)
-
328
-
290
-
941
12,391
25,089
81,714
-
-
-
-
(1,361)
43,911
36,552
(24,161)
12,391
71,006
(45,917)
25,089
151,792
(70,078)
81,714
43,911
35,579
63,466
-
(21,842)
(37,627)
43,911
13,737
25,839
Software
Total
26,470
4,272
2,885
88,183
4,272
2,885
-
-
(1,719)
(7,050)
(8,769)
-
(985)
-
(738)
13,737
25,839
-
(3,084)
83,487
142,956
(59,469)
83,487
162
SAGICOR FINANCIAL CORPORATION LIMITED
50
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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
2016, 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.
The Group obtains independent professional advice in order to select the relevant discount factors,
residual growth rates and earnings multiples.
The carrying values of goodwill and the impairment test factors used are considered in the following
sections.
8.2 Impairment of intangible assets (continued)
(i) Years ended December 31, 2017 & 2016
An actuarial appraisal value technique was adopted to test goodwill impairment. The principal
assumptions included the following:
Discount rates of 10% (2016, 7 - 11%) for individual life and annuity inforce business,
New individual life and annuity business was included for the seven year period 2018 to
2024, (five year period 2017 to 2021)
Annual growth rate for new individual life and annuity business was 12.4% - 21.0% for 2018
and 5% – 16.8 % from 2019 to 2024 (2017 – 0% - 21.8% and 5% to 19.7% from 2018 to
2021),
Discount rates of 14% (2016, 11 - 15%) for new individual life and annuity business,
Required Minimum Continuing Capital and Surplus Ratio (MCCSR) of 175% (2016 – 175%).
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.
Sagicor Life Inc Segment
MCCSR target ratio
Discount rate
Inforce
New business
150%
175%
Low
Mid
High
200%
(a) Sagicor Life operating segment
2017
2016
Low
Mid
High
8%
10%
12%
12%
14%
16%
253,334
102,371
245,807
237,899
90,688
78,481
(10,104)
(24,348)
(39,153)
Carrying value of goodwill
26,552
26,576
51
2017 ANNUAL REPORT
163
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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
13,398
13,051
Carrying value of goodwill
4,284
4,284
2017
2016
2017
2016
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 8.6 (2016– 8.2) which was derived from a pre-tax factor of
6.9 (2016 – 6.6) 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 20.8% (2016 –12.8%) which was derived from an after tax factor of 15.0% (2016
– 12.5%) using an iterative method. The residual growth rate was 2.5% (2016 – 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.
2017 test
Scenario 1
Scenario 2
Scenario 3
After tax earnings multiples
Reduction in forecast earnings
8.6
n/a
7.3
10%
Excess of recoverable amount (of 49.11% interest)
150,046
73,893
4.9
10%
n/a
Impairment (of 49.11% interest)
Nil
Nil
(38,679)
The possible impairment of goodwill is sensitive to changes in earnings multiples and after tax
earnings. This is illustrated in the following table.
After tax discount factor
Residual growth rate
Reduction in residual growth rate
Increase in after tax discount factor
2017 test
Scenario 1
Scenario 2
Scenario 3
15.0
2.5
n/a
n/a
15.0
2.1
16%
n/a
18.0
2.1
16%
20%
Excess of recoverable amount (of 53.0% interest)
21,394
19,115
17,375
Impairment (of 53.0% interest)
Nil
Nil
Nil
164
SAGICOR FINANCIAL CORPORATION LIMITED
52
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 Amounts expressed in US $000 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
Loans and receivables:
Debt securities
Mortgage loans
Policy loans
2017
2016
Carrying
value
Fair
value
Carrying
value
Fair
value
-
-
20,665
21,688
2,266,275
2,266,275
2,271,020
2,271,020
86,862
86,862
96,684
96,684
2,353,137
2,353,137
2,367,704
2,367,704
180,484
180,484
164,005
164,005
158,621
158,621
123,524
123,524
32,477
45,447
32,477
45,447
28,980
40,347
28,980
40,347
417,029
417,029
356,856
356,856
9.1 Analysis of financial investments (continued)
Non-derivative financial assets at fair value through
income comprise:
Assets designated at fair value upon initial recognition
Assets held for trading
2017
2016
375,917
8,635
316,700
11,176
Debt securities comprise:
Government and government-guaranteed debt securities
1,701,250
1,765,558
Collateralised mortgage obligations
Corporate debt securities
Other securities
240,363
214,320
1,444,086
1,352,387
112,743
109,089
3,498,442
3,441,354
Debt securities include $804 (2016 - $1,836) that contain options to convert to common shares of the
issuer.
Corporate debt securities include $28,496 (2016 - $29,693) in bonds issued by an associated company.
1,051,683
1,155,331
985,664
1,042,108
Equity securities include $166,899 (2016 - $146,708) in mutual funds managed by the Group.
296,939
296,867
291,419
291,154
142,132
149,995
137,940
148,141
Finance loans and finance leases
564,399
551,922
508,975
491,131
Securities purchased for re-sale
16,518
16,518
5,227
5,227
Deposits
111,404
111,404
139,298
139,298
2,183,075
2,282,037
2,068,523
2,117,059
Total financial investments
4,953,241
5,052,203
4,813,748
4,863,307
53
2017 ANNUAL REPORT
165
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 Amounts expressed in US $000
9.2 Pledged assets
9.4 Reclassification of financial investments
Debt and equity securities include $140,418 (2016 - $275,250) 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 $6,520
(2016 - $5,982), and mortgages and mortgage backed securities having a total market value of
$155,636 (2016 - $139,630).
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, 2017, these pledged assets totalled $514,674 (2016 - $328,062). Of
these assets pledged as security, $513,468 (2016 – $326,884) 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.
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.
2017
2016
Carrying
value
Fair
value
Carrying
value
Fair
value
Government debt securities maturing after
September 2018
26,344
35,367
27,591
35,879
Other debt securities
922
1,239
1,624
2,217
27,266
36,606
29,215
38,096
Debt securities
Equity securities
Mortgage loans
2017
2016
143,167
133,862
154,775
123,524
Cumulative net fair value gain, beginning of year
45,381
40,271
Net fair value gains
343,323
297,657
Disposals
Effect of exchange rate changes
Cumulative net fair value gain, end of year
2017
2016
5,090
3,245
(778)
84
7,641
4,263
1,887
(971)
(89)
5,090
166
SAGICOR FINANCIAL CORPORATION LIMITED
54
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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
736,547
713,252
41,571
11,561
7,712
35,994
21,775
6,323
797,391
777,344
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
2017
2016
20,477
19,503
39,980
36,279
23,296
59,575
Net defined benefit assets (note 31)
Real estate developed or held for resale (ii)
Prepaid and deferred expenses (ii)
Premiums receivable
Legal claim (iii)
2017
2016
Other assets and accounts receivable (i)
2017
2016
6,059
12,986
22,885
53,446
70,946
62,221
1,333
10,162
21,047
46,530
52,720
51,226
228,543
183,018
(i) Other assets and accounts receivables include $7,892 (2016 - $9,880) due from
managed funds.
(ii) Real estate developed for resale includes $7,291 (2016 - $7,878) 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) On March 17, 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 Jamaica Limited).
This claim pre
dated the acquisition of control of the Bank by RBTT from Finsac Limited (“Finsac”) in 2001.
dated the acquisition of the Bank by Sagicor Group Jamaica Limited, and also pre
‐
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
against any loss the bank may suffer in this matter. As the current owner of Sagicor Bank Jamaica
Limited, Sagicor Group, is the current beneficiary of the Indemnity. The Indemnity from Finsac is
further supported by a Government of Jamaica Guarantee on a full indemnity basis.
The decision of the Supreme Court was appealed and is pending as at December 31, 2017. The
amount previously awarded
from
Finsac/Government of Jamaica and correspondingly payable to the claimant with accrued interest.
(note 20)
the Claimant has been recorded as receivable
to
Income and withholding taxes recoverable are expected to be recovered within one year of the
financial statements date.
During 2017, interest was accrued on this liability and resulted in an increase in the amount
outstanding to $70.9 million.
55
2017 ANNUAL REPORT
167
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 Amounts expressed in US $000
13 ACTUARIAL LIABILITIES
13.1 Analysis of actuarial liabilities
13.2 Movement in actuarial liabilities
Gross liability
Reinsurers’ share
2017
2016
2017
2016
Gross liability
Reinsurers’ share
2017
2016
2017
2016
Balance, beginning of year
2,776,362
2,632,387
713,252
601,597
Contracts issued to individuals:
Changes in actuarial liabilities:
Life insurance - participating policies
238,695
238,604
51
51
Life insurance and annuity
- non-participating policies
Health insurance
Unit linked funds
1,971,894
1,889,653
719,494
694,882
13,189
13,926
433
438
219,533
177,454
-
-
-
-
Reinsurance contracts held
30,121
28,894
Recorded in income (note 27)
145,656
156,983
23,329
111,731
Recorded in other comprehensive
income
19,213
23,769
Other movements
(227)
1
-
2
Effect of exchange rate changes
9,816
(36,778)
(36)
-
(62)
(14)
Balance, end of year
2,950,820
2,776,362
736,547
713,252
2,473,432
2,348,531
719,978
695,371
Analysis of changes in actuarial liabilities
Contracts issued to groups:
Life insurance
Annuities
Health insurance
32,057
30,404
79
118
411,259
362,980
16,418
17,660
34,072
34,447
72
103
477,388
427,831
16,569
17,881
Total actuarial liabilities
2,950,820
2,776,362
736,547
713,252
The following notes are in respect of the foregoing table:
Life insurance includes coverage for disability and critical illness.
Actuarial liabilities include $83,277 (2016 - $83,238) 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
171,398
206,505
18,089
105,642
(39,899)
(7,311)
1,917
(12,915)
-
-
-
-
Other items
Total
31,453
(5,527)
5,240
6,089
164,869
180,752
23,329
111,731
168
SAGICOR FINANCIAL CORPORATION LIMITED
56
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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 reviews the validity of each assumption by
referencing 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.
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.
Any changes in actuarial standards and practice are also incorporated in the current valuation.
(b) Assumptions for mortality and morbidity
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.
Annually, insurers update studies of recent mortality experience. The resulting experience is compared
to external mortality studies including tables from the Canadian Institute of Actuaries. 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.
(c) Assumptions for lapse
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 moving averages.
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.
Ultimate rate of return
2017
2016
Barbados
Jamaica
Trinidad & Tobago
Other Caribbean
USA
7.00%
6.0%
5.0%
6.75%
5.0%
5.0%
4.5% - 7.00%
4.5% - 6.75%
0.85% - 3.65%
0.85% - 3.65%
(e)
Assumptions for operating expenses and taxes
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.
57
2017 ANNUAL REPORT
169
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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
2017
2016
Mortality and morbidity
Lapse
Investment yields and asset default
Operating expenses and taxes
Other
96,090
69,365
68,930
10,807
10,765
89,986
63,855
69,109
11,136
10,486
255,957
244,572
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.
170
SAGICOR FINANCIAL CORPORATION LIMITED
58
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 Amounts expressed in US $000
14 OTHER INSURANCE LIABILITIES
14.2 Policy benefits payable (continued)
14.1 Analysis of other insurance liabilities
2017
2016
Movement for the year:
Gross liability
Reinsurers’ share
2017
2016
2017
2016
Dividends on deposit and other policy balances
63,744
65,719
Policy benefits payable
Provision for unearned premiums
14.2 Policy benefits payable
127,801
107,219
32,614
34,184
224,159
207,122
Balance, beginning of year
107,219
105,910
35,994
Policy benefits incurred
581,238
541,502
101,671
37,816
93,314
Policy benefits paid
(559,981)
(538,459)
(94,673)
(94,898)
Effect of exchange rate changes
(675)
(1,734)
(1,421)
(238)
Balance, end of year
127,801
107,219
41,571
35,994
Gross liability
Reinsurers’ share
2017
2016
2017
2016
14.3 Provision for unearned premiums
Analysis of policy benefits payable:
Life insurance and annuity benefits
86,562
79,445
22,809
22,084
Health claims
4,280
4,284
2,122
1,686
Property and casualty claims
36,959
23,490
16,640
12,224
127,801
107,219
41,571
35,994
Gross liability
Reinsurers’ share
2017
2016
2017
2016
Analysis of the provision:
Property and casualty insurance
32,177
33,777
11,561
21,775
Health insurance
437
407
-
-
32,614
34,184
11,561
21,775
The provision for unearned premiums is expected to mature within a year of the financial
statements’ date.
59
2017 ANNUAL REPORT
171
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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
2017
2016
2017
2016
34,184
74,305
33,710
75,004
21,775
29,676
21,356
48,939
(74,619)
(74,434)
(38,388)
(48,463)
Effect of exchange rate changes
(1,256)
(96)
(1,502)
(57)
Balance, end of year
32,614
34,184
11,561
21,775
15 INVESTMENT CONTRACT LIABILITIES
2017
2016
Carrying
value
Fair
value
Carrying
value
Fair
value
At amortised cost:
Deposit administration liabilities
Other investment contracts
At fair value through income:
Unit linked deposit administration
liabilities
121,483
117,782
239,265
121,483
128,345
128,345
241,398
246,908
249,396
139,753
139,753
130,668
130,668
379,018
381,151
377,576
380,064
2017
2016
Carrying
value
Fair
value
Carrying
value
Fair
value
8.875% senior notes due 2022
317,028
364,131
315,383
364,095
8.25% convertible redeemable
preference shares due 2020 (b)
7.75% convertible redeemable
preference shares due 2018 (b)
11,310
11,887
5,181
5,433
-
-
-
-
4.85% / 5.0% notes due 2019 (a)
74,929
76,199
74,825
75,491
Bank loans & other funding
instruments
5,357
5,357
5,005
5,005
413,805
463,007
395,213
444,591
(a) 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).
i.
ii.
Cumulative redeemable preference shares with a tenor of three (3) years at 8.25% interest
per annum.
Cumulative redeemable preference shares with a tenor of eighteen (18) months at 7.75%
interest per annum.
119,915
118,563
121,051
(b) On March 2, 2017, Sagicor Bank Jamaica Limited issued:
172
SAGICOR FINANCIAL CORPORATION LIMITED
60
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 Amounts expressed in US $000 17 DEPOSIT AND SECURITY LIABILITIES
18 PROVISIONS
2017
2016
Carrying
value
Fair
value
Carrying
value
Fair
value
279,874
750,948
476,034
2,568
284,980
749,834
473,771
2,568
349,514
915,155
320,574
1,939
346,216
915,419
320,574
1,939
1,509,424
1,511,153
1,587,182
1,584,148
Net defined benefit liabilities (note 31)
Cash settled share based payment liabilities(1)
Other provisions
2017
2016
77,110
2,823
94
101,235
-
57
80,027
101,292
(1)
As of March 31, 2017, certain options are recorded using the cash-settled method of accounting.
This resulted in a transfer of $4,873 from reserves to provisions at that date.
At amortised cost:
Other funding instruments
Customer deposits
Securities sold for re-purchase
Bank overdrafts
At fair value through income:
Structured products
47,576
47,576
34,779
34,779
Derivative financial instruments
(note 41.6)
2,232
2,232
1,364
1,364
49,808
49,808
36,143
36,143
1,559,232
1,560,961
1,623,325
1,620,291
Other funding instruments consist of loans from banks and other financial institutions and include
balances of $148,583 (2016 - $134,321) 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.
61
2017 ANNUAL REPORT
173
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 Amounts expressed in US $000
19 INCOME TAX LIABILITIES
Deferred income tax liabilities (note 33)
Income taxes payable
2017
2016
25,092
3,185
28,277
36,238
14,403
50,641
Income taxes payable are expected to be settled within a year of the financial statements’ date.
20 ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Amounts due to policyholders
Amounts due to reinsurers
Legal claim (i)
Other accounts payable and accrued liabilities
2017
2016
22,385
22,590
70,946
131,055
246,976
20,525
17,179
52,720
114,551
204,975
‐
On March 17, 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 Jamaica Limited). This claim
pre
dated the acquisition of the Bank by Sagicor Group Jamaica Limited, and also pre dated the
acquisition of control of the Bank by RBTT 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 against
any loss the bank may suffer in this matter. As the current owner of Sagicor Bank Jamaica Limited,
Sagicor Group, is the current beneficiary of the Indemnity. The Indemnity from Finsac is further
supported by a Government of Jamaica Guarantee on a full indemnity basis.The decision of the
Supreme Court was appealed and is pending as at December 31, 2017. The amount previously awarded
to the Claimant has been recorded as payable to the claimant with accrued interest and correspondingly
receivable from Finsac/Government of Jamaica (note 12).
174
SAGICOR FINANCIAL CORPORATION LIMITED
62
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 Amounts expressed in US $000
21 COMMON AND PREFERENCE SHARES
The Company is authorised to issue:
650,000,000 common shares,
320,000,000 convertible redeemable preference shares.
In each case the shares have a par value of US$0.01.
21.1 Common shares
2017
2016
Number in 000’s
Share capital
Share premium
Total
Number in 000’s
Share capital
Share premium
Total
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)
Total
304,494
3,045
299,111
302,156
304,494
302,156
-
302,156
-
2,062
306,556
(673)
305,883
-
21
-
-
2,021
2,042
-
-
(299,111)
299,111
-
-
-
-
3,066
301,132
304,198
304,494
3,045
299,111
302,156
(7)
3,059
(662)
(669)
300,470
303,529
(1,646)
302,848
(16)
3,029
(2,061)
(2,077)
297,050
300,079
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.
21.2 Convertible redeemable preference shares
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:
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
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;
the redemption date;
63
2017 ANNUAL REPORT
175
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 Amounts expressed in US $000
21.2 Convertible redeemable preference shares (continued)
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.
21.3 Dividends
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.
2017
2016
Per share
Total
Per share
Total
Dividends declared and paid:
Preference shares
Common shares
-
5.0¢
-
15,216
15,216
4.38 ¢
4.5 ¢
5,256
13,624
18,880
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.
2017
2016
Per share
Total
Per share
Total
Dividends proposed:
Common shares - final for current year
2.5 ¢
21.4 Restrictions on common share dividends
7,664
7,664
2.5 ¢
7,612
7,612
The Company’s Constitutive documents include the following limitations on the payment of common share dividends.
(i) 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 preference shares were redeemed on July 18, 2016.
(ii) 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. This
requirement was repealed on June 16, 2017.
176
SAGICOR FINANCIAL CORPORATION LIMITED
64
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 Amounts expressed in US $000 22 RESERVES
2017
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
Balance, end of year
2016
Balance, beginning of year
Transfers to retained earnings and other movements
101
390
<<<<<< Fair value reserves >>>>>>
Owner
occupied
property
Available for
sale assets
Actuarial
liabilities
Currency
translation
reserves
Preference
share
reserves
Other
reserves
Total
reserves
27,184
(2,132)
(6,111)
35,458
(6,735)
(114,480)
(16,544)
4,650
-
-
-
-
-
-
-
-
-
-
25,153
29,737
(23,279)
(109,733)
-
-
-
-
-
-
35,347
(64,795)
-
21,432
5,039
5,039
(11,309)
(11,309)
1,660
30,737
2,151
(47,482)
25,047
(33,305)
8,773
(96,339)
4,219
31,917
(59,688)
Other comprehensive income from continuing operations allocated to reserves
2,137
27,194
(15,509)
(18,141)
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
-
-
-
-
-
-
-
-
1
-
-
-
Balance, end of year
27,184
(6,111)
(6,735)
(114,480)
Other reserves comprise reserves for equity compensation benefits of $10,282 (2016 - $16,552) and statutory reserves of $20,455 (2016 - $18,795).
-
-
-
(4,219)
-
-
(4,319)
5,280
(3,148)
1,298
35,347
5,280
(3,148)
(2,920)
(64,795)
65
2017 ANNUAL REPORT
177
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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:
Closed participating
account
Open participating
account
2017
2016
2017
2016
Life insurance
Annuity
Health insurance
Gross premium
Ceded to reinsurers
2017
2016
2017
2016
419,085
388,287
257,940
225,204
154,015
153,666
29,833
79,567
4,934
30,876
86,490
4,077
Property and casualty insurance
67,314
66,761
38,388
48,519
898,354
833,918
152,722
169,962
Movement for the year:
Balance, beginning of year
Total comprehensive income / (loss)
Return of transfer to support profit
distribution, to shareholders
(1,281)
(266)
(607)
(677)
2,572
56
1,990
809
-
3
(216)
(227)
Balance, end of year
(1,547)
(1,281)
2,412
2,572
Financial statement amounts:
Assets
Liabilities
Revenues
Benefits
Expenses
Income taxes
80,559
82,106
7,129
6,786
414
131
82,306
196,995
196,999
83,587
194,583
194,427
7,557
7,669
428
187
23,552
22,303
1,474
617
22,261
18,917
1,630
877
The Group has the ability to reduce future policy bonuses and dividends in order to eliminate a deficit in
a participating account.
178
SAGICOR FINANCIAL CORPORATION LIMITED
66
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 Amounts expressed in US $000 25 NET INVESTMENT INCOME
25 NET INVESTMENT INCOME (continued)
2017
2016
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
Net investment income
294,741
292,868
3,790
3,865
3,088
3,816
78,415
62,136
9,849
300
5,425
(57)
390,960
367,276
8,361
1,964
1,399
9,621
2,107
2,196
11,724
13,924
379,236
353,352
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
2017
2016
204,037
205,068
18,675
9,678
58,686
542
2,865
258
19,908
9,053
56,166
584
1,902
187
294,741
292,868
28,741
27,939
74
21,661
78,415
37,341
15,982
1,847
6,966
62,136
67
2017 ANNUAL REPORT
179
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 Amounts expressed in US $000
26 FEES AND OTHER REVENUE
28 INTEREST EXPENSE
2017
2016
2017
2016
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 (losses) / gains
Other operating and miscellaneous income
29,179
2,000
9,530
33,558
(4,178)
23,651
93,740
25,470
1,739
29,375
28,288
12,564
19,403
116,839
Insurance contracts
Investment contracts
Other funding instruments
Customer deposits
Securities sold for re-purchase
Other items
1,827
15,796
6,514
16,535
14,245
32
2,866
16,833
6,981
16,204
18,519
45
54,949
61,448
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
2017
2016
2017
2016
Life insurance benefits
215,472
199,946
Annuity benefits
203,072
199,037
Health insurance claims
118,848
119,499
Property and casualty claims
37,603
17,708
Total policy benefits
574,995
536,190
13,976
61,327
5,254
10,953
91,510
16,966
51,566
3,995
10,004
82,531
Change in actuarial liabilities (note 13.2)
145,656
156,983
23,329
111,731
Total policy benefits and change in
actuarial liabilities
720,651
693,173
114,839
194,262
180
SAGICOR FINANCIAL CORPORATION LIMITED
68
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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)
Cash-settled compensation benefits (note 30.1)
Defined benefit expense (note 31 (b))
30 EQUITY COMPENSATION BENEFITS
30.1 The Company
2017
2016
107,431
107,329
9,553
10,302
(1,182)
13,561
9,125
5,365
-
11,528
139,665
133,347
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.
In 2017, the shareholders of the Company approved the increase in the number of the Company’s
shares reserved for the LTI and ESOP from 26,555,274 common shares to 40,400,000 common shares.
2017
2016
Number of
grants
‘000
Weighted
average
price
Number of
grants
‘000
Weighted
Average
price
Balance, beginning of year
Grants issued
Grants vested
4,637
3,366
US$0.92
US$1.13
3,527
3,552
US$0.93
US$0.94
(3,054)
US$1.00
(1,854)
US$0.94
Grants lapsed/forfeited
(230)
US$0.96
(588)
US$1.05
Balance, end of year
4,719
US$1.02
4,637
US$0.92
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/or distributed during the year were as follows:
2017
2016
Number
in 000’s
$000
Number
in 000’s
$000
Balance, beginning of year
Shares acquired
Balance, end of year
1
170
171
3
203
206
1
-
1
3
-
3
(a)
LTI plan – restricted share grants
During 2016 a cash settlement was made in lieu of share issue.
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.
69
2017 ANNUAL REPORT
181
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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:
2017
2016
Number of
options
‘000
Weighted
average
exercise
price
Number of
options
‘000
Weighted
average
exercise
price
Balance, beginning of year
19,800
US$1.30
16,397
US$1.48
Options granted
Options exercised
Options lapsed/forfeited
Balance, end of year
4,873
US$1.00
4,927
US$0.86
(4,555)
(1,431)
US$1.04
-
-
US$1.81
(1,524)
US$1.82
18,687
US$1.25
19,800
US$1.30
Exercisable at the end of the year
8,354
US$1.59
10,197
US$1.61
Share price at grant date
US $0.86 – 2.50
US $0.86 – 2.50
Fair value of options at grant date
Expected volatility
Expected life
Expected dividend yield
Risk-free interest rate
US$0.16 – 0.69
18.3% – 35.8%
7.0 years
2.6% - 4.7%
4.8% - 6.8%
US$0.16 – 0.69
19.3% – 35.8%
7.0 years
2.6% - 4.7%
4.8% - 6.8%
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.
As disclosed in Note 18, share options which were previously settled in the Company’s shares are now
cash-settled.
(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:
2017
2016
Number
in 000’s
$000
Number
in 000’s
$000
Balance, beginning of year
1,645
2,074
Shares acquired
Shares distributed
Balance, end of year
-
-
(1,143)
(1,611)
502
463
2,125
100
(580)
1,645
2,833
98
(857)
2,074
182
SAGICOR FINANCIAL CORPORATION LIMITED
70
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 Amounts expressed in US $000 30.2 Sagicor Group Jamaica Limited (continued)
Further details of share options and the assumptions used in determining their pricing are as follows:
2017
2016
Fair value of options outstanding
J$30,963,000
J$31,770,000
Share price at grant date
J$6.51 – 23.65
J$4.20 – 14.10
Exercise price
J$6.51 – 23.65
J$4.20 – 14.10
Standard deviation of expected share price returns
25.0%
26.0%
Remaining contractual term
0.25 - 7 years
0.25 - 7 years
Risk-free interest rate
8.70%
9.19%
The expected volatility is based on statistical analysis of daily share prices over seven years.
(b) Employee share purchase plan
Sagicor Group Jamaica Limited 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 $1,944 (2016 – $1,298).
30.2 Sagicor Group Jamaica Limited
(a)
Long-term incentive plan
The Group offers stock grants and stock options to senior executives as part of its long-term incentive
plan. The Group has set aside 150,000,000 of its authorised but un-issued shares at no par value for
the stock grants and stock options.
In January 2007, the Group introduced a new Long Term Incentive (LTI) plan which replaced the
previous Stock Option plan. Under the LTI plan, executives are entitled but not obliged to purchase the
Group stock at a pre-specified price at some future date. The options are granted each year on the
date of the Board of Directors Human Resources Committee meeting following the performance year
at which the stock option awards are approved. Stock options vest in 4 equal installments beginning the
first December 31 following the grant date and for the next three December 31 dates thereafter (25%
per year). Options are not exercisable after the expiration of 7 years from the date of grant. The number
of stock options in each stock option award is calculated based on the LTI opportunity via stock options
(percentage of applicable salary) divided by the Black-Scholes value of a stock option of Sagicor Group
Jamaica Limited stock on 31 March of the measurement year. The exercise price of the options is the
closing bid price on 31 March of the measurement year.
Details of the share options outstanding are set out in the following table. J$ represents Jamaica dollars.
2017
2016
Number of
options
‘000
Weighted
average
exercise
price
Number of
options
‘000
Weighted
average
exercise
price
Balance, beginning of year
Options granted
Options exercised
44,945
4,580
J$8.83
J$23.65
53,644
12,463
(24,872)
J$9.66
(18,924)
Options lapsed/forfeited
(2,772)
J$11.41
(2,238)
Balance, end of year
Exercisable at the end of the year
21,881
13,820
J$10.61
J$9.72
44,945
26,509
J$8.63
J$10.52
J$8.56
J$9.09
J$8.83
J$9.47
71
2017 ANNUAL REPORT
183
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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 benefit plans.
184
SAGICOR FINANCIAL CORPORATION LIMITED
31 EMPLOYEE RETIREMENT BENEFITS (continued)
(a) Amounts recognised in the statement of financial position
2017
2016
Present value of funded pension obligations
249,357
239,330
Fair value of retirement plan assets
(257,893)
(214,502)
(8,536)
24,828
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
51,656
27,931
71,051
48,921
28,189
77,110
(6,059)
71,051
45,975
29,099
99,902
44,382
56,853
101,235
(1,333)
99,902
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.
72
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 Amounts expressed in US $000 31 EMPLOYEE RETIREMENT BENEFITS (continued)
(b) Movements in balances
2017
2016
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
29,099
285,305
(214,502)
99,902
26,053
253,443
(192,612)
86,884
Current service cost
Interest expense / (income)
Past service cost and gains / losses on settlements
1,581
2,598
-
6,680
20,581
-
-
(17,879)
-
8,261
5,300
-
Net expense recognised in income
4,179
27,261
(17,879)
13,561
(Gains) / losses from changes in assumptions
7,002
8,885
(Gains) / losses from changes in experience
(12,479)
(21,032)
Return on plan assets excluding interest income
-
-
(702)
(14,928)
828
15,185
(48,439)
828
Net losses recognised in other comprehensive income
(5,477)
(12,147)
(14,802)
(32,426)
Contributions made by the Group
Contributions made by employees and retirees
Benefits paid
Other items
Effect of exchange rate movements
Other movements
-
-
-
6,252
(612)
(16,371)
-
742
130
6,241
4,472
594
(9,971)
(5,765)
14,896
(5,279)
(4,591)
(9,971)
487
(2,087)
962
623
(10,710)
(9,986)
1,429
2,107
-
3,536
(2,593)
4,401
-
1,808
-
-
(547)
-
(1,751)
(2,298)
6,278
17,333
(253)
23,358
(6,896)
26,332
-
19,436
-
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
1,875
(2,298)
310
(2,641)
(1,743)
(14,973)
Net liability / (asset), end of year
27,931
301,013
(257,893)
71,051
29,099
285,305
(214,502)
99,902
73
2017 ANNUAL REPORT
185
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 Amounts expressed in US $000
31 EMPLOYEE RETIREMENT BENEFITS (continued)
31 EMPLOYEE RETIREMENT BENEFITS (continued)
(c) Retirement plan assets
(d) Significant actuarial assumptions
2017
2016
The significant actuarial assumptions for the principal geographic areas as of December 31, 2017 were
as follows:
Equity unit linked pension funds under Group management:
Sagicor Equity Fund (Barbados)
Sagicor Bonds Fund (Barbados)
Sagicor Pooled Investment Funds (Jamaica):
Equity Funds
Mortgage & Real Estate Fund
Fixed Income Fund
Foreign Currency Funds
Money Market Fund
Other Funds
Other assets
Total plan assets
(37,407)
(27,028)
(32,103)
(23,189)
(56,240)
(29,969)
(15,864)
(23,576)
(2,347)
(35,820)
(26,486)
(15,526)
(18,185)
(2,258)
(15,697)
(17,307)
(208,128)
(170,874)
(49,765)
(43,628)
(257,893)
(214,502)
The equity unit linked pension funds are funds domiciled in Barbados and Jamaica. Annual reports of
these funds are available to the public.
186
SAGICOR FINANCIAL CORPORATION LIMITED
Pension plans
Barbados &
Eastern
Caribbean
Jamaica
Trinidad
Discount rate - local currency benefits
7.75%
Discount rate - US$ indexed benefits
Expected return on plan assets
n/a
7.75%
Future promotional salary increases
0.00% – 2.50%
Future inflationary salary increases
Future pension increases
Future increases in National
Insurance Scheme Ceilings
2.00%
2.00%
3.50%
8.00%
5.00%
8.00%
7.50%
5.00%
1.00%
n/a
5.00%
n/a
5.00%
0.00%
2.00%
0.00%
0.00%
Mortality table
Termination of active members
Early retirement
GAM1994 with 5
year improvement
2% - 5.8% up to
age 30, reducing
to 3.8% - 5.8% at
age 50, 2.7% -
3.8% at age 51
n/a
UP94 with
projection scale
AA
3% - 8.40% up to
age 30, reducing
to 1 - 2.1% at age
50, 0% at age 51
100% at the
earliest possible
age to receive
unreduced
benefits
UP94 with
projection scale
AA
3% up to age 30,
reducing to 1% at
age 50, 0% at age
51
100% at the
earliest possible
age to receive
unreduced
benefits
74
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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
7.00%
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
27,931
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
80,615
167,810
14,266
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
7,761
(5,635)
(446)
809
1,511
Decrease average life expectancy by 1 year
(1,946)
10,061
(7,672)
(2,957)
3,403
795
(811)
1,421
(1,046)
(265)
297
399
(162)
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
6,553
(4,927)
(239)
283
913
(910)
(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 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 2018 financial year, the total Group contributions to its defined benefits pension plans are
estimated at $13,636.
75
2017 ANNUAL REPORT
187
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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:
2017
2016
Income before income tax expense
123,746
149,597
2017
2016
Income tax expense:
Current tax
Current tax on profits for the year
32,112
34,872
Adjustments to current tax of prior periods
152
232
Other current tax adjustments
Total current tax expense
32,264
35,104
Adjustments for current tax of prior periods
Taxation at the applicable rates on income subject to tax
42,071
46,090
Adjustments to current tax for items not subject to / allowed for
tax
(24,962)
(23,996)
32
152
(221)
232
Deferred tax
Decrease/(increase) in deferred tax assets
(Decrease)/increase in deferred tax liabilities
Total deferred tax expense
Share of tax of associated companies
523
(14,401)
(13,878)
498
5,696
6,194
191
402
18,577
41,700
Movement in unrecognised deferred tax asset
11,091
13,926
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
(91)
(14,584)
(86)
1,666
3,288
18,577
(18)
(35)
296
670
4,756
41,700
In addition to the above, the income tax on items in other comprehensive income is set out in note 35.
188
SAGICOR FINANCIAL CORPORATION LIMITED
76
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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 losses
Potential deferred income tax assets
Expiry period for unrecognised tax losses:
2017
2018
2019
2020
2021
2022
2023
2024
2025
After 2025
77
2017
7,100
(574)
13,541
410
20,477
2,516
302,051
75,517
-
23,551
27,571
24,863
20,165
37,441
30,579
33,727
49,116
55,038
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
-
302,051
265,699
2017 ANNUAL REPORT
189
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 Amounts expressed in US $000
33 DEFERRED INCOME TAXES (continued)
Deferred income tax assets movements:
2017
Defined
benefit
liabilities
Unrealised losses
on financial
investments
Unused tax
losses
Other items
Total
Balance, beginning of year as previously reported
13,581
6,918
14,993
787
36,279
(Charged)/credited to:
Profit or Loss
Other comprehensive income
Effects of exchange rate changes
Balance, end of year
2016
1,769
(8,426)
176
7,100
(268)
(7,203)
(21)
(574)
(1,746)
(31)
325
13,541
(278)
(110)
11
410
Balance, beginning of year as previously reported
11,031
12,406
21,870
(4,284)
(Charged)/credited to:
Profit or Loss
Other comprehensive income
Effects of exchange rate changes
Balance, end of year
689
2,608
(747)
13,581
297
(5,141)
(644)
6,918
(5,756)
-
(1,121)
14,993
4,272
687
112
787
(523)
(15,770)
491
20,477
41,023
(498)
(1,846)
(2,400)
36,279
190
SAGICOR FINANCIAL CORPORATION LIMITED
78
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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 other items
Total (note 19)
2017
2016
1,666
33,464
334
1,111
15,323
1,640
62,738
343
1,000
6,398
(27,205)
(36,280)
399
399
25,092
36,238
Deferred income tax liabilities to be settled within one year
6,680
8,035
79
2017 ANNUAL REPORT
191
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 Amounts expressed in US $000
33 DEFERRED INCOME TAXES (continued)
Deferred income tax liabilities movements:
2017
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
Balance, beginning of year as previously reported
1,640
62,738
343
1,000
6,398
(36,280)
399
36,238
Charged/(credited) to:
Profit or Loss
Other comprehensive income
Effects of exchange rate changes
Balance, end of year
2016
26
-
-
(23,536)
(5,738)
-
1,666
33,464
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
(167)
-
1
11,034
(6,679)
6
1,640
62,738
(65)
56
-
334
133
189
21
-
343
109
2
-
(10)
8,933
2
9,075
-
-
-
-
-
(14,401)
3,253
2
1,111
15,323
(27,205)
399
25,092
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
192
SAGICOR FINANCIAL CORPORATION LIMITED
80
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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.
2017
2016
Net income attributable to common shareholders
72,233
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
72,233
61,671
4,368
(149)
(5,256)
60,634
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.
2017
2016
Earnings attributable to common shareholders
72,233
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
-
-
-
-
72,233
60,634
5,256
149
(4,368)
4,104
65,775
Weighted average number of shares in issue in thousands
304,732
303,572
LTI restricted share grants
ESOP shares
5,492
2,395
-
4,706
2,103
33,209
Weighted average number of shares in issue in thousands
304,732
303,572
Convertible redeemable preference shares
Basic earnings per common share
23.7¢
20.0¢
Adjusted weighted average number of shares in issue
312,619
343,590
Attributable to:
Continuing operations
Discontinued operation
20.4¢
3.3¢
19.5¢
0.5¢
The computation of diluted earnings per common share recognises the dilutive impact of LTI share
grants and share options (note 30.1), ESOP shares 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 adjusted by the dilutive impacts of the aforementioned share
grants, options and preference shares.
Fully diluted earnings / (loss) per common share
23.1¢
19.1¢
Attributable to:
Continuing operations
Discontinued operation
19.9¢
3.2¢
18.7¢
0.4¢
81
193
Sagicor Financial Corporation Limited
2017 ANNUAL REPORT
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 Amounts expressed in US $000
35 OTHER COMPREHENSIVE INCOME (OCI)
Schedule to OCI from continuing
operations
Items that may be reclassified
subsequently to income:
Available for sale assets:
2017
2016
After tax OCI is attributable to
After tax OCI is attributable to
OCI tax
impact
Shareholders
Participating
policyholders
Non-
controlling
interests
Total
OCI tax
impact
Shareholders
Participating
policyholders
Non-
controlling
interests
Total
Gains / (losses) arising on revaluation
(16,004)
44,239
380
13,281
57,900
(11,058)
(Gains) / losses transferred to income
Net change in actuarial liabilities
Retranslation of foreign currency operations
(141)
5,738
-
(10,407)
(8,781)
(16,544)
4,650
23,564
-
456
(2)
834
(3,478)
2,613
5,073
17,489
(12,259)
(13,475)
9,721
41,887
Items that will not be reclassified
subsequently to income:
Gains / (losses) arising on revaluation of
owner-occupied property
(248)
(2,132)
Defined benefit gains / (losses)
(8,512)
12,586
Other items
-
-
(8,760)
10,454
-
-
-
-
373
(1,759)
11,328
23,914
-
-
11,701
22,155
(1,491)
6,679
-
(5,870)
(939)
2,588
-
1,649
24,082
3,112
(15,509)
(18,141)
(6,456)
2,137
(10,001)
(128)
(7,992)
(1,292)
16,393
-
1,293
21
22
(437)
(2,874)
(10,361)
2,721
-
-
-
-
3,008
(3,874)
-
(866)
39,183
2,675
(17,090)
(28,481)
(3,713)
5,145
(13,875)
(128)
(8,858)
Total OCI movements
(19,167)
34,018
834
29,190
64,042
(4,221)
(14,448)
22
1,855
(12,571)
Allocated to equity reserves
Allocated to retained earnings
21,432
12,586
34,018
194
SAGICOR FINANCIAL CORPORATION LIMITED
(4,319)
(10,129)
(14,448)
82
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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 arising on disposal
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
83
2017
2016
(298,531)
(295,956)
(78,415)
(2,261)
122,327
89,695
21,871
8,644
26,152
(62,136)
-
45,252
99,781
21,283
59
3,619
(110,518)
(188,098)
-
7,272
4,324
(11,538)
(4,386)
(34,822)
13
(93,917)
(24,548)
818
30,495
1,037
(1,989)
(6,115)
(99,130)
1,913
10,236
(37,627)
(157,602)
(100,362)
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
Deposits
Securities sold for re-purchase
Other liabilities and payables
2017
2016
-
-
-
(7)
825
818
(1,789,622)
(1,931,861)
1,796,894
1,962,356
7,272
30,495
(36,335)
40,659
4,324
13,544
(8)
(59,173)
(169,229)
203,160
29,758
18,052
(118,139)
119,176
1,037
6,486
20,012
(29,788)
286,658
(200,610)
1,035
83,793
2017 ANNUAL REPORT
195
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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
2017
2016
37 SUBSIDIARY ACQUISITION AND OWNERSHIP CHANGES
(18,853)
5,468
(20,336)
2,340
(13,385)
(17,996)
2017
2016
18,146
(1,964)
16,182
2017
268,402
72,515
(2,568)
(12,623)
325,726
78,050
(44,042)
34,008
2016
279,070
110,652
(1,939)
(75,677)
312,106
In May 2017, the Group acquired an additional 74,100,770 shares in Sagicor Real Estate X Fund
Limited, a 3.3% interest. In August 2017, a further 2,500,000 shares, 0.11% holdings, were obtained on
settlement of an annuity contact. These acquisitions increased the Sagicor Group Jamaica Limited’s
holdings to 32.72%.
In October 2017, the Sagicor Group Jamaica Limited reduced its holdings in Sagicor Real Estate X
Fund Limited by 3.41% to 29.31% when it sold 76,470,770 shares. This resulted in a $2,261 gain on
disposal.
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.
196
SAGICOR FINANCIAL CORPORATION LIMITED
84
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 Amounts expressed in US $000 38 DISCONTINUED OPERATION (continued)
38 DISCONTINUED OPERATION (continued)
As of December 31, 2017, 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 and total comprehensive gain
2017
2016
-
-
10,110
10,110
1,827
(884)
469
1,412
March 31, 2019
2017
(10,110)
(10,110)
2016
-
-
After accounting for its status as a discontinued operation and for the details of the sale agreement the
net gain 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) / loss
Net currency movements
(Receivable) / payable, end of year
2017
-
-
(10,110)
-
(10,110)
2016
46,026
(44,614)
415
(1,827)
-
The price adjustments are subject to a limit based on the terms of the agreement. These results are
subject to further underwriting, investment and foreign currency adjustments constrained by the limit as
the experience develops.
85
2017 ANNUAL REPORT
197
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 Amounts expressed in US $000
39 CONTINGENT LIABILITIES
39 CONTINGENT LIABILITIES (continued)
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:
(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
2017
2016
Customer guarantees and letters of credit (1)
31,235
22,513
(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.
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 assessment by the
Group of a probable favorable outcome.
(a) Legal proceedings
(a) 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.
The Group is 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 are outlined below:
(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
outcome of this matter cannot be properly assessed until it has been heard.
198
SAGICOR FINANCIAL CORPORATION LIMITED
86
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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, 2017
follows:
are as
Investment property
Owner-occupied lands
Owner-occupied land and buildings
Level 1
Level 2
Level 3
Total
-
-
-
-
-
-
-
-
80,816
35,232
78,465
80,816
35,232
78,465
194,513
194,513
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
80,662
37,185
77,855
195,702
Additions
Transfers in / (out)
Fair value changes recorded in net
investment income
Fair value changes recorded in other
comprehensive income
Depreciation
Effect of exchange rate changes
-
-
74
-
-
80
-
-
-
3,175
3,175
(1,696)
(1,696)
-
74
(1,953)
(274)
(2,227)
-
-
(1,098)
(1,098)
503
583
Balance, end of year
80,816
35,232
78,465
194,513
87
2017 ANNUAL REPORT
199
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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.
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.
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.
Category
Sagicor
Risk
Rating
Investment
grade
t
l
u
a
f
e
d
-
n
o
N
Non-
investment
grade
Watch
Default
1
2
3
4
5
6
7
8
9
Classification
S&P
Moody’s
Fitch
AM Best
Minimal risk
AAA, AA
Aaa, Aa
AAA, AA
aaa, aa
Low risk
A
Moderate risk
BBB
Acceptable risk
Average risk
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
Substandard
Doubtful
C
D
C
C
c
d
C
DDD
DD
D
88
200
SAGICOR FINANCIAL CORPORATION LIMITED
10
Loss
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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
2017
2016
$000
%
$000
3,986,428
64.6
3,864,949
1,048,917
17.0
785,830
12.7
219,090
3.5
978,681
755,569
179,456
%
65.5
16.6
12.8
3.0
Total financial statement exposures
6,040,265
97.8
5,778,655
97.9
Loan commitments
Customer guarantees and letters of credit
Other
78,985
31,235
24,902
Total off financial statement exposures
135,122
1.3
0.5
0.4
2.2
82,088
22,513
15,262
119,863
1.4
0.4
0.3
2.1
Total
6,175,387
100.0%
5,898,518
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, 2017 and 2016
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
2017
Sagicor
Risk
Rating
2016
5
3
6
2
5
1
1
4
3
861,252
265,174
280,407
56,357
71,617
106,882
61,574
29,085
531,310
5
2
5
2
3
1
1
4
3
804,051
226,094
303,973
29,457
80,965
106,341
63,664
28,704
585,561
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 $574,135 (2016 - $596,785).
89
2017 ANNUAL REPORT
201
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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
2017
2016
Exposure
$000
Exposure
%
Exposure
$000
Exposure
%
329,099
459,919
1,445,870
172,175
1,242,095
298,546
3,335
485
8%
12%
36%
4%
31%
8%
0%
0%
337,503
657,285
1,018,985
250,267
1,497,421
58,447
15
707
9%
17%
26%
6%
39%
2%
0%
0%
TOTAL RATED EXPOSURES
3,951,524
99%
3,820,630
99%
Lending portfolios
Risk
Rating
Classification
1
2
3
4
5
6
7
8
9
Minimal risk
Low risk
Moderate risk
Acceptable risk
Average risk
Higher risk
Special mention
Substandard
Doubtful
UN-RATED EXPOSURES
34,904
1%
44,319
1%
10
Loss
2017
2016
Exposure
$000
Exposure
$000
Exposure
$000
Exposure
%
514,455
121,435
267,220
57,670
41,651
12,800
11,307
4,205
7,043
11,048
49%
12%
25%
5%
4%
1%
1%
1%
1%
1%
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%
TOTAL
3,986,428
100%
3,864,949
100%
TOTAL RATED EXPOSURES
1,048,834
100%
978,607
100%
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.
UN-RATED EXPOSURES
83
0%
74
0%
TOTAL
1,048,917
100%
978,681
100%
202
SAGICOR FINANCIAL CORPORATION LIMITED
90
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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
$4,900.
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 to
180 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
2017
2016
2017
Barbados
Jamaica
Trinidad & Tobago
Other Caribbean
USA
202,098
519,770
154,660
106,805
65,584
1,048,917
195,597
463,675
145,409
113,301
60,699
978,681
(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
3,490,549
291,123
521,860
Past due up to 3 months, but not impaired
7,010
23,255
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
-
-
-
3,487
4,005
2,257
34,195
1,598
-
-
Total past due but not impaired
7,010
33,004
35,793
Impaired assets (net of impairment)
883
18,259
6,746
Total carrying value
3,498,442
342,386
564,399
Accumulated allowances on impaired assets
Accrued interest on impaired assets
619
8
7,390
392
14,414
-
91
2017 ANNUAL REPORT
203
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 Amounts expressed in US $000
41.1 Credit risk (continued)
Debt
securities
Mortgage
loans
Finance
loans &
leases
2016
Neither past due nor impaired
3,429,408
270,089
429,066
Past due up to 3 months, but not impaired
9,568
25,312
72,947
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
-
-
-
3,580
10,206
3,051
679
-
-
Total past due but not impaired
9,568
42,149
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
-
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.
204
SAGICOR FINANCIAL CORPORATION LIMITED
92
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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.
2017
Actuarial liabilities
Other insurance liabilities
Total
2016
Actuarial liabilities
Other insurance liabilities
Total
Maturing
within
1 year
208,151
118,584
326,735
224,827
104,860
329,687
Expected discounted cash flows
Maturing
1 to 5
years
696,530
20,875
717,405
678,161
15,297
693,458
Maturing
after
5 years
2,046,139
52,086
2,098,225
1,873,374
52,781
1,926,155
Total
2,950,820
191,545
3,142,365
2,776,362
172,938
2,949,300
93
2017 ANNUAL REPORT
205
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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
2017 - Contractual un-discounted cash flows
2016 - 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
320,760
41,034
222,353
687,085
35,009
477,940
2,008
2,568
173,720
1,962,477
76,192
4,977
17,765
17,831
116,765
53,878
526,404
64,701
71,037
15,356
-
224
-
91,742
823,342
981
8,300
-
1,846
11,127
11,154
-
17,959
8,706
-
-
-
-
385,792
567,438
305,013
766,828
50,365
477,940
2,232
2,568
354,549
34,158
335,928
905,685
19,391
325,495
355
1,939
1,000
266,462
151,436
38,819
2,824,638
2,128,936
1,812
-
-
11,558
13,370
78,985
13,277
17,765
31,235
82,088
4,839
7,500
15,476
141,262
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
2,447
207,319
373,720
2,849,490
-
977
-
4,583
5,560
82,088
15,344
7,500
22,513
127,445
Total
2,079,242
834,469
52,189
2,965,900
2,238,839
358,816
379,280
2,976,935
206
SAGICOR FINANCIAL CORPORATION LIMITED
94
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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
2017 – Contractual or expected discounted cash flows
2016 – 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
402,939
536,581
2,558,922
3,498,442
471,274
622,930
2,347,690
3,441,894
16,521
3,495
125,568
16,518
103,248
32,253
95,109
49,082
53,446
61,269
31,886
14,127
159,581
-
6,086
224
293,979
124,510
279,250
-
2,070
-
284,649
356,789
-
-
71,081
201
-
817
351,967
-
8,097
342,386
142,132
564,399
16,518
111,404
32,477
736,547
49,283
53,446
133,167
360,064
15,883
5,010
39,082
21,085
133,440
152,738
-
159
1,010
276,801
111,845
222,797
-
1,279
-
285,264
331,766
5,149
-
55,447
-
205
-
7,015
15,879
5,227
137,860
27,970
96,222
36,963
46,530
41,484
263,191
331,766
137,940
508,975
5,227
139,298
28,980
713,252
42,317
46,530
103,946
279,070
1,311,415
1,104,215
3,624,635
6,040,265
1,281,054
1,182,864
3,315,277
5,779,195
95
2017 ANNUAL REPORT
207
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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.
208
SAGICOR FINANCIAL CORPORATION LIMITED
96
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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
2017
Exposure
after
5 years
Not
exposed to
interest
Total
Exposure
within
1 year
Exposure
1 to 5
years
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
7,920
319,503
4,756
50,194
7,604
406,148
52,086
126,783
191,545
9,321
-
-
53
379,018
413,805
211,648
679,555
40,578
474,579
-
2,568
1,917
49,773
69,462
6,670
-
-
-
70,946
18,043
410
279,874
750,948
47,576
476,034
2,232
2,568
1,931
328
1,455
2,232
-
-
-
-
-
-
-
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
2016
Exposure
after
5 years
52,781
9,089
Not
exposed to
interest
Total
83,746
172,938
-
316,895
(1,402)
5,184
473
138
125,170
172
1,192
1,364
-
-
-
-
-
-
377,576
395,213
349,514
915,155
34,779
320,574
1,364
1,939
174,113
246,976
147,037
204,975
Total
1,745,872
657,949
79,450
307,305
2,790,576
1,776,673
255,515
384,087
357,752
2,774,027
97
2017 ANNUAL REPORT
209
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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
2017
Exposure
after
5 years
Not
exposed
to interest
Total
Exposure
within
1 year
Exposure
1 to 5
years
2016
Exposure
after
5 years
Not
exposed
to interest
Total
626,248
472,660
2,350,813
48,721
3,498,442
647,158
557,849
2,186,167
50,180
3,441,354
-
19,996
2,591
486,854
16,435
108,940
-
47
184
-
36,452
13,855
37,773
-
340
-
-
-
-
245,483
245,483
1,235
4,787
1,581
83
424
32,477
49,036
53,262
342,386
142,132
564,399
16,518
111,404
32,477
49,283
53,446
57,825
133,167
284,703
120,899
38,191
-
1,700
-
200
-
-
-
-
19,295
4,110
463,487
5,178
137,123
-
1,043
2,302
3,632
-
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
331,766
137,940
508,975
5,227
139,298
28,980
42,317
46,530
47,270
103,946
57,690
279,070
270,267
-
89,797
360,064
221,380
1,535,734
632,250
2,796,506
584,711
5,549,201
1,504,708
706,941
2,575,029
498,933
5,285,611
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
Cash resources
Total
Other assets and accounts receivable
4,172
71,170
210
SAGICOR FINANCIAL CORPORATION LIMITED
98
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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
2017
2016
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
6.1%
5.7%
7.2%
11.6%
5.1%
2.3%
5.6%
9.5%
2.1%
2.0%
3.6%
6.2%
6.1%
6.9%
12.6%
9.2%
1.0%
6.1%
9.4%
1.9%
2.1%
4.5%
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
2017
Effect on
net
income
Effect on
TCI
Change in
interest rate
JMD
USD
2016
Effect on
net
income
Effect on
TCI
- 1%
-0.5%
8,525
21,297
- 1%
-0.5%
1,057
13,141
+1%
+0.5%
(8,856)
(19,691)
+2.5%
+ 2%
(3,690)
(46,516)
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.
99
2017 ANNUAL REPORT
211
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 Amounts expressed in US $000
41.4 Foreign exchange risk (continued)
2017
US$ 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)
444,488
942,730
430,696
140,655
2,598,363
150,826
4,707,758
5,037
16,335
30,474
496,334
203,652
699,986
312
124,204
103,260
1,170,506
360,583
1,531,089
401,388
351,912
69,223
34,252
-
82,293
29,424
43,000
23,065
71,648
16,491
547,756
28,364
133,292
659,580
1,172,528
14,828
1,195
7,564
7,858
28,523
474,641
72,786
547,427
337,729
30,411
149,381
-
1,348
12,894
16,855
548,618
15,732
564,350
(16,923)
8,476
16,947
16,004
762,719
15,291
122,939
182,082
3,499,312
20,247
108,991
202,329
3,608,303
54,441
19,796
44,735
-
15,674
710
4,578
1,710,151
38,595
70,084
397,314
895,363
1,814
42,880
139,934
3,156,201
4,099
22,794
144,033
3,178,995
58,296
429,308
1,722
6,003
58,864
217,415
(2,017)
215,398
95,199
10,455
8,918
-
16,798
6,821
6,371
144,562
2,243
146,805
68,593
785,830
186,638
360,064
6,040,290
764,242
6,804,532
2,950,820
191,545
379,018
413,805
1,559,232
80,027
246,976
5,821,423
60,891
5,882,314
922,218
Total liabilities of continuing operations
674,408
1,173,723
Net position
25,578
357,366
(1) Monetary balances only
(2) Non-monetary balances, income tax balances and retirement plan assets
212
SAGICOR FINANCIAL CORPORATION LIMITED
100
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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)
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
336
86,232
43,379
947,915
337,791
1,285,706
386,276
302,777
65,787
33,733
-
86,251
31,160
42,710
20,504
66,482
-
483,291
48,198
89,992
645,917
1,011,244
13,848
12,794
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
736,067
13,939
135,180
179,340
3,505,005
28,264
99,446
207,604
3,604,451
61,905
10,105
52,451
1,605,596
37,273
76,301
-
395,213
14,414
1,021,431
844
2,831
1,784
50,073
142,550
3,187,671
3,492
33,751
146,042
3,221,422
61,562
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
Total liabilities of continuing operations
659,765
1,024,038
Net position
42,577
261,668
(1) Monetary balances only
(2) Non-monetary balances, income tax balances and retirement plan assets
101
2017 ANNUAL REPORT
213
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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, 2017 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:
1,566,473
1,112,196
2,678,669
1,121,819
988,958
2,110,777
444,654
123,238
567,892
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:
483,662
71,483
555,145
(36,381)
(226,671)
(46,464)
(273,135)
(157,339)
(14,856)
(172,195)
(22,826)
76,826
-
10,163
(22,826)
86,989
Currency risk relating to the future cash flows of monetary balances
Currency risk of reported results of foreign operations
(156,647)
(112,182)
(44,465)
(44,465)
22,667
15,734
2,283
4,303
11,985
(7,682)
4,303
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.
214
SAGICOR FINANCIAL CORPORATION LIMITED
102
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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 used in determining the fair value of Level 3 instruments.
103
2017 ANNUAL REPORT
215
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 Amounts expressed in US $000
41.5 Fair value of financial instruments (continued)
(a) Financial instruments carried at fair value
Available for sale securities:
Debt securities
Equity securities
Investments at fair value through income:
Debt securities
Equity securities
Derivative financial instruments
Mortgage loans
Total assets
2017
2016
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
653,516
1,610,263
2,496
2,266,275
604,786
1,663,306
23,314
53,167
676,830
1,663,430
10,381
12,877
86,862
2,353,137
35,350
51,732
2,928
9,602
2,271,020
96,684
640,136
1,715,038
12,530
2,367,704
19,185
14,269
-
-
62,542
144,352
2,232
-
33,454
209,126
710,284
1,872,556
98,757
-
30,245
45,447
174,449
187,326
180,484
158,621
32,477
45,447
417,029
35,720
3,992
-
-
32,436
119,532
1,364
-
39,712
153,332
2,770,166
679,848
1,868,370
95,849
-
27,616
40,347
163,812
176,342
164,005
123,524
28,980
40,347
356,856
2,724,560
Total assets by percentage
26%
68%
6%
100%
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%
-
-
2,232
2,232
2,232
1%
139,753
139,753
47,576
-
47,576
187,329
99%
47,576
2,232
49,808
189,561
100%
-
-
-
-
-
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%
216
SAGICOR FINANCIAL CORPORATION LIMITED
104
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 Amounts expressed in US $000 41.5 Fair value of financial instruments (continued)
Transfers from Level 1 to Level 2 in 2017 - Nil (2016 - $59,752). Transfers from Level 2 to Level 1 in 2017 – $19,819 (2016 - 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.
2017
Available
for sale
securities
Investments
at fair value
through income
Derivative
instruments
Total
assets
2016
Total
assets
2017
2016
Policy
liabilities
Structured
products
Total
liabilities
Total
liabilities
Disposals
(5,133)
(45,229)
(37,452)
(87,814)
(58,148)
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
-
-
-
-
-
(98)
Transfers (out of) Level 3 classification
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
(6)
-
(265)
12,877
-
-
105
12,530
5,849
136,196
53,820
27,616
19,213
176,342
189,936
130,668
34,779
165,447
160,289
78,882
44,262
-
-
-
76
-
-
-
-
-
-
-
-
-
-
15,467
28,718
44,185
35,664
(8,242)
(20,014)
(28,256)
(22,751)
-
-
-
-
-
-
176
20,868
21,044
8,135
-
-
-
-
-
(98)
-
(308)
-
125
-
-
-
-
-
-
-
-
-
-
125
-
-
-
-
188
-
-
-
3,682
411
3,682
2,146
(252)
(7,691)
(10)
-
(749)
-
-
-
(16)
-
-
-
(1,014)
(7,611)
1,735
144,204
30,245
187,326
176,342
139,753
47,576
187,329
165,447
176
11,411
11,587
10,067
-
-
-
-
-
125
-
-
-
-
125
188
2017 ANNUAL REPORT
217
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 Amounts expressed in US $000
41.5 Fair value of financial instruments (continued)
41.5 Fair value of financial instruments (continued)
(b) Financial instruments carried at amortised cost
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, 2017 is set out in the following tables.
Level 1
Level 2
Level 3
Total
Held to maturity securities:
Debt securities
Loans and receivables:
Debt securities
Mortgage loans
Policy loans
Finance loans and finance leases
Securities purchased for resale
-
-
-
-
-
-
-
-
-
-
445,543
709,788
1,155,331
-
-
-
-
296,867
296,867
149,995
149,995
551,922
551,922
16,518
16,518
445,543
1,725,090
2,170,633
-
445,543
1,725,090
2,170,633
Investment contracts:
Deposit administration liabilities
Other investment contracts
Notes and loans payable:
Convertible redeemable
preference shares
Notes and lease payables
Deposit and security liabilities
Other funding instruments
Customer deposits
Securities sold for repurchase
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
364,131
364,131
121,483
121,483
119,915
119,915
241,398
241,398
17,320
81,556
17,320
445,687
98,876
463,007
-
284,980
284,980
1,396
748,438
749,834
-
473,771
473,771
1,396
1,507,189
1,508,585
365,527
1,847,463
2,212,990
218
SAGICOR FINANCIAL CORPORATION LIMITED
106
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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, 2017 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
17,003
45,528
24,331
86,862
20% change
on TCIBT
3,401
9,106
4,866
17,373
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.
2017
Derivatives held for trading:
Equity indexed options
2016
Derivatives held for trading:
Equity indexed options
Contract /
notional
amount
Fair value
Assets
Liabilities
713,452
713,452
32,477
32,477
2,232
2,232
673,264
673,264
28,980
28,980
1,364
1,364
107
2017 ANNUAL REPORT
219
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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.
220
SAGICOR FINANCIAL CORPORATION LIMITED
108
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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.
2017
ASSETS
Financial investments
Securities purchases under resale agreement
Derivative financial instruments
LIABILITIES
Security liabilities
Derivative financial instruments
2016
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
4,904,246
16,518
32,477
4,953,241
1,557,000
2,232
1,559,232
4,779,541
5,227
28,980
4,813,748
1,621,961
1,364
1,623,325
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,904,246
16,518
32,477
4,953,241
1,557,000
2,232
1,559,232
4,779,541
5,227
28,980
4,813,748
1,621,961
1,364
1,623,325
(1,211,913)
(206,987)
-
(2,232)
-
-
(1,214,145)
(206,987)
(1,191,066)
(2,232)
(1,193,298)
(821,168)
-
(1,364)
(822,532)
(415,910)
(1,364)
(417,274)
(188,722)
-
(188,722)
(260,443)
-
-
(260,443)
(220,100)
-
(220,100)
3,485,346
16,518
30,245
3,532,109
177,212
-
177,212
3,697,930
5,227
27,616
3,730,773
985,951
-
985,951
109
2017 ANNUAL REPORT
221
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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:
•
attritional losses, which are expected to be of reasonable frequency and are less than
established threshold amounts;
•
•
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.
222
SAGICOR FINANCIAL CORPORATION LIMITED
110
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 Amounts expressed in US $000 42.2 Claims risk (continued)
42.3 Reinsurance risk (continued)
Total insurance coverage
2017
2016
Property
Motor
Accident and liability
Total
Gross
Net
Gross
Net
Gross
Net
Gross
Net
8,348,729
1,410,917
433,491
433,491
7,673,403
1,083,282
385,978
192,989
2,769,682
2,275,771
2,253,850
1,086,198
11,551,902
10,335,152
4,098,258
2,362,469
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 2017 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
208,285
7,500
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 $7,500 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.
111
2017 ANNUAL REPORT
223
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 Amounts expressed in US $000
42.3 Reinsurance risk (continued)
43.1 Contracts without investment returns (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
294,515
405,985
-
-
-
-
-
-
42%
58%
0%
0%
0%
0%
0%
0%
TOTAL
700,500
100%
43 INSURANCE RISK – LIFE, ANNUITY & HEALTH CONTRACTS
(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.
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.
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.
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.
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).
224
SAGICOR FINANCIAL CORPORATION LIMITED
112
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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.
2017 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
23,821
77,597
26,642
25,902
53
1,223
1,991
647
1,027
46
22,598
75,606
25,995
24,875
7
154,015
4,934
149,081
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.
2017
2016
Liability
5% increase
in liability
Liability
5% increase
in liability
47,261
4,280
51,541
2,363
214
2,577
48,373
4,284
52,657
2,419
214
2,633
Actuarial liability
Claims payable
113
(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.
2017 ANNUAL REPORT
225
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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
2017
2016
Barbados
Gross
3,973,661
1,299,463
3,855,798
1,338,221
Net
3,680,227
1,247,768
3,546,641
1,286,564
Jamaica
Gross
8,045,374
5,935,234
7,107,905
4,901,489
Net
7,934,866
5,882,949
6,961,507
4,869,094
Trinidad & Tobago
Gross
3,491,638
2,225,487
3,322,781
2,379,773
Net
2,900,602
2,115,756
2,741,682
2,262,405
Other Caribbean
Gross
7,936,174
1,443,434
7,702,307
1,824,971
USA
Total
Net
Gross
Net
6,939,861
1,282,782
6,616,723
1,647,151
6,291,352
2,106,362
38,824
37,318
5,935,908
2,018,213
43,463
41,422
Gross
29,738,199
10,942,442
27,924,699
10,487,917
Net
23,561,918
10,566,573
21,884,766
10,106,636
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
2017
2016
Barbados
Jamaica
Gross
Net
Gross
Net
Trinidad & Tobago
Gross
Net
Other Caribbean
Gross
Net
116,587
116,587
608
608
120,342
120,342
30,721
30,721
45,417
45,417
341,872
341,872
-
-
28
28
110,544
110,544
575
575
115,254
115,254
26,827
26,827
USA
Total
Gross
1,183,959
23,942
1,150,170
Net
408,531
7,524
390,478
Gross
1,452,217
411,259
1,403,370
Net
676,789
394,841
643,678
43,674
43,674
293,596
293,596
-
-
27
27
25,684
8,024
362,981
345,321
226
SAGICOR FINANCIAL CORPORATION LIMITED
114
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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)).
115
2017 ANNUAL REPORT
227
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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.
Sensitivity
Scenario
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.
Sagicor Life Inc
segment
Sagicor Jamaica
Segment
Sagicor USA 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
Assumed increases in the
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 0.25% per year for
5 years, with the rates
remaining constant
thereafter.
Assumed
decreases in
investment
portfolio yield
rates of 0.5% per
year for 10 years.
Worsening
mortality and
morbidity
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.
Lapse rates were increased or
reduced by 30%, and the more
adverse result was selected.
A 1% increase was applied to
the investment portfolio rate.
A 1% decrease was applied
to the investment portfolio
rate.
rates
For life insurance and deferred
annuity products, the base
were
assumed
increased annually by 3%
cumulatively over the next 5
years. For payout annuity
products only, the mortality
rates were decreased by 3%
cumulatively over the next 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.
Sagicor Life segment
Sagicor Jamaica
segment
Sagicor Life USA
segment
2017
2016
2017
2016
2017
2016
Base net actuarial
liability
956,305
936,049
374,483
327,183
623,269
580,784
Scenario
increase in liability
increase in liability
increase in liability
Worsening rate
of lapse
144,892
135,728
53,868
47,635
11,432
9,330
High interest rate
(89,289)
(84,334)
(111,058)
(98,734)
(37,115)
(34,545)
Low interest rate
161,474
156,127
102,183
124,400
42,637
39,771
Worsening mortality/
morbidity
37,528
35,808
42,776
37,209
16,783
12,842
Higher expenses
19,053
20,715
17,530
14,939
5,255
4,418
228
SAGICOR FINANCIAL CORPORATION LIMITED
116
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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.
2017
2016
Pension and insurance fund assets
2,072,232
1,726,467
Mutual fund, unit trust and other investment fund assets
1,132,928
890,235
3,205,160
2,616,702
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 $1,253,052 (2016 - $1,436,232)
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.
117
2017 ANNUAL REPORT
229
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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
2017
2016
623,374
308,089
413,805
536,149
257,974
395,213
Total financial statement capital resources
1,345,268
1,189,336
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 life insurers of the Sagicor Group as of December 31 has been
estimated as 258% (2016 – 249%). The 2016 MCCSR which was disclosed as 291% in 2016 has been
revised and restated to 249% this year. This is the principal standard of capital adequacy used to assess
the overall strength of the life insurers 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 life insurers of 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 regulatory capital requirements.
230
SAGICOR FINANCIAL CORPORATION LIMITED
118
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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, 2017 and 2016, this ratio was 186.0%
and 156.5% 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, 2017 and 2016 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 2017 and 2016, all applicable
externally imposed capital requirements were complied with.
Sagicor
Investments
Jamaica
Sagicor Bank
Jamaica
2017
2016
2017
2016
16%
10%
13%
10%
15%
10%
14%
10%
Actual capital base to risk weighted assets
Required capital base to risk weighted assets
119
2017 ANNUAL REPORT
231
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 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
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, 2017, and 2016, the Group
satisfied these requirements.
The Group is in compliance with all covenants.
Limitation on sale of assets of
subsidiary stock
This covenant restricts
from selling material
the Group
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.
232
SAGICOR FINANCIAL CORPORATION LIMITED
120
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 Amounts expressed in US $000 47 RELATED PARTY TRANSACTIONS
48 BREACH OF INSURANCE REGULATIONS – RELATED PARTY BALANCES
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
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:
Compensation
2017
2016
Salaries, directors’ fees and other short-term benefits
Equity-settled compensation benefits
Pension and other retirement benefits
19,884
6,969
1,475
28,328
20,548
4,047
1,235
25,830
Balance, beginning of year
Advances
Repayments
Effects of exchange rate changes
Balance, end of year
Mortgage loans
Other loans
Total loans
4,937
582
(735)
-
4,784
992
951
(892)
23
1,074
5,929
1,533
(1,627)
23
5,858
Interest rates prevailing during the year
3.75% - 7.00%
0.00% - 9.75%
As at December 31, 2017, one of the Group’s subsidiaries, Sagicor Life Jamaica Limited exceeded
the regulated 5% maximum of related party balances to total assets of the company. Management
is in discussions with the Regulator, Financial Services Commission, in relation to this matter. The
regulator has not imposed any penalty.
49 EVENTS AFTER DECEMBER 31, 2017
Subsequent to the year-end, certain affiliates of Sagicor Group Jamaica Limited (SGJ), including
Sagicor Real Estate X Fund Limited, entered into an agreement for a business combination with
Playa Hotels & Resorts N.V. “Playa”, an entity listed on the NASDAQ. Under the terms of the
agreement, SGJ’s affiliated entities will receive 20 million shares of Playa and US$100 million in
cash in return for certain owned and managed hotels in Jamaica.
The properties subject to the agreement comprise properties owned by the Sagicor Sigma Real
Estate Fund, the Sagicor Pooled Investment Funds and Sagicor X Fund Property Limited. The
properties include 4 existing resorts, being the 489-room Hilton Rose Hall, the 268-room Jewel
Runaway Bay, the 250-room Jewel Dunn’s River and the 225-room Jewel Paradise Cove, as well
as a newly-built 88-room Sentry Palm hotel tower and spa at Jewel Grande and 2 developable land
sites with a potential density of up to 700 rooms. A hotel management contract for the Jewel Grande
Sabal Palm Towers is also included in the agreement.
121
2017 ANNUAL REPORT
233
Notes to the Financial Statements Sagicor Financial Corporation Limited Year ended December 31, 2017 Amounts expressed in US $000
SHAREHOLDER
INFORMATION
We are creating the building blocks
of a better future for our clients
upon the foundation of strength, stability and trust.
SHAREHOLDER INFORMATION
DIVIDENDS
An interim dividend of US 2.5 cents per common share, approved for the half-year ended June 30, 2017, was paid on November 15, 2017 to the holders of
common shares, including depositary interest holders, whose names were registered on the books of the Company at the close of business on October 18,
2017. A final common dividend of US 2.5 cents per common share, payable on May 15, 2018, was approved for the financial year ended December 31, 2017 to
the holders of common shares, including depositary interest holders, whose names were registered on the books of the Company at the close of business on
April 17, 2018.
SHARES
The following Shareholders own 4% or more of the capital of the Company as at December 31, 2017:
Common Shares
Number of Shares
Percentage
National Insurance Board
International Finance Corporation
18,950,000
12,269,938
6.18
4.00
The total number of issued shares as at December 31, 2017 and as at December 31, 2016 is set out below
Common Shares
As at 31-Dec-17
As at 31-Dec-16
306,555,644
304,494,131
236
SAGICOR FINANCIAL CORPORATION LIMITED
LONG TERM INCENTIVE PLAN (LTI)
The Tables below show grants of restricted stock and stock options as at December 31, 2017 under the LTI for Executives.
Restricted Stock
As of December 31, 2017
Award Year
Value attributable to Stock Grant
Awards Made
and in Effect
Vested
Forfeited
Not Yet Vested
Vested in 2017
2006 – 2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
1.98, 2.01, 2.50
1,302,161
1,302,161
1.58, 2.50
1,033,058
1,033,058
1.60
1.48
1.53
1.15
1.075
1.05
0.86
1.00
760,026
625,787
760,026
625,787
1,024,879
1,024,879
1,507,918
1,507,918
2,601,230
2,044,281
2,802,877
2,094,099
3,566,169
1,675,704
3,405,383
1,101,331
12,759
53,581
263,108
493,017
459,998
686,175
791,937
171,243
91,088
38,948
0
0
0
0
0
0
0
655,154
1,799,377
2,265,104
0
0
0
0
0
0
425,452
572,462
954,735
1,101,331
18,629,488
13,169,244
3,061,854
4,719,635
3,053,980
Allocated for settlement of taxes
(959,544)
Total converted to shares
2,094,436
2017 ANNUAL REPORT
237
Award Year
Exercise Price of
Stock Option
Awards Made
Vested
Exercised
Forfeited &/or
Expired
Not Exercised
Not Vested
Vested in 2017
Stock Options
As of December 31, 2017
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
120,443
72,839
818,009
973,711
120,443
798,372
72,839
1,976,759
596,749
640,272
US$ 1.98
918,815
US$ 2.01
2,049,598
US$ 2.5
US$ 2.5
US$ 1.6
1,414,758
1,613,983
2,060,619
1,295,616
US$ 1.48
2,569,572
1,644,170
US$ 1.53
1,458,559
1,043,968
0
0
0
0
0
US$ 1.15
2,279,818
1,742,489
990,896
537,329
US$ 1.075
3,275,787
2,214,589
1,249,377
US$ 1.05
3,401,743
1,689,017
1,023,317
US$ 0.86
4,946,649
1,462,249
936,112
US$ 1.00
4,853,069
380,979
356,004
387,571
233,417
65,690
66,490
0
0
818,009
973,711
751,593
965,212
0
0
0
0
0
0
0
0
673,627
0
0
0
0
0
0
0
435,636
769,066
665,700
1,479,309
893,909
526,137
3,418,710
1,462,249
24,975
4,405,600
380,979
765,003
1,295,616
925,402
1,644,170
414,591
1,043,968
30,842,970
13,458,079
4,748,988
7,407,645
8,709,091
9,977,246
3,941,839
238
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, 2017 (with 2016 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
2017
2016
2017
2016
2017
2016
2017
2016
6,534
14,922
6,960
3,916
2,777
661
217
32
6,476
14,962
6,932
3,922
,2,829
644
222
31
18.14
41.43
19.32
10.87
7.71
1.84
0.60
0.09
17.98
3,879,557
3,816,930
41.53
24,732,936
24,843,507
19.25
24,146,139
24,040,879
10.89
27,904,352
27,991,237
7.85
1.79
0.62
0.09
39,948,479
40,753,105
31,075,736
29,974,552
61,386,472
62,695,447
93,481,973
90,378,474
1.27
8.07
7.88
9.10
13.03
10.14
20.02
30.49
1.25
8.16
7.90
9.19
13.38
9.84
20.59
29.69
Total
36,019
36,018
100.00
100.00
306,555,644
304,494,131
100.00
100.00
2017 ANNUAL REPORT
239
Common Shareholders by Country of Residence
Number of Common Shareholders by Country of Residence and by Type as at December 31, 2017
Country
Directors, Management,
Staff, Advisors
Shareholders
Trinidad and Tobago
Barbados
Eastern Caribbean
Other Caribbean
Other
Total
100
582
109
34
64
889
%
0.28
1.62
0.30
0.09
0.18
2.47
Common Shares held by Country of Residence
Companies
Individuals
Total
Shareholders
573
243
36
36
5
893
%
1.59
0.67
0.10
0.10
0.01
2.48
Shareholders
14,828
10,999
6,933
178
1,299
34,237
%
41.17
30.54
19.25
0.49
3.61
95.05
Shareholders
%
15,501
11,824
7,078
248
1,368
43.04
32.83
19.65
0.69
3.80
36,019
100.00
Number of Common Shares Held by Country of Residence and by Type as at December 31, 2017
Country
Directors, Management,
Staff, Advisors
Companies
Individuals
Total
Shares
Trinidad and Tobago
2,406,607
Barbados
5,983,529
Eastern Caribbean
292,423
Other Caribbean
1,556,534
Other
Total
4,796,834
15,035,927
%
0.79
1.95
0.10
0.51
1.56
4.90
Shares
70,227,920
38,801,990
3,580,097
3,849,269
12,931,249
%
22.91
12.66
1.17
1.26
4.22
Shares
79,368,786
56,200,655
19,477,209
1,315,156
5,767,386
%
25.89
18.33
6.35
0.43
1.88
Shares
152,003,313
100,986,174
23,349,729
6,720,959
23,495,469
%
49.58
32.94
7.62
2.19
7.66
129,390,525
42.21
162,129,192
52.89
306,555,644
100.00
240
SAGICOR FINANCIAL CORPORATION LIMITED
ADVISORS AND BANKERS
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
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
Paul Hastings (Europe) LLP
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
2017 ANNUAL REPORT
241
OFFICES
Sagicor Registered Office
SAGICOR FINANCIAL CORPORATION
LIMITED
Clarendon House
2 Church Street
Hamilton HM11
Bermuda
Tel: (441) 295-1422
Fax: (441) 292-4720
Sagicor Corporate Head Office
SAGICOR FINANCIAL CORPORATION
LIMITED
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
Sagicor Life Inc Branch Offices
Barbados
Sagicor Life Inc.
Sagicor Financial Centre
1st Avenue
Belleville, St Michael
Tel: (246) 467-7500
Fax: (246) 436-8829
Sagicor Life Inc.
Sagicor Financial Centre
Collymore Rock
St Michael
Tel: (246) 467-7500
Fax: (246) 436-8829
Antigua
Sagicor Financial Centre
#9 Sir Sydney Walling Highway
St John’s
Tel: (268) 480-5550
Fax: (268) 480-5520
Email: info_antigua@sagicor.com
Belize
Coney Drive Business Plaza
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
Email: info_curacao@sagicor.com
Grenada
TransNemwil Complex
The Villa
St George’s
Tel: (473) 440-1223
Fax: (473) 440-4169
Email: info_grenada@sagicor.com
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: info_trinidad@sagicor.com
Sagicor Life Inc Agencies
Anguilla
Malliouhana Anico Insurance Co Ltd
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
242
SAGICOR FINANCIAL CORPORATION LIMITED
Dominica
WillCher Services Inc
44 Hillsborough Street
Corner Hillsborough & Independence Streets
Roseau
Tel: (767) 440-2562
Fax: (767) 440-2563
St Vincent
Sagicor Life Inc.
C/o Incorporated Agencies Limited
Frenches
Kingstown
Tel: (784) 456-1159
Fax: (784) 456-2232
Haiti
Cabinet d’Assurance
Fritz de Catalogne
Angles Rues de Peuple et des Miracles
Port-au-Prince
Tel: (509) 3701 1737
SAGICOR LIFE (EASTERN CARIBBEAN) INC.
Sagicor Financial Centre
Choc Estate Castries, St Lucia
Tel: (758) 456-1700
Tel: (758) 450-3787
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
C/o The St Kitts Nevis Anguilla Trading and
Development Co. Ltd
Central Street, Basseterre
Tel: (869) 465-9476
Fax: (869) 465 6437
SAGICOR GENERAL INSURANCE INC.
City Cetre Mall
Bridgetown, Barbados
Tel: (246) 413-2886
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
Email: sgi-info@sagicorgeneral.com
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
St Lucia
Sagicor Life Inc
Sagicor Financial Centre
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 Agencies
HHV Whitchurch & Company Limited
Old Street
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
2017 ANNUAL REPORT
243
Orry J Sands & Co. Ltd.
300 east Shirley Street
Nassau, NP Bahamas
Tel: (242) 393-4300
Fax: (242) 393 6258
SAGICOR FUNDS INCORPORATED
Cecil F de Caires Building, Wildey, St Michael
Barbados
Tel: (246) 467-7500
Fax: (246) 436-8829
Email: info@sagicor.com
SAGICOR ASSET MANAGEMENT INC
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
SAGICOR ASSET MANAGEMENT (TRINIDAD
AND TOBAGO) LIMITED
Sagicor Financial Centre
16 Queen’s Park West, Port of Spain
Trinidad
Tel: (868) 628-1636/7/8
Fax: (868) 628-1639
NATIONWIDE INSURANCE COMPANY
LIMITED
Sagicor Financial Centre
16 Queen’s Park West
Port of Spain, Trinidad
Tel: (868) 628-1636
Fax: (868) 628-1639
Email: comments@sagicor.com
BARBADOS FARMS LIMITED
Bulkeley
St George
Barbados
Tel: (246) 427-5299
Fax: (246) 437-8873
SAGICOR PANAMA SA
Ave Samuel Lewis y Calle Santa Rita
Edificio Plaza Obarrio
3er Piso Oficina 201
Panama City, Panama
Tel: (507) 223-1511
CAPITAL LIFE INSURANCE COMPANY
BAHAMAS 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
Email: info@familyguardian.com
SAGICOR LIFE ARUBA NV
Fergusonstraat #106
AHMO Plaza Building, Suites 1 and 2
Oranjestad, Aruba
Tel: (297) 582-3967
Fax: (297) 582-6004
Email: calico@setarnet.aw
Lyder Insurance Consultants
Seroe Blanco 56A
Tel: (297) 582-6133
GLOBE FINANCE INC
Shirley House
Hastings Main Road
Christ Church
Tel: (246) 426-4755
Fax: (246) 426-4772
Website: www.globefinanceinc.com
LOJ HOLDINGS LIMITED
28-48 Barbados Avenue
Kingston 5, Jamaica
Tel: (876) 929-8920(-9)
Fax: (876) 960-1927
SAGICOR GROUP JAMAICA LIMITED
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
Website: www.sagicorjamaica.com
244
SAGICOR FINANCIAL CORPORATION LIMITED
SAGICOR FINANCE LIMITED
Maples Corporate Services Limited
Ugland House
South Church Street
George Town, Grand Cayman
Cayman Islands
Associated Companies
FAMGUARD CORPORATION LIMITED
No.1 Shirley Street & Village Road
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 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
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 INSURANCE BROKERS LIMITED
28-48 Barbados Avenue
Fax: (507) 264-1949
Email: capital1@sinfo.net
Website: www.sagicorjamaica.com
EMPLOYEE BENEFITS ADMINISTRATORS
LIMITED
28-48 Barbados Avenue
Kingston 5, Jamaica
Tel: (876) 929-8920(-9)
Fax: (876) 960-1927
Website: www.sagicorjamaica.com
SAGICOR INVESTMENTS JAMAICA LIMITED
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
SAGICOR BANK JAMAICA LIMITED
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
SAGICOR LIFE INSURANCE COMPANY
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
Scottsdale, Arizona, 85251, USA
Tel: 1-800-531-5067
Fax: (480) 425-5150
Website: www.sagicorlifeusa.com
2017 ANNUAL REPORT
245
Connect with us!
Sagicor Financial Corporation Limited welcomes your feedback regarding any aspect
of our business, or of any member of the Sagicor Group of companies. We are very
happy for you to contact us through any of the channels listed below.
Shareholders
Contact us for:
• Dividends
• Change in share registration and address
• Lost share certificates
• Estate transfer
• General shareholder requests
Connect with us!
Sagicor Financial Corporation Limited
Cecil F De Caires Building
Wildey
St. Michael
Barbados, BB15096
Phone: (246) 467-7500
Fax: (246) 426-7907
Email: info@sagicor.com
To obtain additional printed copies of the Annual
Report or make enquiries regarding company
news and initiatives
Phone: (246) 467-7500
Fax: (246) 426-7907
Email: info@sagicor.com
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(246) 467 7500 | www.sagicor.com