Stronger
Together
2020 ANNUAL REPORT
Stronger Together | 2020 Annual Report
OUR VISION
To be a great company committed to
improving the lives of people in the
communities in which we operate.
TABLE OF CONTENTS
FINANCIAL HIGHLIGHTS
SAGICOR GROUP CHAIRMAN’S REVIEW
SAGICOR GROUP PRESIDENT & CHIEF EXECUTIVE OFFICER’S MESSAGE
BOARD OF DIRECTORS
EXECUTIVE MANAGEMENT
GROUP ORGANISATIONAL CHART
CORPORATE & SOCIAL RESPONSIBILITY
HUMAN CAPITAL REPORT
INNOVATION & TECHNOLOGY
MANAGEMENT DISCUSSION & ANALYSIS
INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS
SHAREHOLDER INFORMATION
OFFICES
1
2
5
7
10
16
22
24
39
45
46
130
308
310
2
FINANCIAL HIGHLIGHTS
NET INCOME 1
COMMON DIVIDENDS
SHAREHOLDERS’ RETURNS
(4)
2020
87
20192
37
2018
62
2017
60
2016
33
2020
15
2019
15
2018
15
2017
14
2016
BOOK VALUE PER SHARE3
7.59
2020
7.81
20192
8.50
2018
8.83
2017
7.66
2016
1 from continuing operations
2 before Alignvest Acquisition II Corporation transaction costs
3 under the Alignvest transaction, Sagicor Financial Corporation Limited common shares not purchased for cash, were exchanged for common shares of Sagicor Financial Company Ltd on an exchange
ratio of one Sagicor Financial Company Ltd. common share for 4.328 of Sagicor Financial Corporation Limited common shares (“Exchange Ratio”). This exchange ratio has been used to convert the 2018
and prior years outstanding shares to the Sagicor Financial Company Ltd equivalent.
Basic earnings per share 3
Return on shareholder’s equity 1,2
2020
(2.4¢)
(0.3%)
20192
57.5¢
10.50%
2018
51.7¢
6.20%
2017
88.7¢
11.30%
2016
84.4
12.30
ASSETS 1
9,266 8,729 7,308 6,805 6,532
2020
2016
2018
2019
2017
GROUP FINANCIAL POSITION
OPERATING LIABILITIES
6,461 5,700 5,464 5,341
2019
2016
7,136
2020
2018
2017
EQUITY & DEBT CAPITAL (TOTAL CAPITAL)
2,128 2,266
2019
2020
1,622
2018
1,352
2017
1,190
2016
1 from continuing operations
Debt to Capital
MCCSR
2020
2019
22.2% 22.8%
253%
252%
2018
30.2%
234%
2017
2016
30.5% 33.2%
258% 249%
FINANCIAL HIGHLIGHTS
3
NET INCOME 1
(15)
2020
147
20192
96
2018
106
2017
108
2016
GROUP RESULTS 1
REVENUE
1,878
2020
1,867
2019
1,386
2018
1,219
2017
1,134
2016
1,221
2020
1,117
2019
BENEFITS
765
2018
659
2017
560
2016
1 from continuing operations
2 from continuing operations (before Alignvest Acquisition II Corporation transaction cost)
SAGICOR LIFE INC - NET INCOME 1
47
2018
59
2019
64
2017
49
2020
65
2016
SEGMENT RESULTS
SAGICOR GROUP JAMAICA - NET INCOME 1
111
2018
38
2020
90
2016
124
2019
95
2017
SAGICOR USA - NET INCOME 1
(27)
2020
35
2019
18
2018
13
2017
10
2016
2020
523
2,279
2019
533
2,116
2018
340
2,008
2017
421
1,953
2016
411
1,928
Revenue
Assets
2020
632
3,455
2019
735
3,482
2018
586
3,104
2017
590
2,836
2016
524
2,674
Revenue
Assets
2020
679
3,383
2019
562
2,842
2018
421
2,293
2017
159
1,982
2016
149
1,901
Revenue
Assets
1 from continuing operations
4
Timothy Hodgson
SAGICOR GROUP CHAIRMAN
Stronger Together | 2020 Annual Report
5
SAGICOR GROUP CHAIRMAN’S REVIEW
Dear Shareholders:
Our 2020 results have been dominated by COVID-19,
one of modern history’s most challenging health
and economic crises, and we expect the challenges
to continue into 2021. The pandemic affected the
tourism dependent Caribbean regions in which we
operate, just as it impacted economies around the
world. In the face of this unprecedented disruption,
Sagicor remained steadfast in its objectives, and
adaptive in its ways of doing business. Drawing upon
180 years of experience as a market-leading financial
services provider with a strong capital position,
Sagicor demonstrated its resilience, as well as its
social responsibility.
The pandemic profoundly changed the way we
interact with each other and how we do business. It
forced us to adapt innovative strategies to accelerate
business initiatives. Our customers depended on us
and in response, we introduced new products, digital
technologies for broader engagement, and simpler
ways of doing business. Sagicor continues to use
its broad platform to support its communities. We
willingly shoulder our responsibility as a corporate
leader in the Caribbean and as a leading indigenous
financial institution.
The past year marked our first full year as a Toronto
Stock Exchange (TSX) public company, and it was
also my first year as Chair of the Board. I owe a
debt of gratitude to my fellow Board members and
the entire management team at Sagicor for their
dedication and commitment during the burgeoning
pandemic. Our open and transparent discussions,
facilitated by a transition to virtual meetings, allowed
us to quickly pivot, and continue providing the
critical oversight and strategic direction needed
during such challenging times. During the year, the
Board provided guidance on business initiatives, ever
mindful of the need to balance shareholder value
creation and capital allocation decisions.
As the pandemic’s impact became more quantifiable,
we pursued digital business transformation strategies
that could benefit our service offerings and enhance
our workflows. We also encouraged leadership
at all levels of the organisation to help develop
strategies for helping our stakeholders to weather
the pandemic storm – employees, customers policy
holders, and the communities we serve. Sagicor used
its financial strength in ways that not only supported
stakeholders, but that could also position the
company to be stronger once the pandemic is safely
behind us.
As we looked forward, we embarked on a full multi-
year strategic review and planning exercise with
management. The decisions we adopted were driven
by our strong risk culture, as well as our focus on
profitable growth and sustainability. Our Governance
and Nominating Committee conducted their annual
review of executive compensation and succession
plans to ensure we have the proper framework to
attract and retain the talent needed to execute our
strategic vision. On the matter of board diversity,
we are a leader in terms of ethnic and geographic
diversity on our board. At the same time, we are also
committed to increasing the gender diversity on
our board.
The Board experienced some changes to its directors
during the year. The Board reappointed Mr. Monish
Dutt, having served on the Board of Sagicor Financial
Corporation Limited for nearly a decade. We also
welcomed Mr. Gil Palter and Mr. Jonathan Finkelstein
to the Board. In September, we mourned the sad
passing of Mr. John Shettle Jr., a board member since
2008. We deeply appreciated John’s years of service
and significant contribution to Sagicor’s development,
and especially his work on various committees.
On behalf of the Board of Directors, I would like
to thank our policyholders, our customers, our
employees, our advisors, our shareholders and
our many business affiliates for the support,
commitment and trust you have placed in Sagicor.
We will continue to do our best to consistently and
effectively serve your needs. To our Group President
and Chief Executive Officer, Mr Dodridge Miller,
and his executive team, the Board expresses its
confidence in your tireless work to fulfill Sagicor’s
ongoing purpose. To the Sagicor family, the Board is
grateful for your continued commitment to assisting
your communities, especially in the face of natural
disasters and the ongoing COVID-19 pandemic.
I firmly believe we will come out of this crisis stronger
together. Stay safe and stay well.
Yours truly
Timothy Hodgson
Chair of the Board of Directors
6
Dodridge Miller
GROUP PRESIDENT &
CHIEF EXECUTIVE OFFICER
Stronger Together | 2020 Annual Report
7
SAGICOR GROUP PRESIDENT & CHIEF EXECUTIVE OFFICER’S
MESSAGE
Dear Shareholders:
2020 in Review
The year 2020 was a challenging one for the world
as it was for Sagicor. A Global pandemic rocked
the world from very early in the year and the social
and economic upheaval quickly raced around the
globe. At Sagicor, we successfully leveraged our
more than 180 years of experience to ensure first
the safety of our staff and customers, and secondly
the maintenance of high-quality service to all of
our stakeholders. We demonstrated flexibility and
agility in our ability to efficiently pivot into a digital
world, successfully transitioning and adapting our
approach to doing business in each of our markets.
The COVID-19 pandemic accelerated transformational
shifts that fortunately, were already underway at
Sagicor. I am extremely proud of the way Team
Sagicor responded to the changing environment.
In our experience, people generally hold on to their
insurance products during periods of economic
uncertainty, and this was proven true as we
weathered the unheralded challenges presented in
2020. While new business production was impacted
during the second and third quarter; periods of lock-
down and various “stay at home” restrictions, the
fourth quarter of 2020 saw a reasonable return to
normal business with production near previous year
levels. Our existing business mostly remained intact
as we accelerated several e-commerce initiatives
across client portals, websites and branch locations.
This served to make the organisation more efficient
while also safeguarding the health and safety of
employees and customers.
Sagicor entered 2020 in a position of financial
strength, following the capital raised from our
December 2019 listing on the Toronto Stock
Exchange. While it is still too early to assess the full
impact, our new stock exchange listing exposed
Sagicor to a more liquid equity capital market and
brought in over $450 million of additional capital
and new long-term investors to Sagicor. Going
forward, we are committed to building our presence
in these new markets and engaging new investors,
while leveraging our brand leadership and reputation
in our home markets, as we execute our purpose-
driven strategy.
Our financially strong position helped us maintain and
improve our credit ratings during the year, validating
that others view Sagicor as resilient, well-capitalised
and diversified across our many geographies and
lines of business. At the Group level, support to
our segments enabled them to be as efficient and
financially profitable as possible, while positively
influencing many lives in the markets we serve.
For financial year 2020, Sagicor earned total revenues
of $1.9 billion, despite the challenging environment.
After three quarters of slower new business, we were
pleased to see some recovery of the business in the
fourth quarter with stronger new business across
all segments. We were also pleased that our fourth
quarter returned to a pre-pandemic earnings pattern,
delivering $29 million in net income to shareholders.
Our fourth quarter benefited from normalisation
of new business sales across all segments, and the
positive impact asset optimisation efforts in our
Sagicor Life segment. However, overall, the Group
recorded a loss for the year to shareholders of $4
million, driven by lower interest rates, strengthening
of actuarial reserves for forward looking assumptions
and increased credit losses. From a balance sheet
perspective, we ended the year with assets of $9.3
billion, an increase of $500 million, as we continue
to focus on growth and internal capital optimisation.
We believe we are well positioned to execute our
growth plans with a strong foundation of financial,
operational and risk management strengths.
Key Business Segments:
With a committed workforce of over 4,500 team
members and advisors in the Caribbean, Sagicor
operates in 17 countries throughout the English
speaking Caribbean and the Dutch countries of
Curacao and Aruba. During the past year, Sagicor
leveraged its market leading position, to enhance
its offering of individual life and annuities, employee
benefits, group health and life, group pension
and asset management, commercial banking and
general insurance.
While the pandemic ushered in much uncertainty
and fear, our response was purposeful, and customer
centered. Attention was paid to how and when to
better service our customers in a swiftly evolving
environment. We focused on product development
and new technological solutions, and our Group
Life and Health division launched products and
services such as the Frontline Heroes and Healthcare
Heroes plans, which catered to the medical fraternity
8
Stronger Together | 2020 Annual Report
and other frontline professionals. We also fast-
tracked the acceptance of telemedicine claims
and facilitated business interactions through the
introduction of e-fillable applications and automatic
underwriting solutions.
Utilising an extensive network of independent
agents, Sagicor USA successfully offers annuities
and life insurance to individuals. The outstanding
performance of our automated underwriting
technology, Accelewriting, contributed in part
to Sagicor Life (USA) being recognised by the
publication “Life Annuity Specialist” in June as one of
the fastest growing US individual life insurers in 2020.
We believe that our competitive pricing and product
design, underpinned by top service, will continue to
lead to opportunities in growing our life and annuity
business in the US.
Sagicor Life (USA) has approximately 30% of
cases submitted on Accelewriting, receiving an
underwriting decision in less than 2 minutes. In
addition, the average cycle time for term products
submitted to Sagicor via a widely used industry
platform was observed to be in the top quartile in
2020 relative to competition. We expect to achieve
scale over time in this market.
Corporate and Social Responsibility
Sagicor’s guiding force during 2020 emanated
from its corporate vision, “to be a great company,
committed to improving the lives of people in the
communities in which we operate”. We maintained
our longstanding tradition of supporting worthwhile
projects in the areas of health, education, community,
youth development and sport. Helping communities
and policyholders in good times and bad is a mindset
that is well ingrained within Sagicor, and this is
one of the main contributing factors to our long,
successful 180 years of history in the Caribbean, and
our growing presence in the United States. I am proud
of our peoples’ strong spirit, creativity and resolve to
address community needs.
Market Environment and Outlook
The Caribbean took a proactive approach very
early on in the pandemic and closed its borders
in some regions and kept others open to varying
degrees, while not hesitating to adjust where needed
in response to the virus. Because Sagicor has the
benefit of a diversified region with varying economic
landscapes and dependencies, the full impact of
the pandemic was somewhat mitigated. I am very
proud of the role Sagicor has played throughout
this crisis. As key private sector representatives, our
executives actively participated in the development
and coordination of the region’s response to the
pandemic. While the near-term economic outlook
for the Caribbean remains uncertain, the aggressive
roll out of the vaccines regionally and globally should
allow for a faster re-bound of the vital tourism
sector, which should have a positive impact on
Caribbean economies.
2021 and Beyond
At the end of year, Mr. Ravi Rambarran, President
& CEO of Sagicor Life Inc. retired from the Sagicor
Group. Ravi has been an important part of our growth
and development for more than two decades. We
wish him well in his retirement. Mr. Robert Trestrail
was appointed as President and CEO of Sagicor
Life Caribbean, succeeding Mr. Ravi Rambarran.
Robert has been with Sagicor in various leadership
roles since 2007, most recently being the head of
our Trinidad & Tobago operations. Robert has the
knowledge and experience to lead Sagicor Life
through the next phase of its development.
As I look towards the future, I am confident that
Sagicor is well-positioned to thrive in a post-
COVID-19 environment. Our strong capital position
and innovative customer focused operating mindset
should support our strategy of profitable long-
term growth.
I would like to express my gratitude to our Team
Members, our customers, shareholders and
business partners for their support this past year.
I especially offer my heartfelt appreciation to our
Board of Directors and to each of our 4500 plus
team members for their hard work and ongoing
commitment, which enabled us to navigate this past
year so effectively and register yet another strong
performance. Thank you for taking on new challenges
and working together as a true Sagicor team – where,
we are stronger together.
Yours sincerely
Dodridge D Miller
Sagicor Group President and Chief Executive Officer
We are stronger together.
BOARD OF DIRECTORS
10
STRONGER TOGETHER BOARD OF DIRECTORS
TIMOTHY HODGSON
SIR HILARY
Timothy Hodgson is Chair of the Board. He is a professional
corporate director. He currently chairs the Investment
Committee on the board of the Public Sector Pension
Investment Board (PSP Investments) and is Chair of the
board of directors of Hydro One Limited. Mr. Hodgson’s prior
directorships include MEG Energy, the Global Risk Institute,
KGS-Alpha Capital Markets, Next Canada, the Richard Ivey
School of Business and Bridgepoint Health.
He was previously a Managing Partner with Alignvest
Management Corporation (“AMC”), having served at the firm
from 2012 to August 2019. Mr. Hodgson was the special advisor
to Mr. Mark Carney, Governor of the Bank of Canada, from
2010 to 2012. From 1990 to 2010, he held various positions
with Goldman Sachs in New York, London, Silicon Valley and
Toronto, serving as Chief Executive Office of Goldman Sachs
Canada from 2005 to 2010. He holds a Master of Business
Administration degree from the Richard Ivey School of
Business at Western University, and a Bachelor of Commerce
degree from the University of Manitoba. He is a Fellow of the
Institute of Chartered Professional Accountants and has earned
the ICD.D designation from the Institute of Corporate Directors.
DODRIDGE MILLER
Dodridge D. Miller has been Group President and Chief
Executive Officer of SFCL since July 2002 and has been
a director since December 2002. Mr. Miller joined SFCL in
1989 and has more than 30 years’ experience in the banking,
insurance, and financial services industries. He previously
held the positions of Treasurer and Vice President - Finance
and Investments, Deputy Chief Executive Officer and Chief
Operating Officer. Mr. Miller is also a director of a number
of subsidiaries within Sagicor. Mr. Miller is a Fellow of the
Association of Chartered Certified Accountants (FCCA) and
obtained his Master of Business Administration from the
University of Wales and the Manchester Business School. He
holds an LL.M in Corporate and Commercial Law from the
University of the West Indies and in 2008 was conferred with
an honorary Doctor of Laws degree by that institution.
Sir Hilary was elected an independent director of SFCL in
2005. He is the Vice-Chancellor of The University of the West
Indies. He is currently Chairman of the Caribbean Examinations
Council. He is also a founding member of the Science Advisory
Board and Sustainable Development Secretary established by
the Secretary-General of the United Nations and serves on the
United Nations Development Programme’s Advisory Panel on
the Caribbean Human Development Report, is Vice President
of UNESCO’s Slave Route Project and is Vice President of
the Commonwealth Ministers’ Advisory Board on Sport and
Development. Sir Hilary is an Editor of the UNESCO General
History of Africa Series, volume 9. Sir Hilary earned his PhD
from Hull University, United Kingdom, from which he received
an Honorary Doctorate of Letters in 2003. He also received
honorary Doctorates of Letters from the University of Glasgow,
Brock University in Canada, Kwame Nkrumah Science and
Technology University in Ghana, and the University of the
Virgin Islands. In 2007, he received a knighthood, Commander
Knight of St. Andrew (KA), the highest national honour
recognised in Barbados, “in recognition of his distinguished
service in the fields of Education, Sports and the Arts”.
DR ARCHIBALD CAMPBELL
Dr. Archibald Campbell is a director of the Company. He is
currently Chairman of JMMB and most of its subsidiaries. He is
Chairman of the Board of Trustees of the JMMB Pension Fund
and Trustee at the University of the West Indies Non-FSSU
Staff Pension Scheme. Prior to this he served as a Director
at the University Hospital of the West Indies, a member of
the Sugar Industry Divestment negotiation team and also as
director of several companies that included Hotels, Property
Management, Banks and a number of non-profit organisations.
He also served as Bursar of the UWI and Chief Financial
Officer with responsibility for maintaining relations with the
seventeen Contributing Caribbean countries with regard to
funding. He is a Chartered Accountant and has served as
an accounting expert in an arbitration. Archibald is a past
president of the Institute of Chartered Accountants of Jamaica.
He was awarded the honour of being the 2020 Distinguished
Member. Archibald has a Doctorate in Business Administration
(DBA) and a M.Sc. in Accounting from the University of the
West Indies.
11
BOARD OF DIRECTORS
PETER CLARKE
STEPHEN FACEY
Mr. Clarke is a director of the Company as well as certain of its
subsidiaries. Mr. Clarke is a Financial Consultant who practiced
as a Barrister-at-Law before embarking on a 22-year career in
stockbroking. From 1984-2000, he was the Managing Director
of Money Managers Limited, and served as the Chief Executive
of West Indies Stockbrokers Limited from 2001 to 2005, when
he retired. From 2002 to 2005, he was also a director of the
Trinidad and Tobago Chamber of Industry and Commerce.
From 1995 to 1999 he was Chairman of the Trinidad and
Tobago Stock Exchange, and he is currently a director of that
organisation. From 1992 to 1995, Mr. Clarke served as Deputy
Chairman of the Trinidad and Tobago Free Zones Company,
and he is currently the Chairman of Guardian Media Limited
in Trinidad and Tobago, and a director of 14 other companies
including the Trinidad and Tobago IFC Management Company
Limited. Mr. Clarke is a member of the Finance Council of the
Roman Catholic Archdiocese of Port of Spain. He obtained a
Bachelor of Arts degree from Yale University and a law degree
from Downing College, Cambridge University. Mr. Clarke was
called to the Bar as a member of Gray’s Inn in London in 1979,
and to the Bar of Trinidad and Tobago in 1980.
KEITH DUNCAN
Keith Duncan is a director of the Company. Since 2005 he has
been the Chief Executive Officer of JMMB, with responsibility
for the overall performance and charting the strategic direction
of the business. Under his leadership, JMMB was conferred
with the American Foundation for the University of the West
Indies (AFUWI) Award for Excellence in Business Leadership
in February 2020, and the ‘Best of Chamber Award’ from the
Jamaica Chamber of Commerce in March 2011. From 2012
to 2014, he served as Vice President of the Private Sector
Organisation of Jamaica and is currently the President of
that organisation. Mr. Duncan is also a past president of the
Jamaica Securities Dealers’ Association and currently chairs
the Government of Jamaica’s Economic Programme Oversight
Committee. Mr. Duncan obtained a Bachelor of Arts degree in
Economics from the University of Western Ontario in Canada
and holds the Chartered Financial Analyst accreditation.
Stephen Facey is a director of the Company and Sagicor Group
Jamaica Limited. He is the Chairman and Chief Executive
Officer of PanJam Investment Ltd. and Chairman of a number
of other organisations, including Jamaica Property Company
Ltd., New Castle Group of Companies, Caribbean Policy
Research Institute (CAPRI), Kingston Restoration Company
Ltd, and the New Kingston Civic Association. Mr. Facey serves
as Chairman of the C.B. Facey Foundation, the charitable arm
of PanJam Investment Ltd. Mr. Facey is a Director of Chukka
Caribbean Adventures and the National Gallery of Jamaica.
An architect by training, he has over 40 years of experience in
architecture, real estate development and management, and
private equity investing. Mr. Facey holds a Bachelor’s degree
in Architecture from Rice University and a Master’s degree in
Architecture from the University of Pennsylvania.
MAHMOOD KHIMJI
Mahmood Khimji is a director of the Company. Mr. Khimji is a
founding Principal of Highgate, a real estate investment and
hospitality management company, and has been involved in
all aspects of Highgate’s development since its founding in
1988. Prior to founding Highgate, Mr. Khimji practiced law at
Paul, Weiss, Rifkind, Wharton & Garrison. Mr. Khimji is on the
Board of Directors of Playa Hotels & Resorts and American
Hotel Income Properties and is a member of the Young
Presidents’ Organisation (YPO) and the Real Estate Forum.
He previously held board positions at MeriStar Hospitality
Corporation, Interstate Hotels, and Morgans Hotel Group. Mr.
Khimji also serves on the National Committee of Aga Khan
Foundation USA and on the boards of Aga Khan Museum, the
Asia Society, and Trinity School. Additionally, Mr. Khimji serves
on the Board of Visitors for Columbia Law School. He attended
the University of British Columbia, holds a B.A., summa cum
laude, from the University of Houston and a J.D. from Columbia
Law School.
12
STRONGER TOGETHER BOARD OF DIRECTORS
STEPHEN MCNAMARA
REZA SATCHU
Stephen McNamara is Vice-Chair of the Board (the “Vice-
Chair”) and is a director of Sagicor Group Jamaica Limited
and serves on the board of a number of other subsidiaries
within the Sagicor group of companies, including as Chairman
of Sagicor’s main operating subsidiaries, Sagicor Life Inc.,
Sagicor USA and Sagicor Finance Inc. Mr. McNamara was also
Chairman of SFCL between January 2010 and December 2019.
The senior partner of McNamara & Company, Attorneys-at-Law
of St. Lucia, Mr. McNamara was called to the Bar at Lincoln’s
Inn and in St. Lucia in 1972. He specialises in the representation
of foreign investors in St. Lucia in the tourism, manufacturing
and banking sectors and served as Chairman of the St. Lucia
Tourist Board for nine years. His St. Lucia-based service
also includes the board of directors of St. Lucia Electricity
Services Ltd. where he served as Chairman from 2015 until his
retirement at the end of 2017, and as President of the St. Lucia
Tennis Association. In the 2015 Queen’s Birthday Honours, Mr.
McNamara was made a Commander of the Order of the British
Empire 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 40 years.
Reza Satchu is a director of the Company. He is Managing
Partner and co-founder of AMC, a private investment firm.
Previously, Mr. Satchu was the President, Chief Executive
Officer and a director of AQY, where he participated in
sourcing, evaluating and executing the qualifying acquisition.
He has co-founded, built and/or managed several operating
businesses from inception, including AMC; SupplierMarket, a
supply chain software company that was sold to Ariba Inc.;
StorageNow, which became one of Canada’s largest self-
storage companies prior to being sold to Instorage REIT; and
KGS-Alpha Capital Markets L.P., a U.S. fixed income broker
dealer, that was sold to BMO Financial Group. Previously, Mr.
Satchu was a General Partner at Fenway Partners, a US$1.4
billion private equity firm focused on acquiring middle market
companies and was also a Financial Analyst at Merrill Lynch
in the High Yield Finance and Restructuring Group. He is the
Founding Chairman of Next Canada, an entrepreneurship
program for Canadian entrepreneurs. Currently on the board
of directors of Trilogy International Partners Inc., Mr. Satchu
previously served on the board of directors of the Toronto
Hospital for Sick Children Foundation where he was Vice
Chairman of the board of directors, and of KGS-Alpha Capital
Markets. He has received Canada’s “Top 40 Under 40” Award
and the 2011 Management Achievement Award from McGill
University. Previously, Mr. Satchu was an Adjunct Professor at
the University of Toronto and currently serves on the faculty
at the Harvard Business School. Mr. Satchu has a Bachelor’s
degree in economics from McGill University and a Master’s in
Business Administration from Harvard University.
13
BOARD OF DIRECTORS
AVIVA SHNEIDER
JONATHAN FINKELSTEIN
Aviva Shneider is a director of the Company. She is a Principal
and Operating Partner with CVC Capital Partners. Prior to
joining CVC, she founded Bayes Ventures, a consulting firm.
From 2015 to 2018, Ms. Shneider was a part of the private
equity team at Caisse de Depot et Placement du Quebec
(CDPQ), initially as an Operating Partner and subsequently as
Co-Head of Direct Private Equity investments in the United
States and Latin America. Prior to this, she spent ten years
with Silver Point Capital, a credit and special situation focused
hedge fund based in Greenwich, Connecticut, and has also
worked at McKinsey & Company. She has previously served
on the boards of AlixPartners, Alliant National Title Insurance
Co, 2-10 Home Buyers Warranty, LifeCare Hospitals and Cyrus
Re among others. Ms. Shneider is a trained actuary (ACAS,
ASA), with a Bachelor’s degree in Math from the University of
Waterloo and a Master in Business Administration degree from
the Wharton School at the University of Pennsylvania.
Jonathan Finkelstein is a director of the Company. He is also
a Principal at AMC, with ten years of high-level experience
as an attorney, government official, investment banker and
private equity investor. Since 2017, he has worked primarily in
the firm’s private equity business. In that capacity, he spent
two years working on the transaction between SFCL and AQY.
Early in his career Mr. Finkelstein’s practice focused primarily
on the tax aspects of public company mergers, acquisitions
and corporate restructurings at the New York offices of
Skadden, Arps, Slate, Meagher & Flom. He joined the office
of Canadian Finance Minister Jim Flaherty in 2011 as Senior
Policy Advisor responsible for Taxation. In that capacity, Mr.
Finkelstein advised Minister Flaherty directly on tax measures
contemplated by the Canadian Department of Finance, as well
as industrial policy, pension policy and venture capital. In the
latter capacity, he played a central role in designing Canada’s
Venture Capital Action Plan – a programme that the current
government recently renewed. Mr. Finkelstein joined the New
York City office of Lazard Freres and Co. in 2015, where his
practice focused on mergers and acquisitions of financial
institutions, with emphasis on life insurance and banking. Mr.
Finkelstein graduated from McGill University with a B.A. in
Economics. He holds two law degrees, including an LL.M. in
Taxation from New York University and a J.D. from Osgoode
Hall Law School. He also holds an MBA from the Columbia
Graduate School of Business.
14
STRONGER TOGETHER BOARD OF DIRECTORS
GILBERT PALTER
MONISH DUTT
Gilbert Palter is the Co-Founder and Chief Investment
Officer of EdgeStone Capital Partners, an alternative asset
management firm. He is also the Chairman and CEO of
EGADS Group, which invests in public and private companies.
Mr. Palter was the founding Chairman of Aurigen Capital
Limited, a Bermuda-based life reinsurer, leading the $500
million initial funding. He is the former Chairman of Affinion
Group Holdings Inc., which operated Affinion Benefits Group,
LLC, a U.S. accidental death and dismemberment business.
Over his 30-year career as a private equity investor he has
served on numerous private company boards and, on behalf
of EGDAS Group, on the public boards of Atlantic Power
Corporation since 2015, cxLoyalty Group Inc. since 2017, and
RPX Corporation from 2016-2018. In his early career Mr. Palter
worked at Morgan Stanley, McKinsey & Company, Clairvest
Group, and Smith Barney. Mr. Palter received a Master’s in
Business Administration from Harvard Business School where
he graduated as a Baker Scholar and the winner of the John
L Loeb Fellowship in Finance, and he earned a B.Sc. degree
in Computer Science and Economics at the University of
Toronto, where he was the Gold Medalist in his class. He was
a 2003 recipient of “Canada’s Top 40 Under 40” award, and
a recipient of the Ernst & Young Entrepreneur of The Year®
Award 2006.
Monish Dutt has been an Independent Director of SFCL since
2012. He retired from the board of the Company on June 30,
2020 and rejoined in October 2020. He is also a director of
Sagicor Bank. Currently a consultant on Emerging Markets,
he serves on several boards in these markets as well as on the
board of FINCA Microfinance Holdings. Mr Dutt is a seasoned
investment professional who was employed with the IFC,
a member of the World Bank Group, for 25 years. He held
various positions with the IFC over the years, rising to the
position of Chief Credit Officer for Global Financial Institutions
and Private Equity Funds at the time of his departure from the
organisation in 2011. He had also served as the Head of IFC’s
Private Equity Advisory Group, Head of the Baltics, Central
Europe, Turkey and Balkans Group, and as an Investment
Officer for Africa, Latin America and Asia. Mr Dutt has also
represented IFC on the boards of investee companies.
15
EXECUTIVE
MANAGEMENT
16
STRONGER TOGETHER EXECUTIVE MANAGEMENT
DODRIDGE D MILLER, FCCA, MBA, LL.M, LL.D (Hon)
Group President and Chief Executive Officer
DONALD S AUSTIN, FCCA, BSc, MBA
Chief Executive Officer, Sagicor Life (Eastern Caribbean) lnc
• 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 LL.M in Corporate and Commercial Law from the
University of the West Indies and, he was conferred with an
Honorary Doctor of Laws degree by the University of the
West Indies, in October 2008.
• 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.
ANDRE MOUSSEAU, BA, MBA
Group Chief Financial Officer
• Appointed Group Chief Financial Officer in 2019, with
oversight of and primary responsibility for the planning,
implementation and management of the Group’s
financial activities.
• His prior directorships also span the boards of Aurigen
Reinsurance, a Bermuda- based life reinsurance provider,
Impark Corp., one of North America’s largest parking
management providers, and Premier Lotteries. He was also
an alternate board member of Camelot Group PLC, the
operator of UK National Lottery.
• Holds an undergraduate degree in Economics from McGill
University, and an MBA from the Richard Ivey School of
Business, University of Western Ontario.
• Has 20 years of experience in the financial services industry.
• Formerly a Partner with Alignvest Private Capital, Portfolio
Manager for the Long-Term Equities Group at the Ontario
Teachers’ Pension Plan (OTPP), and Principal at EdgeStone
Capital Partners, a leading independent private equity
manager in Canada.
• Appointed Chief Executive Officer, Sagicor Life (Eastern
Caribbean) Inc. in 2015.
• Board Member of Sagicor Funds Inc and Sagicor Asset
Management Inc.
• Former Chairman of the Board of Directors of LIME
Grenada and LIME Dominica, and former Board Member of
LIME Barbados.
• Holds a Bachelor of Science degree (Hons) 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.
RONALD B BLITSTEIN, BA, MBA
Group Chief Information Officer
• Joined Sagicor Financial Corporation in 2013.
• Holds both a BA in Political Science, and an 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.
17
EXECUTIVE MANAGEMENT
BART F CATMULL, BSc, CPA
President and Chief Operating Officer, Sagicor USA Inc
SAMANTHA CHEUNG, B.Sc.Eng, M.Sc.Eng, MBA, ICD.D
Executive Vice President, Investor Relations.
• Appointed President and Chief Operating Officer of Sagicor
• Appointed Executive Vice-President, Investor Relations in
USA in 2013.
• Certified Public Accountant (CPA), and obtained his BSc 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.
ANTHONY O CHANDLER, CPA, CGA, MBA
Group Chief Financial Controller
• Appointed Group Chief Financial Controller in 2013.
• Member of the Chartered Professional Accountants of British
Columbia, 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.
September 2018.
• Holds both a B.Sc. (Engineering) and M.Sc. (Engineering)
from Queen’s University (Kingston, Ontario)
• Holds an MBA and ICD.D. from the Rotman School of
Management (Toronto) and Institute of Corporate Directors.
• Member and former board director of the Canadian Investor
Relations Institute and Women in Capital Markets.
• Elected University Council member at Queen’s University
• More than 20 years in banking, insurance and
financial services.
• Previously served as Head of Investor Relations at two TSX
listed Canadian insurance companies.
J EDWARD CLARKE, FCCA, CIA
Executive Vice President and General Manager, Barbados
(Retired June 30, 2020)
• 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, he served as Chief Financial Officer
of a major conglomerate in Barbados.
• Director of Sagicor General Insurance Inc, Sagicor Funds
Inc, Barbados Farms Limited, past President of the
Barbados Chamber of Commerce and Industry, Chairman
of the Barbados Private Sector Association, and Co-Chair
of The Barbados Economic Recovery and Transformation
Programme (BERT).
18
STRONGER TOGETHER EXECUTIVE MANAGEMENT
J. ANDREW GALLAGHER, FSA, FCIA, CERA, BMath
Group Chief Risk Officer, Chief Executive Officer, Sagicor Reinsurance
Bermuda Ltd.
• Appointed CEO, Sagicor Re Bermuda in December 2018.
• 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.
• Member of the Caribbean Actuarial Association.
• More than 30 years in the insurance industry.
ALTHEA C HAZZARD, LL.B (Hons). LL.M (Cantab), FCG, 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.
• Fellow of the International Compliance Association and a
Fellow of the Chartered Governance Institute of Canada
(formerly the Institute of Chartered Secretaries and
Administrators in Canada).
KESTON D HOWELL, BSc, (Hons), MBA
President and Chief Executive Officer, Sagicor General Insurance Inc
• Holds a BSc Management Studies from University of the
West Indies and an MBA from the University of London.
• More than 32 years in the insurance and banking industries.
• Joined Sagicor in April 2005 as Executive Vice-President
- Merchant Banking, responsible for the establishment of
Sagicor Merchant Bank and overall Banking Strategy of
the Group.
• Assumed executive responsibility for the life operations of
Dutch Caribbean and Central America in April 2013.
• Appointed President and Chief Executive Officer of Sagicor
General Insurance Inc. in October 2017.
R. PAUL INNISS, MBA, FCIP, CRM
Executive Vice President and General Manager – Sagicor Life Inc.
Barbados
• Joined Sagicor Life Inc on April 1, 2020.
• More than 30 years of experience, both regionally and
internationally, in the insurance and banking industries.
• Fellow, Chartered Insurance Professional, Insurance Institute
of Toronto
• Holds a MBA from Heriot-Watt University, Edinburgh
Business School
• Past President of the General Insurance Association
of Barbados.
NARI T PERSAD, BSc Actuarial Science, BSc Biochemistry, 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.
• 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 30 years of experience 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.
19
EXECUTIVE MANAGEMENT
RAVI C RAMBARRAN, BSc, MSc, FIA
President and Chief Executive Officer – Sagicor Life Inc
(Retired December 31, 2020)
• 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.
ROBERT J L TRESTRAIL, BA
President and Chief Executive Officer, Sagicor Life Inc
• Appointed President and Chief Executive Officer, Sagicor
Life Inc in January 2021.
• Prior to this, he served as Executive Vice President and
General Manager, Trinidad & Tobago since 2007.
• Assumed executive responsibility for Dutch Caribbean and
Sagicor Life Aruba N.V. in 2017.
• Graduate of the University of Toronto (Bachelor Arts -
Economics).
• More than 20 years in the Insurance and Financial
Services Industry.
• Board Member of Sagicor Investments Trinidad & Tobago
Limited, Nationwide Insurance Company Limited, RGM
Limited and several of its subsidiaries.
• President of the Trinidad & Tobago Insurance Institute (TTII)
Board of Governors.
• Former President of the Trinidad & Tobago Chamber of
Industry and Commerce (TTCIC) 2015-2016, having served
as a Board Member of the Trinidad & Tobago Chamber of
Industry and Commerce (TTCIC) 2006-2018.
• Positions formerly held with the Trinidad & Tobago Chamber
of Industry and Commerce include President (2015-2016) and
Board Member (2006-2018).
20
STRONGER TOGETHER EXECUTIVE MANAGEMENT
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.
21
Stronger Together | 2020 Annual Report
GROUP
ORGANISATIONAL
CHART
22
Sagicor USA, Inc.
(Delaware, USA)
Sagicor Life Insurance
Company
(Texas, USA)
SAGICOR FINANCIAL COMPANY LTD.
(Bermuda)
(Publicly traded on the Toronto Stock Exchange)
100%
Sagicor Financial Corporation Limited
(Bermuda)
100%
100%
Sagicor Reinsurance
Bermuda Ltd
(Bermuda)
Sagicor Life Inc.
Southern Caribbean
(Barbados)
16.66%
LOJ Holdings Ltd.
(Jamaica)
32.45%
Sagicor Group
Jamaica Ltd.
(Jamaica)
(Publicly Traded on the Jamaica Stock Exchange)
23
24
CORPORATE & SOCIAL
RESPONSIBILITY,
HUMAN CAPITAL
REPORT, INNOVATION
& TECHNOLOGY
25
CSR RESPONSE TO COVID-19
As COVID-19 was spreading globally and entering
the Caribbean, Sagicor very early undertook a
comprehensive response plan guided by the
objectives of the safety of our people, business
continuity for our customers and compassion for
our communities. In March 2020, Sagicor Financial
Company Limited committed US$1m to aid in the
fight against COVID-19 in the Caribbean, with an
emphasis on early detection programmes and the
provision of equipment for the immediate care of
those already infected.
The committed funds were used to support initiatives
that would minimise risk and reduce the spread of
the virus. This donation is consistent with Sagicor’s
history of supporting the communities in which it
operates. Each company within the Sagicor Group
liaised directly with governments and other agencies
to determine the level of financial support that
was needed and contributed to local government
discussions on country preparedness and responses.
SAGICOR LIFE INC SOUTHERN CARIBBEAN
The Ministry of People Empowerment and Elder
Affairs
Critical assistance in the form of care packages
was provided to 3000 persons in Barbados who
were identified by social service agencies as being
vulnerable, especially amidst the pandemic. Sagicor’s
support boosted efforts of the Ministry of People
Empowerment and Elder Affairs to provide basic food
and sanitary items to recipients, many of them elderly,
disabled or families in need. The care packages were
distributed prior to a 14-day shutdown ordered by
Government, realising that many would not have
been in a position to visit supermarkets to stock up
and prepare.
Barbados Alliance to End Homelessness (BAEH)
Sagicor provided funds and food items to the
Barbados Alliance to End Homelessness, supporting
their initiative to provide three daily meals to 100
individuals for a period of four weeks. Sagicor’s relief
efforts aimed to embrace the most vulnerable in
society, including the homeless.
Barbados Welfare Department
In its efforts to assist those negatively impacted by
the COVID-19 pandemic, Sagicor partnered with the
Barbados Welfare Department to ensure that help
was offered to those who needed it the most. Dozens
of families and households across all 11 parishes of
Barbados received hampers containing groceries,
personal care and household items, donated
by Sagicor.
Media Workers Care Baskets
Sagicor General and Sagicor Life joined forces
in May to provide care baskets to the night shift
workers of major media houses across Barbados.
Considered frontline workers, the media workers were
appreciative of the light snacks, beverages and hand
sanitising products in the baskets, and the sentiments
behind the effort. The companies involved were
Starcom, CBC, Nation, Advocate, Barbados Today and
Loop News. Support for the project also came from
WiFetch, a local shopping and delivery company.
US$150,000, to the Barbados Ministry of Health
for use at the Queen Elizabeth Hospital (QEH) and
the Grantley Adams International Airport. At the
hospital, one of the scanners will be used at the main
entrance to read the temperatures of those entering
the facility, while the two assigned to the airport will
be used to test passengers arriving into the island.
The equipment was handed over by Executive Vice
President and General manager of Sagicor Life Inc.,
Paul Inniss, during a small ceremony at the QEH.
Mother’s Day and International Nurses’ Day
In June, Sagicor made several donations to mothers
and nurses working on the frontlines of the battle
against the COVID-19 pandemic, in recognition of
both Mother’s Day and International Nurses’ Day.
To honour these two groups, Sagicor organised
packages of groceries and items of indulgence,
and had them delivered to mothers engaged in the
various essential services, as well as nurses stationed
at medical institutions and clinics across the island.
Father’s Day
Sagicor team members in Barbados, led by the
Customer Experience Department, surprised a
number of fathers with tokens of appreciation.
Labelled as “superheroes”, the men were frontline
workers, Sagicor clients and winners of the company’s
“Best Dad” social media competition, and were
presented with tailored gift baskets and other tokens
of appreciation. The initiative coincided with Father’s
Day, which was celebrated in June, and reflected
Sagicor’s commitment to recognising the contribution
of frontline and essential workers.
Thermal Imaging Scanners
In July, Sagicor donated three full-body thermal
imaging scanners, valued at approximately
Barbados Fire Service
Sagicor Life donated five automated external
26
1
2
3
4
defibrillators to the Barbados Fire Service (BFS),
enhancing fire officers’ ability to diagnose and treat
life threatening cardiac arrhythmias, which can lead to
a sudden cardiac arrest. The devices will be placed on
emergency vehicles and at fire stations, and will go a
long way in helping BFS to meet its goal of being well-
equipped to be a first responder in those situations
where urgent medical care is required.
Risk Expertz supports Tacarigua Ahlu Sunnah Wal
Jamaat
Understanding the real-life financial impact of
COVID-19, insurance agents for Sagicor General
Insurance, Azard and Joan Mohammed of Risk Expertz,
donated their $2,000 prize money for capturing
the Agency Award of Top Agency of the Year GWP
New and Renewals (Bronze category) to support
the Tacarigua Ahlu Sunnah Wal Jamaat. This Muslim
organisation, well known for its community service,
used this contribution to purchase food hampers for
the needy.
Prime General Insurance Limited Supports The
Shelter
In September Sagicor General corporate agent, Prime
General Insurance Limited, donated $5,000 to The
Shelter for Battered Women and Children. Established
in 1987 in response to a need to provide support
and a safe house for victims of domestic violence in
Trinidad and Tobago, the Shelter experienced intense
pressure during the year, as the number of people they
supported had increased, while the funds to provide
vital assistance decreased drastically due to COVID-19.
Prime General Insurance had been awarded the $5,000
as prize money for outstanding performance, but
opted to once again donate the funds to The Shelter in
2020 just as it had done in 2019
Donation of Personal Protective Equipment to the
Ministry of Health
Sagicor supported the Trinidad and Tobago Ministry
of Health’s fight against COVID-19 by donating 20,000
N95 masks and 1,000 face shields to essential workers
in the healthcare system. It also assisted with the
procurement of COVID-19 educational brochures for
distribution to the public and pledged further support
via the procurement of 100,000 3-ply medical masks.
Sagicor Branches Support Communities
During 2020, Sagicor took steps not just to protect
its team and clients, but also to support the members
of the communities in which it operates. Sagicor
also partnered with local broadcast media to deliver
tutorials to assist children with their education;
delivered essential food and hygiene supplies to
homes for children and the elderly; donated handheld
thermometers to the Port of Spain City Corporation;
sponsored radio prevention tips on COVID-19
to the public; hosted an online camp on social
media; and donated supplies and food to socially
displaced persons.
Sagicor Collaborates with Sewa TT
Sagicor partnered with Sewa International TT (Sewa
TT), a not-for-profit service organisation, to donate
masks to the less fortunate. Having partnered with
Sewa TT on several initiatives in the past, Sagicor
engaged them in 2020 to coordinate the production
of 20,000 reusable face masks for free distribution to
those who are unable to afford them. Using a network
of over 100 private seamstresses and volunteers, Sewa
TT collected the finished masks, which were then
taken to a single location for washing, packaging and
labelling with care instructions by people who were
self-isolating for that purpose. Sagicor also donated
several hampers to the organisation for distribution to
its members.
FEEL School Programme
Recognising the need for educators to have ample
supplies of disinfectant and hand sanitiser products,
Sagicor sought to arm the school community with
these items through its donation to the Foundation
for the Enhancement and Enrichment of Life (FEEL)
School Programme. The donation was made at the
start of the September school term, assisting FEEL
with its ongoing efforts to provide 70 schools with a
wide range of supplies on a quarterly basis.
Rebirth House
Rebirth House, which provides a residential service for
the rehabilitation of drug addicts, was given a donation
of six handheld thermometers by Sagicor. Considered
vital tools in the fight against COVID-19, the devices
were welcomed by the not-for-profit agency, which
currently has 80 clients at its three locations in St
Ann’s, Carenage and Chaguaramas.
Grenada
• The Grenada Nurses Association
• The Royal Grenada Police Force
St Kitts and Nevis
• The Ministry of Health
• The St Christopher and Nevis Police Force
Sagicor Supports Frontline Associations Across
the OECS
COVID-19 was declared an emergency in the Eastern
Caribbean markets and in Belize in quick succession,
prompting Sagicor Life Eastern Caribbean Inc (SLECI)
to mobilise its support almost immediately. As an
immediate action, US$20,000 or 50% of the cost
of thermal-infrared thermometers for COVID-19
testing, was donated to the Organisation of Eastern
Caribbean States (OECS), to assist in testing persons
at ports of entries and other places during this period.
Subsequently, Sagicor agencies made donations to
frontline associations in their respective countries to
support the purchase of protective gear and other
equipment for policemen, firemen, medical and
immigration personnel.
A donation of US$60,000 was allocated to
a number of organisations across six Eastern
Caribbean countries:
Antigua and Barbuda
• The Antigua and Barbuda Nurses Association
• The Orderlies of Mount St. John’s Medical Centre
• National Vocational and Rehabilitation Centre for
Disabilities
Dominica
• The Police Welfare Association
• The Dominica Nurses Association
• The Dominican Air and Sea Port Authority
• The Dominica Fire and Ambulances Association.
St Lucia
• Ministry of Health and Wellness
St Vincent and the Grenadines
• Ministry of Health
Fundacion pa nos Comunidad (FPNC) -
Sagicor Life Aruba donated to the Fundacion pa nos
Comunidad (the Foundation for the Community),
assisting in the provision of personal care items,
personal protective equipment and food items. The
Foundation manages Aruba’s official food bank and
also focuses on fighting poverty and promoting
well-being across the country. One beneficiary of
the Foundation’s work is Casa Cuna, a home and
support facility for children and young mothers. During
COVID-19 “lock-down” periods, food packages were
distributed to the wards of Casa Cuna, as many of the
adults had lost their sources of income as a result of
the pandemic.
Arugas
Sagicor partnered with propane gas manufacturer
Arugas in Aruba to ensure that 125 needy families
could prepare home-cooked meals using gas cylinders.
These efforts were supplemented by Aruba’s food
bank FPNC (Fundacion Pa Nos Comunidad), who
provided the families with grocery items and also
coordinated the distribution of the gas vouchers.
Imeldahof “Buddy System”
Donations of personal care items, personal protective
equipment, food items, medicine and refurbished
computers were made to Imeldahof, a private
foundation focusing on at-risk children and elderly
persons. Using its team of 40 volunteers, Centro
5
6
3
1. Paul Innis, Executive Vice President and Barbados General Manager
presented thermal imaging scanners to members of the Ministry of Health,
Barbados at the Queen Elizabeth Hospital, and 2. automated external
defibrillators to the Barbados Fire Service. 3. Brenton Hilaire, Agency
Manager, Dominica presented funds to a representative from The Dominica
Fire and Ambulances Association. 4. Azard Mohammed, part of the husband
and wife team at Risk Expertz, handed over the hampers for distribution
to Imam Junaid Ahmed of the Tacarigua Ahlu Sunnah Wal Jamaat. 5. FEEL
CEO Elena Villafana Sylvester, left, received a cheque from Sagicor branch
manager Christopher Gouveia. 6. Randall Croes, General Manager of Sagicor
Aruba, centre, with Unit Manager Sonja Velthuizen, right, handed over the
Arugas gas vouchers and funds to representatives of Aruba’s food bank
FPNC. 7. Nurse from The Antigua and Barbuda Nurses Association received
their personal protective equipment.
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Kibrahacha, facilitated the distribution through the
creation of a “Buddy System”, thereby encouraging
social isolation while providing vital services to
the elderly.
Chromebook Computers for Online Learning
Sagicor Life Inc, Curacao donated 30 Chromebook
computers to students who experienced difficulties
with online classes and completion of assignments
because they lacked the necessary equipment.
Students benefitting from the donation attended
the J.W.Th. Schotborgh School in Koralspecht and
Scholengemeenschap Otrabanda in Otrabanda.
Sagicor Heroes Health Plan
The COVID-19 pandemic reinforced to the world
the value of essential medical services. In May of
2020, Sagicor sought to recognise and reward the
sacrifice and dedication of this group, by providing
a life insurance plan built specifically for them.
Such insurance coverage is typically unavailable to
this group due to the associated risks attached to
their professions, however, Sagicor showcased its
commitment to recognising these heroes with a plan
priced lower than what was available on the market.
This was followed up a few months later with the
introduction of the Frontline Heroes version of the
plan, providing similar, discounted life insurance
coverage to those in the protective services (Fire
service, Police and Security Guards), other essential
services (supermarket workers, ground transport and
delivery services, Air Traffic controllers, Pilots and
Immigration officers), along with other necessary
support services (caretakers or care givers, welfare
officers, charity associations, utility service providers,
sanitation services, energy services, banking, insurance,
media and telecommunications).
Small Business Owners’ Webinar
Small business owners across the Caribbean region
gained an opportunity to acquire actionable tips on
marketing and using social media to drive business
during COVID-19 when Sagicor Life Inc Southern
Caribbean, hosted a live webinar on the subject.
Driven by the topic “Marketing your small business
in the new normal”, the webinar saw small business
owners combining their real-life experiences with
the industry knowledge of Sagicor’s Marketing,
Communications and Brand Experience team.
Topics discussed included “Promoting your business
using social media,” and “Marketing during COVID-19.”
The importance of knowing one’s customer and
gaining insights into their preferences also took
centre stage with the topic “Using data to drive
your business.” These and other areas of focus were
presented by senior members of Sagicor’s Marketing
team. Small business owners Julian Greig of JNL
Traders and website kwikily.com as well as Lily Dash
and Sophie Bannister of Wi-Fetch, also shared their
perspective on successfully navigating a small business
in a COVID-19 environment. Eric Watson, Social Media
Specialist at Canadian Agency, Grey Advertising
rounded off the day’s presenters.
SAGICOR USA
Feeding the Frontlines
Sagicor team members partnered with Brooke Palmer
Kuhl from RSBP Events and Forbici Modern Italian to
deliver meals to 14 firefighters at Tampa’s Fire Rescue
Station 14, and 85 members of AdventHealth’s Tampa
Campus who worked with the COVID response team
and in the maintenance department. The initiative was
part of the #12DaysOfCovidChristmas programme
organised by RSBP Events, with Sagicor sponsorship
being applied to day 9.
SAGICOR GROUP JAMAICA
Throughout the year, Sagicor Group Jamaica remained
committed to its corporate social responsibility
(CSR) programmes, with a primary focus on the
areas of health and education. The year was also an
unprecedented one due to the COVID-19 pandemic,
resulting in the unfortunate shelving of some initiatives.
Once the first cases of COVID-19 were seen in Jamaica
in March 2020, Sagicor joined national efforts and
assisted the Jamaica Government with the purchase
of ventilators and personal protective equipment to
bolster the country’s health system. Some nursing
students were also gifted with personal protective
equipment and numerous hand wash stations were
placed in the metropolitan areas of Kingston for
the convenience of both vendors and shoppers, to
encourage proper sanitization.
Online schooling became the norm for children across
the island and this created a huge gap for children who
either did not have access to, or could not afford the
tools to learn remotely. Sagicor donations were given
to EduFocal, the social learning website, to provide
students with access to study materials, and to Ready
TV in support of the national eHomeschool Network
which provided live and recorded study programmes
over the television and the internet. Some 50 tablets
were also provided to various institutions and groups
involved in improving student access to online
learning materials.
Sagicor Group Jamaica’s investment towards COVID-19
support totaled USD $202,702.
EDUCATION
SAGICOR LIFE INC SOUTHERN CARIBBEAN
Secondary School Donations
Sagicor continued its advocacy for youth and
education in Barbados by giving support to two
primary schools. In January, a donation was made to
the Blackman and Gollop Primary School to assist
with funding its graduation and a similar amount was
contributed to the Grantley Prescod Memorial Primary
School towards the purchase of educational supplies.
The Erdiston Special School also received sponsorship
for its participation in Power Gen’s Annual Special
Children’s Fun Day, hosted by the Power Generation
Company of Trinidad and Tobago. This school caters
to students with various disabilities and learning
challenges such as Down Syndrome, Autism, hearing,
visual and cognitive impairments. Power Gen’s Annual
Special Children’s Fun Day, held on March 18th, 2020, is
a regional sporting event consisting of activities such
as March Pass, track and field and sack races.
Social Sciences Department, University of the West
Indies Cave Hill
Sagicor was a notable contributor to the Social
Sciences department at the University of the West
Indies, Cave Hill. The organisation provided support
to various initiatives, including a panel discussion
with students and experts on varied subject
areas, the Annual Inter Association Debate and
Interdepartmental Sports.
SAGICOR USA
Hillsborough Education Foundation
Sagicor donated $10,000 to the Hillsborough
Education Foundation (HEF) in Florida, which
coordinates the donation of school supplies to
teachers and provides technology and online access to
students at risk of falling behind in today’s e-learning
environment. Stocked with a wide range of critical
school supplies, HEF’s Teaching Tools Resource
Center serves teachers assigned to low-income areas
of Tampa who are allowed to shop there at no cost.
Sagicor Team volunteers also contributed many hours
of service sorting and packaging items for the Center
and organised fundraising events.
Adopt-A-Class Programme
In spite of pandemic-related restrictions, the Tampa
office organised its annual holiday party for 3rd
graders at BT Washington Elementary. While an
in-person celebration was not permissible, Sagicor
nonetheless gifted students with a variety of toys
and goodies, including glow-in-the-dark sticks for a
virtual “Glow Party” held via Zoom. Four teachers,
the principal and an assistant also received gift cards,
compliments of Sagicor.
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1. Curacao General Manager & Principal Representative Anneke Soedhoe,
second from right, presented Gianward La Croes from Scholengemeenschap
Otrabanda with computers for his school, as financial advisors Misheinou
Winklaar, left, and Magaly Mingeel looked on. 2. Team Sagicor USA
partnered with members and volunteers of RSBP Events and delivered
meals to front line workers during the Feeding the Frontlines programme.
3. Members of the UWI Nursing Students’ Association, from left, Shannon
Pike, Vice President and Aaron Lawrence, President, accepted PPE from
Shelley Ebanks-McGregor, Project Manager, Sagicor Bank Jamaica and
Sagicor Foundation Volunteer. 4. Sagicor Foundation Director, Mark
Chisholm, right, presented a tablet to Damarie Thomas, centre, student of
the Abilities Foundation, at the special education institution. Also pictured is
Susan Nelson, Managing Director of the Abilities Foundation. 5. Volunteers
from Sagicor USA sorted school supplies donated to the Hillsborough
Education Foundation. 6. Elementary students from BT Washington School
enjoyed their virtual Holiday Party supported by Sagicor USA Tampa’s
Adopt-a-Class programme.
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Members of the Scottsdale office organized their
annual Adopt-a-Classroom event, treating a 2nd grade
classroom at Wilson Elementary School in downtown
Phoenix. Sagicor Team members shopped for the
students’ “Wish List” items, and arranged for drive-thru
deliveries by Santa and some of his elves who were
appropriately outfitted with masks and gloves befitting
the holiday season.
SAGICOR GROUP JAMAICA
Adopt-A-School Programme
Representing an investment of USD $121,621, Sagicor
Foundation’s Adopt-A-School programme was
executed for one school year, from September 2019 to
July 2020. During the period, significant renovations
were completed at three early childhood/basic
schools: Petersville Early Childhood Institution (ECI)
in Whitehouse, Westmoreland; Prime Time Early
Childhood Institution in Denbigh, Clarendon; and St
Peter Claver Infant School on Waltham Park Road
in Kingston. By the end of the programme, all three
schools had benefited from significant upgrades,
and each received hand wash stations in support of
sanitization protocols, as well as a computer and printer.
In March 2020 one health tour was carried out at
Petersville Basic School, with students, teachers,
parents, guardians and other stakeholders being
engaged as well. However, health tours of the
other two adopted schools were canceled due to
the pandemic.
Scholarships & Educational Grant Support
Sagicor Foundation’s annual scholarship programme
provided scholarships to 71 students. Fifty tertiary
school students received awards for their academic
performance, community involvement, volunteerism,
strong leadership potential and financial need, while
21 secondary-level students were rewarded for their
exceptional performance in the Primary Exit Profile
Examination (PEP). While the tertiary scholarships
usually numbered 25, the number of awarded doubled
this year in honour of Sagicor’s 50th anniversary.
The tertiary recipients have been accepted at some
of Jamaica’s top universities, such as: The University
of the West Indies; University of Technology Jamaica;
Mico University College; the Caribbean Maritime
University, Northern Caribbean University; and the
Edna Manley College of the Visual and Performing
Arts. The PEP scholarship recipients were children of
Sagicor clients and team members stakeholders who
had excelled in the national examination.
The Foundation also supported the 2020 Prime
Minister’s Youth Awards for Excellence by providing
grants of $100,000 to 30 recipients. Donations of
book vouchers and school supplies were also made to
a number of institutions and organisations during the
back-to-school period.
Guided by its commitment to support the nation’s
youth, Sagicor’s investment in education, scholarships
and grants totaled USD $270,270.
HEALTH
SAGICOR LIFE INC SOUTHERN CARIBBEAN
Broadway to Barbados Charitable Trust
To help improve the quality of healthcare available
to Barbadians, Sagicor joined with other corporate
donors to support the Broadway to Barbados
Charitable Trust. Funds raised by this registered charity
provide financial support and equipment to the Queen
Elizabeth Hospital.
Myeloma, Lymphoma and Leukemia Foundation of
Barbados
Sagicor support of the Myeloma, Lymphoma and
Leukemia Foundation of Barbados helped to raise
awareness about the three conditions, known
collectively as the “blood cancers”. The Foundation’s
main activities in 2020 included the inaugural “Walk for
A Good Cause” which helped to mark World Cancer
Day in February.
John Hayes Foundation - World Kidney Day
Sagicor donated funds to the John Hayes Foundation
in Trinidad in support of its Secondary Schools’ Kidney
Health Caravan and Community Outreach Programme
which helps raise awareness of chronic kidney disease
and the harmful impact it can have on the quality
of life of those afflicted. The events were held in
March in observance of World Kidney Day under the
theme, “Kidney Health for Everyone Everywhere; from
Prevention to Detection and Equitable Access to Care.”
Medical Research Foundation (MRF) HIV Awareness
The Medical Research Foundation (MRF) of
Trinidad and Tobago received a Sagicor donation
towards the expansion of its “Partnership for Youth”
programme during 2020, through to 2023. MRF,
one of the country’s largest organisations involved
in the treatment of HIV, has developed initiatives for
young people living with HIV/AIDS which provide
them with training in life skills, psychological and
behavioural counselling, and career counselling to
better help them develop leadership skills and engage
more meaningfully in their communities. Overall, the
programme aims to work with 150 youths until such
time as they are able to transition to adult HIV care.
Sagicor Pinktober Activities
With October designated and recognised
internationally as Breast Cancer Awareness Month,
Sagicor branded the month as Pinktober, supporting
a number of activities across the Caribbean to raise
awareness and provide assistance for organisations
dedicated to this important cause. Following the
tradition of previous years, Sagicor’s team members
again worked tirelessly to ensure that the public
understood the importance of regular breast exams,
early testing and early action even though adherence
to the new pandemic-related health and safety
protocols often challenged planning teams to devise
new strategies.
In Barbados, Sagicor teams assisted the Breast
Screening Programme of the Barbados Cancer
Society by producing customised face masks carrying
the message “Fighting More Than COVID. Support
The Fight Against Breast Cancer”. The masks were
then offered to staff and the public in exchange for
donations, generating much-needed proceeds for
the Barbados Cancer Society whose overall funding
had declined in 2020 due to the impact of COVID-19.
Sagicor also promoted the importance of early
detection, displaying signage at four of its offices which
encouraged Barbadians to “Stop and Get Tested”.
In Trinidad, Sagicor team members offered pink
branded masks for sale, with proceeds going towards
the Vitas House Hospice which provides free care to
all terminally ill cancer patients who have exhausted
medical resources and have a life expectancy of six
months or less. In November, Executive Vice President
and General Manager of Sagicor Life Inc Robert
Trestrail visited Vitas House to present a financial
donation to Dr Asante Le Blanc, Chairman of the Board
of the Hospice and the Trinidad and Tobago Cancer
Society. Vitas House hopes to expand its services,
post-COVID, to provide an environment which better
caters to the family members of its patients.
Team members in Curacao wore pink during the month
of October as a reminder that both men and women
have breast tissue, and therefore everyone should have
the necessary checkups to facilitate early detection.
Through the actions of its passionate team members,
Sagicor showed its whole-hearted support for
cancer survivors, persons undergoing treatment, and
individuals who had lost a family member or friend.
Teams across the territories covered by Sagicor Life
(Eastern Caribbean) Inc and Belize showed their
support of Pinktober by making donations totaling
US$ 13,035 in their respective countries. The funds
supported non-governmental organisations which
manage facilities for those with breast cancer, also
providing support for breast cancer survivors and
their families.
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1. and 2. Sagicor Foundation Scholarship recipients Demetri Grant and
Abigail Barnes were excited following their scholarship interviews. 3. Sagicor
team member, Talia Simpson-Cox, left, was pleased to present a cheque
to Abiola Baptiste, a registered nurse at The John Hayes Memorial Kidney
Foundation, in honour of World Kidney Day. 4. Executive Vice President and
General Manager Robert Trestrail, centre, with Sagicor advisor Carla James-
Young presented a cheque to Dr Gregory Boyce, left, Deputy Director at
the Medical Research Foundation, towards the Foundation’s Partnership for
Youth programme on HIV awareness. 5. Team Curacao wore pink in support
of Breast Cancer Awareness Month. 6. Executive Vice President and General
Manager of Sagicor Life Inc, Robert Trestrail donated a $10,000 cheque
which was received by Dr Asante Le Blanc, Chairman of the Board of the
Vitas House Hospice.
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Antigua and
Barbuda
Belize
Dominica
Grenada
St. Lucia
Organisations supported during
PinkTober
Breast Friends (promotes
awareness and provides support
to survivors)
Belize Cancer Society
Dominica Cancer Association
Grenada Cancer Society
St. Lucia Cancer Society, and
Faces of Cancer
St. Kitts and Nevis Reach for Recovery Foundation,
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St. Vincent and the
Grenadines
and Pink Lily Cancer Care
Foundation
SVG Medical Foundation
In Antigua and Barbuda, a donation was made to the
Breast Friends Antigua organization which promotes
awareness of the disease and also provides support
to survivors; donations in Belize were directed to the
Belize Cancer Society; in Dominica support was given
to the Dominica Cancer Association; In Grenada funds
were donated to the Grenada Cancer Society; in St
Lucia the St Lucia Cancer Society and Faces of Cancer
were supported; in St Kitts and Nevis donations were
made to the Reach for Recovery and the Pink Lily
Foundations and in St Vincent and the Grenadines
donations were made to the SVG Medical Foundation.
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Sagicor Team members in Panamá actively participated
in the promotion and sale of pink and blue masks
for Pinktober, reminding clients of the importance of
cancer care and prevention. The funds raised were
donated to Fundación Pequeños Luchadores, an
association that provides family support to children
with cancer.
SAGICOR USA
Phoenix Children’s Hospital
Sagicor USA supports many worthy causes in its
communities, including Phoenix Children’s Hospital
(PCH) in Arizona. Over the past several years, Sagicor
has consistently donated to the facility, both financially
and as well as through volunteer time.
The Hardship Fund - The Hardship Fund at PCH
provided emergency relief for families facing financial
adversity. Through this programme, the Social Work
team at PCH identified patient families needing
assistance, triggering help with rent, mortgage, utilities,
gas, temporary housing, grocery cards, transportation
and other basic needs. Sagicor’s $25,000 donation
helped to provide stress-free emergency reprieve
options to patients’ families so they could better focus
on their children’s recovery.
The Child Life ZONE Network – Even though face-
to-face volunteering opportunities were dramatically
reduced due to the COVID-19 pandemic, Sagicor
team spirit was still front and centre as support was
channeled to the innovative Child Life Zone within
the PCH. The Zone features a specially outfitted room
that provides an escape for children coping with
illness and hospitalization, and its special programmes
include a closed-circuit TV station that broadcasts
weekly trivia quizzes and other programming into all
playrooms, infusion rooms and patients’ rooms. An
educational video segment on Sagicor was aired over
the closed-circuit network, and Sagicor volunteers
helped to administer the quiz and to deliver prizes to
winners’ rooms.
PCH Telethon and Radiothon – Each year, the
hospital partners with television and radio stations
to host high-profile fundraising events and Sagicor’s
Arizona office once again joined the ranks of sponsors
in 2020. Not only were funds donated to the PCH
Telethon in April and the radio-based Thank-A-thon
in August, but Sagicor team members from Arizona
also helped in manning the phones to answer calls and
take donations. Sagicor donated $5,000 each to the
two events, plus an additional $5,000 to an initiative
which saw special Christmas meals being provided for
patients and their families.
Arthritis Foundation
Walk to Cure Arthritis (Virtual) – Due to the COVID-19
pandemic, the Arthritis Foundation’s 12th Walk to Cure
Arthritis became a virtual event, supported by Sagicor
team members from Tampa who walked, ran or jogged
along the three-mile course. Through their efforts,
Team Sagicor raised $7,072 and was recognised by the
Arthritis Foundation as a top corporate fundraising
team for 2020. The annual Walk to Cure Arthritis takes
place in cities across the United States in May of each
year, raising funds to support the Foundation’s efforts
to find better treatments and a cure for the disease,
recognised as America’s leading cause of disability.
Jingle Bell Run (Virtual) – Sagicor Life continued
its longstanding support of the Jingle Bell Run, an
event that was successfully redesigned to enable
virtual participation in the year 2020. Having set an
initial fundraising goal of $1,000, Team Sagicor went
on to raise $1,660. In one of its #ThankfulThursday
social media posts, the Arthritis Foundation of
Florida expressed appreciation to Sagicor with its
heartwarming message, “Thank you Sagicor for all you
do for the 54 million Americans living with arthritis!”
Pancreatic Cancer Action Network
Sagicor partnered with the Pancreatic Cancer Action
Network (PanCAN) in their quest to end Pancreatic
cancer, registering three team members in the
PurpleStride 5K walk/run in March in St Petersburg,
Florida. As a Silver Sponsor, Sagicor contributed
$2,500 to this year’s donations which went on to
total more than $287,000. PurpleStride has become
PanCan’s most powerful vehicle for fundraising
and awareness, with its proceeds helping to fund
pancreatic cancer research and patient services.
SAGICOR GROUP JAMAICA
Sagicor Sigma Corporate Run
The Sagicor Foundation in Jamaica staged its annual
charity road race, Sagicor Sigma Corporate Run,
attracting over 26,000 participants and raising a
record USD $373,648, or JMD $55.3 million. Held on
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Sunday February 16, the year 2020 marked the 22nd
consecutive Sigma Corporate Run.
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The successful effort culminated with a symbolic
cheque handover between Sagicor Executives and
Sigma Run beneficiaries during a post-race ceremony
at Emancipation Park. The three beneficiaries were
The Bustamante Hospital for Children, Savanna-La-Mar
Hospital, and the Clifton Boys’ Home.
Jamaica Cancer Society (Misc Donation)
Sagicor supported the Jamaica Cancer Society during
the year, including initiatives such as its Virtual Keeping
Abreast Luncheon in October. Also sponsored in
October was the Society’s “Pink Talk: A Conversation
on Breast Cancer,” reflecting Sagicor Foundation’s
longstanding commitment to promoting breast
cancer awareness.
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COMMUNITY & YOUTH DEVELOPMENT
SAGICOR LIFE INC SOUTHERN CARIBBEAN
Holetown Festival
The Barbados Holetown Festival, one of the longest
running National festivals in Barbados, received a
$3,500 donation from Sagicor to assist with prizes and
to help offset costs associated with the festival’s 5K
Road Run. Now in its 43rd year, the Holetown Festival
commemorates the island’s first English settlement
with a full calendar of events and cultural displays
each February.
Eden Lodge Charitable Trust
Sagicor donated $2000 to the Eden Lodge Charitable
Trust in support of their efforts to provide daily lunches
to children from less fortunate families, particularly
secondary school students needing to purchase
lunches from the school canteen. The Trust also
supports children whose parents are unable to provide
them with education, and aims to eradicate poverty
in Barbados.
1. Team members from Antigua wore pink for Breast cancer Awareness
Month and presented a donation to Breast Friends, an organisation which
provides support to cancer survivors 2. Sagicor Life St Lucia presented a
donation to the St Lucia Cancer Society. 3. Sagicor USA’s team Arizona
volunteered at the PCH telethon and Radiothon, as well as donated $5000
to each event. 4. The Pancreatic Cancer Action Network presented a floating
billboard giving thanks to Sagicor USA and other sponsors. 5. Sagicor
Executives and Sigma Run beneficiaries celebrated the $55.3 million raised.
From left are: Sagicor Life Jamaica - Individual Life Division Executive
Vice President, Mark Chisholm; Tanesia Tomlinson, Hospital Administrator,
Savanna-la-mar Hospital; Claudette Marshall, Director of Mission and Ministry
– Anglican Diocese – representing the Clifton Boys’ Home; Dr. Brian James,
Head of Department for Anesthesiology and Critical Care, Bustamante
Hospital for Children; and Christopher Zacca, President and CEO, Sagicor
Group Jamaica.
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Caribbean Youth Environment Network (CYEN)
Coastal Beach Cleanup
In November, dozens of Sagicor team members
showed their commitment to cleaning up the
environment when they assisted the Caribbean Youth
Environmental Network (CYEN) in cleaning the popular
Browne’s Beach, collecting almost 1000 pounds of
garbage in just three hours’ time. Speaking on behalf
of Sagicor at the culmination of the activity, Unit
Manager Wayne Alleyne reminded the gathering that,
“Our beaches matter, and we must improve our efforts
to keep them clean due to the impact this has on the
health of marine life, as well as ourselves.”
Enterprise in Action Youth Programme
In support of the Small Business Association of
Barbados’ efforts to develop an entrepreneurial culture
among young people, Sagicor donated $2,000 to the
Enterprise in Action (EIA) Youth Programme which
targets secondary students between the ages of 14-16,
as well as a few primary school students in class 4.
The programme helps equip young participants with
leadership skills and encourages the creativity and
innovation required to function in a globalised market.
This initiative, celebrating its 12th consecutive edition,
is implemented over one academic year. Due to the
COVID-19 pandemic and its associated restrictions
at the schools, a hybrid approach was taken in 2020.
The programme was delivered virtually using the
participating schools’ Google Classroom platform
and where this was not possible, face to face
sessions continued with smaller groups as guided by
the protocols.
Students were taught the fundamental theoretical
principles of Team Building & Teamwork, Marketing,
Financial Planning and the Legal & Administrative
framework of starting a business. The next step of
this process is the practical phase of developing and
running a business within their schools. The process of
adapting the programme to overcome the challenges
of the pandemic was also a real-life example for
the students on the importance of adjusting and
reengineering the way one does business in order to
remain relevant.
Lions Club of Barbados South
The annual Christmas hampers project organised
by the Lions Club of Barbados South received a
$5,000 boost from Sagicor, further enabling the
group to spread cheer to over sixty Barbadians. The
donation helped to purchase items for the hampers
and care packages, and Team members from Sagicor
Life’s Gibson agency also assisted with the sorting
and packing.
Carols by Candlelight
The annual Carols by Candelight family show staged
by the Rotary Club of Barbados was supported by
Sagicor in December with a donation of $5,000. The
show took a creative approach in 2020, moving from
its longstanding venue, Ilaro Court, to the Globe Drive-
In where patrons viewed the entertainment from the
confines of their vehicles. Out of consideration for
COVID-19 restrictions, the event was also streamed
before a virtual audience for the first time. Proceeds
from the show aided in the installation of water tanks
at secondary schools across the country.
Prison Fellowship Angel Tree Programme
In December, Sagicor made donations to Prison
Fellowship Barbados, assisting with the Angel Tree
Programme which oversees the donation of gifts to
the children of inmates. Sagicor team members from
across the Group donated wrapped gifts to the non-
profit organisation, handing them over just before
Christmas at their Collymore Rock location. Sagicor
Executive Vice President and General Manager Paul
Inniss commended the response of the Sagicor team,
linking it to the company’s Project Kindness initiative.
SAGICOR LIFE INC SOUTHERN CARIBBEAN
Government Industrial School, Barbados
Sagicor encourages young girls not to let their past
define them and to adopt a mindset of “I Can”, even
when they feel that the deck is stacked against
them. The company shared this message during a
visit with the female residents of the Government
Industrial School, Barbados’ detention centre for at-
risk youth, in observance of International Women’s
Day in 2020. Highlights of the visit were an interactive
motivational session which explored the importance
of acknowledging and managing emotions on one’s
journey towards developing strong self-esteem,
and bonding over lunch with residents and staff of
the institution.
St Jude’s Home for Girls
Sagicor Life’s donation helped young women
attached to the St Jude’s Home for Girls in Trinidad
and Tobago to further their personal development
while also honing their skills in art through a unique
collaboration with the Chosen Hands Art and Wellness
Programme. Chosen Hands uses art as a vehicle for
personal development, healing and self-expression,
and Sagicor’s support helped offset the cost of
materials for sessions with ceramic artists attached
to Veronica’s Pottery. This type of art therapy is often
used as a holistic means of managing one’s emotional
well-being and coping with physical illness or disability,
and the skills learned can also lead to alternative
income streams as the young participants age out of
the school.
Court Shamrock Shelter
On World Kindness Day in November, Sagicor
executives Robert Trestrail and Keston Howell visited
the Court Shamrock Shelter for the Socially Displaced
in San Fernando to distribute meals to the residents.
The gesture was made during the 5-day festival of
Divali, demonstrating their understanding of how Divali
is more than just a celebration of the triumph of light
over darkness; it is also about sharing those blessings
with others. The 21-year old Court Shamrock Shelter
for men supplements a government subvention with
a number of in-house agricultural projects, such as
raising chickens and rabbits and the establishment of a
kitchen garden.
Gasparillo Flood Victims Relief
Sagicor partnered with the Disaster Management
Unit of the Couva/Tabaquite/Talparo Regional
Corporation to distribute relief packages, food and
cleaning supplies to residents in the Gasparillo area
affected by heavy rains and flooding. Reflecting on his
experience during the relief effort, Sagicor volunteer
Rameshwar Mahadeo said, “It’s natural to me to help
someone in need; everyone has a down time and it’s
our responsibility to help them up…the joy on their
faces knowing that they aren’t forgotten and someone
is there to help made it more than worth it.”
Harry Persad Helping Hands Foundation
The saying that “Many hands make light work”
reflects the relationship forged between Sagicor Life
and the Harry Persad Helping Hands Foundation as
both organisations continue their work in organising
community-based events and assisting the vulnerable
citizens of Trinidad and Tobago. Sagicor presented a
token of appreciation to Harrinarine “Harry” Persad
for the foundation’s support of the Sagicor-sponsored
Indian Arrival Day, and also pledged to partner with the
foundation every quarter as it continues to reach out
to vulnerable citizens with its charitable projects.
World Environment Day
Sagicor Life Inc’s Customer Service departments
marked World Environment Day on June 5th by
distributing seedlings to clients, promoting the
importance of growing one’s own food and creating
a sustainable food system. In addition to customers
receiving their choice of pigeon peas, cucumber, pak
choi, basil, wax pepper, squash, sorrel and tomato
seedlings, six lucky clients won fruit trees. Out of
its commitment to protecting the environment,
Sagicor has also implemented a number of “green”
corporate initiatives through the years, particularly
using digital applications versus paper applications,
providing premium receipts via email, paying claim
reimbursements through direct deposit, and the
introduction of its CariCARE card, which allows clients
to digitally settle claims immediately.
35
5
6
7
1. and 2. Team members in Barbados convened at Browne’s Beach for the
Caribbean Youth Environment Network Coastal Beach Cleanup. 3. Assistant
Vice President, Human Resources, Michelle Bell-Sookhoo, left, discussed the
impact of the Chosen Hands Art and Wellness Programme with its founder
and creative director Anika Plowden-Corentin. 4. The manager of the Court
Shamrock Shelter for the Socially Displaced, Gloria Coombs, looked on
as Sagicor executives Robert Trestrail, left, and Keston Howell served a
midday meal for the shelter’s residents on World Kindness Day. 5. Sagicor
General Insurance team member, Sonia Gadar gives a flood-affected
resident some supplies, as part of Sagicor’s flood relief collaboration with
the Couva/Talparo Regional Corporation in the Gasparillo area. 6. and
7. Robert Trestrail, Executive Vice President and General Manager, and
Ravi Rambarran, left, President & CEO of Sagicor Life Inc, served food
for distribution to the needy who were supported by the Harry Persad
Foundation.
36
1
2
3
St. Vincent de Paul Society
Advisors from the Ralph Coutain Branch, distributed
care packages to families in nearby Port of Spain
districts in May, working alongside the St. Vincent de
Paul Society and the St. Joseph Presbyterian Church.
St. Vincent De Paul is an international voluntary
organisation in the Catholic church dedicated to
service of the poor.
Prinses Margriet School
In Curaçao, Sagicor Life Inc assisted the Prinses
Margriet School by donating a toaster oven, thereby
making it possible for students to have a warm
meal after school when awaiting pick-up by their
parents. Children often use the time after school to
complete homework, and the toaster oven is expected
to make them more comfortable and therefore
more productive.
Royal St Vincent and the Grenadines Police Force
(RSVGPF) Training School
Sagicor Life presented the Royal St Vincent and the
Grenadines Police Force (RSVGPF) Training School
with a portable projector screen for use during the
delivery of lectures. Sagicor was represented by Syd
Hazel, whose remarks during the handover encouraged
other outstanding citizens and members of corporate
society to partner with the Police Force as they strive
to deliver an effective and efficient service.
Support Given To NGOs In St Lucia
Many organisations who would normally support their
operating costs via fundraising events and donation
drives were unable to do so in 2020 as a result of
pandemic-related restrictions on group activities. As
such, Sagicor life Inc’s Team in St Lucia, donated a
total of USD $60,000 to several non-governmental
organisations to assist with their ongoing operating
expenses. Those receiving the monetary contributions
included the Marian Home, St. Lucy’s Home, Villa St.
Joseph, Cornerstone Humanitarian Society and the St.
Lucia Blind Welfare Society.
Back To School Support
Demonstrating how Sagicor’s commitment to improve
the lives of people in the communities in which we
operate permeates throughout the entire organisation,
St Lucia Advisor Mrs. Minerva Charles David organised
back-to-school gift bags full of school supplies for
25 families. According to Mrs David who has been an
Advisor for 12 years, she developed relationships with
her clients in the Soufriere and Choiseul areas that
made her aware of the challenges being faced as they
prepared their children for the new school year. The
venture marked the first anniversary of her Soufriere
office, and received support from Sagicor as well.
Hurricane Relief In Belize
The Sagicor team in Belize worked diligently during
November to assist military personnel and other first
responders, as well as persons forced into shelters
during the passing of Hurricanes Eta and Iota. Not
only were warm meals provided, but hampers of
food and cleaning supplies were donated as well
to assist residents with getting their lives back to
normal. Though the two hurricanes did not hit Belize
directly, the associated flooding affected an estimated
50,000-60,000 residents, many of whom were already
grappling with economic hardships resulting from
COVID-19.
Patronato Nacional De Nutrición
Sagicor Panamá contributed to the Patronato Nacional
de Nutrición (National Nutrition Service), a non-profit
organisation that promotes the development and
implementation of self-sustainable development and
production farm programmes in that country. The
financial contribution marked the fourth consecutive
year of support, and in 2020 the funds supported food
production initiatives for Farm Las Gaitas in the District
of Capira and provided a day of fun and treats for
children of the Farm.
SAGICOR USA
SagicorNow
SagicorNow.com, Sagicor USA’s fully digital platform,
not only enables potential customers to conveniently
purchase life insurance online in a matter of a few
minutes, but also helps fund the company’s “Larger
than Life” charitable initiative. Though not available
in all states, when eligible customers purchase a
policy using SagicorNow, Sagicor Life USA’s operating
company donates $25 to their choice of one of four
charities: the American Heart Association; Juvenile
Diabetes Research Foundation; Operation: Military
Matters; and Positive Coaching Alliance. Funds raised
for the charities in 2020 totaled $3,375.
Operation: Military Matters (OMM)
In addition to donations made through the SagicorNow
initiative, Operation: Military Matters was supported
in other ways as a result of team member activities
in Arizona. As an additional incentive for their
participation in a virtual fitness challenge organised
by the Wellness Council of Arizona, team members’
registration fees were matched, resulting in a $520
donation to OMM which was applied to a “packing
party” with veterans from MacDill’s Air Force Base. This
initiative resulted in 230 packages being shipped to
members of the military serving overseas.
Metropolitan Ministries
November Sagicor USA’s Tampa office collected food
for the holidays as well as donated $10,000 for the
“Barrels of Hope” initiative organised by Metropolitan
Ministries. The charity’s mission is to care for the
homeless and those at risk of being homeless in
the Tampa Bay area, and while Sagicor volunteers
were unable to help sort donations, pack boxes and
clean the facilities due to COVID-19 restrictions,
they participated in a holiday food drive and made
additional monetary donations.
non-perishable food items at St. Mary’s Food Bank
and bag produce for St. Mary’s Surprise Pantry. St.
Mary’s mission is to combat food insecurity across the
state, alleviating hunger through the gathering and
distribution of food, while encouraging self-sufficiency,
collaboration, advocacy and education. Team members
from the Scottsdale office also teamed up with the
Scottsdale Landings Property Management team to
help with special holiday food drives in conjunction
with the Feeding Arizona Food drive, collecting and
also organising deliveries of the canned goods, earning
Sagicor the distinction of being Feeding Arizona’s
largest donor.
St. Vincent de Paul Society
Water Drive - Sagicor USA’s support of the St. Vincent
de Paul charity in the greater Phoenix area is an
ongoing effort, and during the year a number of its
programmes received support. A water drive during
the summer mobilised team members to collaborate
with area supermarkets and the ABC15 Arizona
television statement to ensure that the charity’s
resource centre and dining areas were sufficiently
stocked to accommodate those seeking heat relief.
An impressive Phone Bank day organised to fund the
effort raised $167,424, equivalent to more than 1.3
million bottles of water, and also attracted donations of
21,248 physical bottles of water. Further underscoring
its commitment, Sagicor matched dollar donations up
to $10,000.
Feed the Need - St. Vincent de Paul’s Feed the Need
meal programme received a boost from the Arizona
team as team members donated over a ton of non-
perishable food items to the cause. This initiative was
especially welcomed, as it helped the charity to stock
it shelves and continue serving an astounding 4,200
daily meals, even though the impact of COVID-19
restrictions had resulted in a plunge in the amount of
food contributions normally seen.
St. Mary’s Food Bank
Even during the pandemic, the month of May saw
Arizona Team members helping to sort and organise
Turkey Tuesday - During the Thanksgiving holiday
period, a special donation drive helped St. Vincent
de Paul prepare meals for families which could be
37
4
5
1. Team members from Curacao supported the students of the Princess
Margriet school by donating a toaster oven. 2. Team members in Belize
provided warm meals to individuals and families who fled to shelters in the
Cayo, and Stann Creek Districts, and to the military and other first responder
personnel following the passage of Hurricane Eta. 3. Team Panama posed
for a team photo at the cheque donation to the Patronato Nacional De
Nutrión (National Nutrition Service). 4. Sagicor USA Arizona team members
volunteered to package items for veterans for Operation: Military Matters.
5. Metropolitan Ministries’ Barrels of Hope received barrels of food items and
a cash donation from Sagicor USA’s Tampa Office.
1
2
3
1. Mischa McLeod Hines, left, Assistant Vice President, Sagicor Investments,
and Alicia Bogues, right, Head of Marketing and Regional Development,
CB Foods, joined Debbie Dunn-Ferguson, Administrator for the Maxfield
Park Children’s Home, during the presentation of educational supplies
and personal care items from Sagicor Foundation. 2. Howard Smith, right,
Manager, SME Business Banking, with, from left Dr. Makesha Archer-Gooding
and Dr. Judian Peart of the Victoria Jubilee Hospital, standing in front a
Sagicor donated Christmas tree. 3. Ramdeen Deosingh received his prize
from Keston Howell, President and Chief Executive Officer, Sagicor General,
at the prizegiving ceremony for the Brechin Castle Open Golf Tournament.
then taken to their homes for sharing with their
families and friends. Sagicor came onboard as a
sponsor, matching text-in and online donations
up to $10,000. This donation drive saw an overall
increase over the previous year’s donations, raising
$98,540 and $138,529 from text-in and online
donations respectively.
Boys & Girls Clubs of Tampa Bay
Sagicor provided a helping hand to the “Great Futures
Start with Us” virtual breakfast organised by the
Boys & Girls Clubs of Tampa Bay, donating $2,500 to
the cause. Held in December, the event showcased
the Clubs’ activities over the years, and presented
testimonials and stories of success from past Club
members who had been positively impacted by the
organisations, including celebrity alumni such as
Denzil Washington, Martin Sheen, Shaquille O’neal and
others. Because 2020 donations to the organisation
were at a record low, Sagicor’s donation was
especially welcomed.
SAGICOR GROUP JAMAICA
Sagicor Community Heroes Awards
Also in honour of Sagicor’s 50th anniversary, the
inaugural Sagicor Community Heroes Award was
bestowed upon 50 extraordinary Jamaican citizens.
Deemed “everyday heroes” for their qualities of
volunteerism, charity, kindness and selflessness, the
pool of recipients hailed from communities across the
country and included an 11-year old awardee. The total
value of the awards presented was USD $16,890.
Donations to the Community
Sagicor Foundation was one of several organisations
supporting the inaugural Jamaica Food and Drink
Cares initiative, designed to make a difference to
those in need using food as a platform. Organised by
the Jamaica Food and Drink Festival, the innovative
programme involved a team of 70 chefs and resulted
in the provision of over 200 meals and personal care
items being provided to staff and wards of three
children’s homes and a senior citizen facility.
Hear the Children Cry, the country’s leading advocacy
organisation for the nurturing and protection of
children, received a monetary donation in support of
their various programmes and initiatives.
During the Christmas Season, Sagicor spread
Christmas cheer at several hospitals and
children’s home with the donation of a decorated
Christmas trees.
In this category, Sagicor made donations totaling USD
$40,540.
SPORT
SAGICOR LIFE INC SOUTHERN CARIBBEAN
Brechin Castle Golf Tournament
Sagicor General Insurance Company was the title
sponsor of the two-day Brechin Castle Open Golf
Tournament, held in January at the Sevilla Golf and
Club House in Couva, Trinidad and Tobago. Speaking on
behalf of Sagicor General, President and Chief Executive
Officer Keston Howell expressed the company’s delight
at being able to contribute to the event, giving golfers
the opportunity to hone their skills before hitting the
international stage as part of the national team.
SAGICOR USA
Positive Coaching Alliance
The Positive Coaching Alliance (PCA) Class of
2020 has expressed appreciation to Sagicor for its
support of the Triple Impact Competitor Scholarship
programme which saw 25 scholarships being awarded
to Tampa Bay area student athletes to help meet
college expenses, and 15 scholarships to those from
Arizona, for a total of $65,000. PCA is an organisation
dedicated to developing “Better Athletes, Better
People”, by providing resources to youth and high
school sports coaches, parents, administrators
and student-athletes which help create a positive,
character-building, youth sports culture at the high
school level.
39
HUMAN CAPITAL REPORT
EXECUTIVE CHANGES
SAGICOR LIFE INC – SOUTH
CARIBBEAN
Retirements
Mr Ravi Rambarran retired from his
position as President & CEO of Sagicor
Life Inc effective December 31st, 2020.
Mr J. Edward Clarke retired from the
role of Executive Vice President and
General Manager, Barbados Operations,
Sagicor Life Inc on June 30th, 2020.
Appointments
Mr Robert Trestrail assumed the role
of President & CEO of Sagicor Life
Inc effective January 1, 2021. Robert
has been a member of the Senior and
Executive management team since
2001 and held the position of Executive
Vice President and General Manager for
the Trinidad & Tobago operations since
2007. He assumed responsibility for
operations in the Dutch Caribbean in
2017 and currently serves as a Director
on the Group’s subsidiaries in Trinidad
& Tobago.
Mr Paul Inniss assumed the role of
Executive Vice President and General
Manager, Barbados Operations, Sagicor
Life Inc effective July 1st, 2020. He
previously led high-performance
teams in the Property & Casualty and
Life, Health, Pensions and Banking
sectors. Paul has an MBA from the
Edinburgh Business School of Heriot-
Watt University, and a Fellowship in
Risk Management from the Insurance
Institute of Canada and University
of Toronto.
SAGICOR GROUP JAMAICA
LIMITED
Retirement
Ivan Carter retired from the post of
Executive Vice President and Chief
Financial Officer with Sagicor Group
Jamaica Limited in April 2020.
Appointments
Andre Ho-Lung was appointed to the
post of Executive Vice President and
Chief Financial Officer. Andre holds
a B.Sc. and an M.Sc. in Accounting
from the University of the West Indies
and is a Fellow of the Association of
Chartered Certified Accountants.
Sean Newman was appointed to the
post of Executive Vice President &
Chief Investments Officer – Sagicor
Investments Jamaica Limited. Sean has
a B.Sc. in Management & Accounting
from the University of the West Indies
and an MBA from Howard University.
COVID-19 Response
A multi-company COVID-19 strategy
was deployed in February 2020, in
response to news that a new strain of
the Coronavirus had been detected
in the USA and U.K. This strategy was
developed ahead of the first COVID-19
patients being identified in the
Caribbean and South America.
Executive management teams
collaborated on policies, the
procurement of personal protection
equipment, and the roll-out of robust
educational and communication
programmes promoting new hygiene
protocols, including the use of masks
and social distancing. Appropriate
signage was erected to provide safety
guidance for team members and
customers, enabling the continuation of
in-office services wherever possible.
sought as material changes in the
environment evolved, helping to shape
guidelines and ensure the safe return of
team members back into their offices
whenever restrictions were lifted.
We have very carefully managed
our COVID-19 response to mitigate
contact risks, team infection rates
and team mortality rates. Sagicor
Group companies aim to maintain this
standard, and pledge to keep team
members abreast of current scientific
data and available vaccination options
even as we move into the uncertain
climate of 2021.
Change Management and
Engagement activities
In Jamaica, the new year began on a
high note with the annual company
conference, themed “Beyond Gold”
in 2020. Separate team meetings
were later held for Sagicor Advisors
and Administrative Staff to provide
information on the past year’s
performance and on strategies for
the coming year. Hosted by senior
members of management, these high
energy meetings featured motivational
speakers and ably set the tone for
the new year. The release of the 2020
Sagicor Calendar, illustrated with
striking human interest photographs
of Sagicor team members and their
families, was a quiet reminder of
how much the company values its
internal stakeholders.
During this period our Group team
leaders demonstrated tremendous
agility and responsive leadership,
and by March 2020, temporary Work
from Home strategies were being
crafted in adherence to evolving
directives from local government
officials. Return-to-Office scenarios
were also developed and approved
by the Boards of Directors. Business
continuity strategies were adjusted to
maintain client services in all markets,
benefitting from earlier investments in
technology and digitisation projects.
Regular Town Hall Meetings for
Sagicor team members provided a
solid platform for communicating the
change management programmes,
keeping the community engaged,
informed and motivated.
Health and Safety Policies
In adjusting to COVID-19 conditions, our
main priority was the safety of our staff,
advisors and clients. This was reflected
in all procedures introduced during
the pandemic, from the preparation of
our offices to determining which staff
and advisors should be allowed in the
offices. It governed interactions with
our clients, guiding our Work-From-
Office operations as well as our Return-
to-Work Policies. The expert advice
of occupational health and safety
experts and medical practitioners was
40
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2
Sagicor General Inc conducted
quarterly Employee Experience
Pulse Surveys, which revealed that
the respondents awarded positive
Employee Net Promoter Scores (eNPS)
for all the quarters of 2020, in spite of
the dramatic global and local changes
they would have experienced.
In the Eastern Caribbean, weekly
20-minute sessions branded as
“Sagicor Advisor Chat Sessions” not
only aided peer development but also
provided convenient opportunities
for continuous learning. Mindset and
behaviour shifts were encouraged in
“Leading the SGI-Way Workshops”,
as our people completed pre- and
post-workshop assessments on the
leadership principles being presented,
and also received feedback from their
direct reports.
Sagicor Group Jamaica Ltd launched
its Pulse Survey in November of
2020 to check in with team members
and also identify areas in need of
strengthening. The survey captured
feedback on engagement, leadership,
and communication, and work from
home support. It also provided an
opportunity to lodge general concerns
relating to the pandemic.
A full slate of fitness and other
activities presented online served
as mood and morale boosters, while
corporate recognition events and
regular team meetings encouraged
productivity. Team members who found
themselves grappling with the new
normal ushered in by the COVID-19
pandemic were supported by the
Employee Assistance programme,
and presentations were organised on
physical and mental wellness, financial
planning, and the complex issues of
domestic abuse.
for team members and ensure that
expectations are clearly defined,
recorded, managed and tied to our
annual rewards programmes.
The popular “Lunch and Learn”
programme transitioned seamlessly
into a series of virtual classes and team
events, which were well-attended. They
provided convenient opportunities for
team members to learn more about
topics such as COVID-19, Pensions,
Supplemental Health, Accessing NHT
and mortgage benefits. Virtual wellness
classes and team events like “The Don’t
Rush Challenge” and “Fast Finger
Fridays, the S.T.A.R.S Week of activities,
Sage Live Morning Talk Show, Church
Service, Battle of the Executives,
Games Night, Benefit-a-thon Charity
Event all provided variety and interest.
2020 saw a significant transformation
in how training was delivered as the
concept of “anywhere and anytime
training” was positively embraced
across the Group. The new work
environment combined to produce
a rich curriculum of virtual training
workshops for managers and
supervisors to aid in the development
of skills required to effectively manage
remote teams. Other mandatory
workshop topics included Preventing
Workplace Harassment, Anti-Money
Laundering, our Code of Business
Conduct and Ethics, Information
Security and Wellness.
Sagicor USA conducted monthly
interviews to monitor the level of
engagement of our USA-based team
members. Also in the USA, new
legislation provided some measure
of economic stability, including the
Family’s First Coronavirus Response
Act with provisions for paid sick
leave and medical leave, and the
Coronavirus, Aid, Relief and Economic
Securities (CARES) Act, also known as
the Economic Stimulus Bill.
Learning and Development
Our corporate value, “Timeless”, drives
us to maintain a learning culture
that supports “building a company
for today…which will continue to be
relevant for all times”. This is reflected
in our performance management
systems, which set learning goals
Sales teams in Barbados were
exposed to additional workshops on
various categories of benefits, legal
instruments, electronic workflow
applications and sales strategies. In
Trinidad, similar workshops for teams
of sales advisors and managers were
organised, along with opportunities
to pursue the professional certificate
in Strategy and Innovation with the
Arthur Lok Jack School of Business.
In the Eastern Caribbean, the Skillsoft
Assignment Challenge competition was
held, where team members recorded
and shared via video their top three
takeaways from the Skillsoft courses
and how they have or will implement
these new skills in their roles. Winners
in each territory won Amazon gift
card prizes.
1. and 2. Sagicor General Insurance Inc’s specially-
outfitted space, stimulating creative thinking and group
collaboration for team members to take part in “The
Huddle”.
41
Hiring and Selection
Traditional talent fairs at local university
campuses were fully transitioned to
the virtual space through the increased
use of LinkedIn, Caribbean Jobs and
the resources of Executive Search
companies. Psychometric tests and
other skills-based testing further
strengthened our talent selection and
placement processes. The Recruitment
module of the Sagicor Success
platform was also instrumental in
these areas.
New team members welcomed
during the year were onboarded
with programmes to help them
understand the fundamentals of
our business and rapidly changing
technology, and they are required to
complete LOMA 280 and LOMA 290
insurance courses. New sales managers
in Barbados also completed the
Supervisory Management course at
the Barbados Institute of Management
and Productivity. Notably, tuition
assistance and support is available
for the completion of professional
designations for key occupations in
our business.
Innovations
Collaboration & Communication
Sagicor General Inc launched “The
Huddle”, to inspire teams to come
together for the generation of
innovative ideas and brainstorming. In
Barbados, the concept was supported
by a specially-outfitted space which
stimulates creative thinking and
group collaboration.
The launch of our SAP JAM platform
in July 2020 enhanced collaboration
and communication across Sagicor’s
Southern Caribbean countries.
Internally branded as “Jammin”,
the SAP software tool replaced the
previous intranet-based “Saginet”,
and reduced the heavy reliance on
company-wide emails for internal
communication and feedback. It
promotes real-time social collaboration
by connecting customers, partners,
and colleagues with information,
applications, and processes to solve
business critical problems and to drive
results. Jammin’ integrates with our
business applications and has been
optimised for mobile devices as well.
Talent Management
The Success Factors Talent
Management platform has been
internally branded as “Sagicor Success”
and over the last eleven years has
increased the efficiency of several
talent management processes. The
newest module, “Onboarding”, was
configured and tested during the year
and is expected to go live in 2021.
New hires can now sign off on and
submit documents via the portal, while
managers can pair new employees
with “buddies” and set interim goals
for them during their early months of
employment. This paperless process
has resulted in a more efficient and
cost-effective way of onboarding our
new recruits while enhancing their
overall experience.
“Employee Central” proved invaluable
as we transitioned to work-from-
home arrangements in 2020 and were
able to rely on it for the creation and
maintenance of employee records. A
new feature added in 2020 facilitates
requests for the extension of temporary
employee contracts, allowing for easy
tracking of short-term employment
contracts and cost. The “Reporting”
module can be used to generate
customised employee reports, and is
accessible by the HR team as well as
other business units.
Other modules scheduled for
completion during 2021 include the
“Development” and “Succession”
modules for documenting and
tracking the personal goals of team
members, and the “People Analytics”
module which will use system data
to generate rich analytical visual
management reports.
Personal Social Responsibility
Despite the challenges presented by
COVID-19 conditions, we proceeded
with our Personal Social Responsibility
programme to encourage and facilitate
team participation in community-
building. These initiatives included
corporate programmes as well as
projects developed by team members
to uplift their own communities.
Sagicor Group Jamaica recognised
eight outstanding team members
from the Mandeville Branch for their
selfless acts in 2020. Whether for
their collaboration on the delivery of
food packages, masks and personal
care items, or for their personal
demonstrations of bravery and
sacrifice, the following team members
were awarded:
1. Sanjae Walker-Newman, Wealth
Advisor – Sagicor Investments
Jamaica Limited who with
family and friends provided care
packages to families in need.
2. Shameika Scarlett, Client Service
Representative – Sagicor Bank
Jamaica Limited who provided
roadside first aid assistance
to an elderly man who fell and
was injured.
3. Erica Prendergast, Supervisor
Claims Administration and
Project Services - Sagicor Life
Jamaica Limited who selflessly
planned and participated in
numerous COVID-19 relief
activities including sponsoring an
education assistance programme,
providing care to an elderly
neighbor, arranging prayer
meetings and delivering care
packages to those in need.
4. Monique Wilson, Business
Development Advisor – Sagicor
Investments Limited who
produced masks and then used
the proceeds from these sales
to purchase food and care
packages for the less fortunate
within her community. She also
donated masks to colleagues in
the branches.
5. Reneika Thompson, Compliance
Officer – ERM & Compliance –
Sagicor Group whose goodwill
and service at the community
level has propelled her to serve
on football associations at the
parish and regional level. She
42
also assisted at-risk youth in
her community by planning
charity events to offset their
educational expenses.
6. Shanakay Dyer, Account
Maintenance Clerk – Sagicor
Bank Jamaica Limited who
founded the iBloom Foundation
which provides mentorship and
educational assistance to youth.
iBloom has assisted 48 students
across seven (7) parishes in
Jamaica by supplying them with
much-needed data packages to
facilitate online learning. Its back-
to-school drive assisted over 100
students with stationery supplies,
masks, sanitisers, lunch kits and
school bags, school uniforms
and shoes.
7. Roger McKenzie, Assistant Vice
President – Sagicor Investments
Jamaica Limited whose various
initiatives including sponsoring
and assisting community
outreach programmes,
mentoring, coaching, developing
and feeding the nation’s young
minds, assisting over 100
youngsters in the process.
TOP PERFORMERS
SALES HONORS
5th consecutive year, and the Anthony
Kennedy Award for the fifth time in
her tenure.
Top Sales Performer
Belize
Top Sales Performer
SLI Eastern Caribbean
Top Sales Performer
Sagicor Life Inc Barbados
Marsha Gill
Marsha Gill had an exceptional sales
performance in 2020, in spite of the
many challenges she would have faced
in doing business during the year.
Ms. Gill’s commendable performance
and perseverance belies the many
obstacles faced, given the prolonged
and repeated periods of COVID-19
lockdowns and the impact Hurricanes
Eta and Nana had on Belize in the same
year. She was previously awarded the
coveted President’s trophy in 2018.
Shameka David
Shameka David’s career with Sagicor
began on May 1st, 2018. Described
as bold, willing and competitive,
her outstanding performance in
2020 followed two previous years of
constant work and effort that moved
her along the performance spectrum to
record an exceptional performance in
Sales for the year.
Janice Mullin- Sargeant
At the 2020 annual awards, Janice
Mullin-Sargeant added another
outstanding year of performance
to her eight-year streak of success.
Janice received the highly coveted
Platinum and 100 Club awards for
a record-breaking nine and eight
consecutive years, respectively, also
receiving the D.W Allan Award for the
Top Sales Performer
Trinidad and Tobago
Top Sales Performer
Sagicor Group Jamaica
ADMINISTRATIVE HONORS
Contributor of the Year
Sagicor Life Inc Barbados
Pioneer of the Year
Sagicor Life Inc Barbados & the
Sagicor Group of Companies
43
Denzil Supersad
Denzil Supersad is a top Sagicor
advisor with 11 years industry
experience. Previous achievements
during his tenure include being
named Top Agent of the Year on three
occasions, as well as having received
Centurion, Excalibur, Top Persistency,
and the Highest Annual Premium
Income (API) awards. Currently
pursuing the Financial Services
Certified Professional, programme,
Denzil has qualified the Million Dollar
Round Table for the past eight years
and has never missed a Convention.
Nicholene Taylor was not only the
top sales performer of Sagicor Group
Jamaica for 2020, but she also received
the Pansy Ennevor Trophy for being the
top female agent for Net Annualised
Premium income (API) and setting a
new API record for this group for 2020.
Nicholene also achieved the elusive Top
of Table qualification in MDRT and was
President of the club of Top 30 Sagicor
Advisors in Sagicor in Jamaica. She is
the Chairperson of the Production Club
and is ranked third among her peers in
the highly competitive Century Club.
André Scantlebury’s performance has
been described as phenomenal. His
reliability, persistence, calm approach
and commitment to the work of the
Corporate Secretarial and Legal and
Compliance department saw him
emerge as a keen team player and
valuable contributor to the completion
of several key projects associated with
the Sagicor/Alignvest transaction.
During 2020 he was nominated for
trendsetter awards in Q2 and Q4.
Nigel Pierre was responsible for
the creation of the Risk Profiling
Application, one of the tools used in
our anti-money laundering and counter
financing of terrorism (AML/CFT)
efforts in the Southern Caribbean,
Belize and Dutch Caribbean. Not only
has the software application taken
Sagicor’s effective AML/CFT risk-
based approach and methodology
and converted it to a software
programme, but it has saved the
company thousands of dollars in
licensing fees. Nigel also contributes
to the field of AML/CFT in Barbados,
and is a founding Board Member of the
Barbados Chapter of the Association of
Anti-money Laundering Specialists.
44
Sagicor Spirit Employee of the Year &
Sagicorian Employee of the Year
Sagicor Life Inc
Sagicor Spirit Manager of the Year
Sagicor Life Inc & Joint Sagicorian
Manager of the Year
Group Contributor of the Year
Trinidad and Tobago
Sagicorian Manager of the Year
SUSA
Tamara David is being recognized for
her commitment to excellence and
her desire to see Sagicor excel. She
was integral to the success of several
customer service initiatives in 2019,
having been involved in customer
experience training, leadership and
staff development, the launch of the
Contact Centre–Live Chat, as well
as our customer loyalty initiatives.
Tamara developed her own personal
social responsibility project, “Hair 2
Care”, in which friends and family use
their talents to style children’s hair
while engaging them in wholesome
conversations and delivering life-
enhancing presentations. The
programme also provides food
to the less fortunate in needy
Barbadian communities.
Kenrick Austin is being recognised for
his leadership on several important
projects during the year 2019, as his
hands-on approach to leadership and
willingness to go above and beyond
the call of duty ensured success upon
completion. Kenrick Austin is also a role
model in the Policy Administration and
Customer Service areas in SLI Southern
Caribbean. He consistently exceeds
expectations in his efforts to ensure
the satisfaction of both internal and
external customers, and he has been
a keen resource in dealing with clients
and regulators throughout the English
and Dutch Caribbean.
Sergio Smith is a top performer among
our team in Trinidad and Tobago. Since
being named Employee of the Year in
2016, he has continued to demonstrate
his commitment to the company’s
vision, values and business goals. He
is a professional whose strong affinity
for team work and collaboration has
helped to create a positive culture for
all those who interact with him.
Rohit Pagey has been an instrumental
systems developer for the Sage Secure,
MYGA, IUL, Peace Assured and Wealth
Care Products that contributed to
our record sales in 2019. He is being
recognised as a great leader who does
an amazing job inspiring his teams
across the group, both onshore and
offshore. Rohit epitomises the Sagicor
Spirit through his dedication to work
and to the community, as demonstrated
through his active engagement with
our partnering charity organisations.
INNOVATION & TECHNOLOGY
45
TECHNOLOGY
Sagicor IT Response to COVID-19
COVID-19 served as a catalyst for
transformational shifts across our
markets as well as our lines of
business, prompting swift responses
from Sagicor Information Technology
Shared Services (Sagicor IT).
Improving organisational velocity has
long been a hallmark of Sagicor IT’s
mission, and value was brought to
both customers and internal business
partners alike through the roll out of
new technologies.
Working closely with business
leadership, Sagicor IT pressed the
accelerator on e-commerce initiatives,
while successfully repositioning more
than 4,000 team members across our
network of countries to be able to
work from home within a two-week
window. This required deployment
of next-generation collaboration
tools, enhanced information security
measures, user training and robust
technical support services.
To support customer safety and
meet social distancing requirements,
mechanisms for accepting credit
card payments were introduced and
deployed across our websites, client
portals, and at branch locations.
Our range of electronic applications
was extended to include more
products, reducing the need for paper
transactions and further minimising
personal contact. Underwriting rules
were automated to enable greater
throughput, and internal processes
were adapted to enable the use of
digital signatures.
A number of business processes were
modified to assist consumers. Every
effort was made to facilitate client
payments, and both the website portal
and the Sagicor Go! app proved to
be convenient options. Following the
company’s decision to offer payment
moratoria to clients, changes were
developed to ease policy lapse
rules, as well as the lapse grace
period. Additionally, processes and
systems were revised to accept tele-
medicine claims.
All these changes and innovations
required tight coordination, fast
cadence, and strong teamwork across
IT members based in Barbados,
Trinidad, Jamaica, and USA, as well
as third party resources in India and
North America.
Workflow Remains a Focus
Workflow tools underpin Sagicor’s
virtual Branch Network, which
allows customer-driven activities to
start in their country of origin, but
be processed in any other Sagicor
jurisdiction. This approach to “cross-
skilling” the branch and back-office
workforce on new business and policy
management activities allowed for
better workload balancing, as non-peak
tasks began to be addressed outside
of peak volume periods. Analytics
indicate that workflow technology
was successfully leveraged during the
year, resulting in increased operational
efficiency, reduced paperwork, and
enhanced customer experience.
For Sagicor Investments Trinidad and
Tobago Limited, IT process analysis
teams worked closely with business
users, third party vendors, internal
software developers and integration
specialists to create a highly automated
production platform that initially
removed almost 70% of manual tasks,
with further streamlining expected.
Technology Reuse
Technology reuse continues to be
an important pillar of Sagicor’s IT
community, as seen in the evolution
of the Client Experience Portal (CXP).
A modular platform, the CXP was
initially designed, developed, and
deployed for the Employee Benefits
Division in Jamaica to provide a client
with consolidated view to an array of
services. However, its modular design
and flexibility allowed it to easily
be adapted for Individual Life and
Annuities, Individual Health, General
Insurance, Mortgages and online
motor claims. Other enhancements
included the addition of electronic
payment facilities, and the granting
of permissions to Sagicor General
partners (brokers, roadside assistance
and police) which allowed them
to access claims and insurance
coverage details.
Sagicor USA Automation
In the USA, there were significant
workflow changes as well as new
features to our life administration
platform. The validation of agent
training for annuity apps was
automated, and shortly after
implementation, 1,120 Annuity e-apps
were received, and work effort was
reduced by 93 hours. Additionally, the
processing time of e-apps was also
accelerated. New tools were created
to provide a better and more secure
way for agents to upload documents
and move them through all the stages
of the application process. These tools
were easily customised and placed
on the Sagicor public website, client
website, and producer website.
Measure What You Manage
Dynamic dashboards were created
to monitor performance of the new
initiatives, such as tracking sales and
daily production, as well as various
customer metrics for key transactions.
MANAGEMENT
DISCUSSION &
ANALYSIS
Introduction and Notice
The principal activities of the Sagicor Group are as follows:
47
This Management’s Discussion and Analysis (“MD&A”) contains important
information about Sagicor’s business and its performance for the three-month
period and year ended December 31, 2020 with comparative analysis for the
corresponding periods ended December 31, 2019. This MD&A should be read
in conjunction with the Company’s annual financial statements, prepared in
accordance with International Financial Reporting Standards (IFRS), in effect on
the date of such information.
The following discussion is based on the financial condition and results of
operations of Sagicor, unless otherwise specified or indicated. Financial
information is presented in millions of US dollars, unless otherwise indicated.
Amounts for subtotals, totals and percentage variances included in tables in this
MD&A may not sum or calculate using the numbers as they appear in the tables
due to rounding.
Legal Constitution and General Information
Sagicor Financial Company Ltd. (“Sagicor”) (“the Company”) (TSX: SFC) is
a leading financial services provider in the Caribbean, with over 180 years of
history. Sagicor’s registered office is located at Clarendon House, 2 Church
Street, Hamilton, HM 11, Bermuda, with its principal office located at Cecil F De
Caires Building, Wildey, St. Michael, Barbados.
On November 27, 2018, Sagicor Financial Corporation Limited entered
into a definitive arrangement agreement as amended on January 28, 2019
with Alignvest Acquisition II Corporation (“Alignvest”) pursuant to which
on December 5, 2019, Alignvest acquired all the shares of Sagicor by way
of a scheme of arrangement under the laws of Bermuda, where Sagicor is
incorporated, and continued as Sagicor Financial Company Ltd.
The Company’s issued common shares are listed on the Toronto Stock Exchange.
Sagicor Financial Company Ltd. and its subsidiaries (“the Group”) operate
across the Caribbean and in the United States of America (USA). Details of
Sagicor’s holdings and operations are set out in notes 4 and 38 to the 2020
financial statements.
• Life and health insurance,
• Annuities and pension administration services,
• Banking and investment management services,
and its principal operating companies are as follows:
• Sagicor Life Inc. (Barbados and Trinidad & Tobago),
• Sagicor Life Jamaica Limited (Jamaica),
• Sagicor Bank Jamaica Limited (Jamaica),
• Sagicor Life Insurance Company (USA).
The Group also underwrites property and casualty insurance and provides
hospitality services.
Result of Operations
An understanding of Sagicor’s financial condition and the results and related
risks of Sagicor’s operations for the periods discussed in this MD&A requires
an understanding of Sagicor’s business. Accordingly, the following discussion
should be read in conjunction with the discussion of these and related matters
that appear elsewhere in this MD&A, including under the following headings: (i)
Key Factors Affecting Results; (ii) Critical Accounting Estimates and Judgments;
and (iii) Risk Management.
Non-IFRS Financial Information
Sagicor reports its financial results and statements in accordance with IFRS. It
also publishes certain financial measures that are not based on IFRS (non-IFRS).
A financial measure is considered a non-IFRS measure if it is presented other
than in accordance with the generally accepted accounting principles used for
the Group’s audited financial statements. These non-IFRS financial measures
are often accompanied by and reconciled with IFRS financial measures. For
certain non-IFRS financial measures, there are no directly comparable amounts
under IFRS. The Group believes that these non-IFRS financial measures provide
additional information to better understand the Group’s financial results and
assess its growth and earnings potential. Since non-IFRS financial measures do
not have standardised definitions and meanings, they may differ from the non-
IFRS financial measures used by other institutions and should not be viewed as
an alternative to measures of financial performance determined in accordance
with IFRS. The Group strongly encourages investors to review its financial
statements and other publicly filed reports in their entirety and not to rely on any
single financial measure.
48
Sagicor believes that certain non-IFRS measures described below are more
reflective of its ongoing operating results and provide readers with a better
understanding of management’s perspective on the Group’s performance. These
measures enhance the comparability of the Group’s financial performance from
period to period, as well as measure relative contribution to shareholder value.
The following represent non-IFRS financial measures:
1. Return on Shareholders’ Equity
IFRS does not prescribe the calculation of return on shareholders’ equity and
therefore a comparable measure under IFRS is not available. To determine this
measure, reported net income/(loss) attributable to shareholders is divided by
the total weighted average common shareholders’ equity for the period. The
quarterly return on shareholders’ equity is annualised.
2. Return on Total Equity
expected to establish and meet an internal target greater than 150%. Refer to
note 46.2 to the 2020 audited financial statements, for details.
6. Debt to capital ratio
The debt to capital ratio is the ratio of notes and loans payable (refer to note
16 to the 2020 audited annual financial statements) to total capital (excluding
Participating accounts), where capital is defined as the sum of notes and loans
payable and total equity excluding Participating accounts. This ratio measures
the proportion of debt a company uses to finance its operations as compared
with its capital.
7. Debt to equity ratio
The debt to equity ratio is the ratio of notes and loans payable (refer to note
16 to the 2020 audited annual financial statements) to total equity (excluding
Participating accounts). This ratio measures the proportion of debt a company
uses to finance its operations as compared with its equity.
IFRS does not prescribe the calculation of return on total equity and therefore
a comparable measure under IFRS is not available. To determine this measure,
reported group net income/(loss) is divided by the weighted average total equity
for the period. The quarterly return on total equity is annualised.
8. Dividend pay-out ratio
This is the ratio of dividends paid per share to basic earnings per common share.
3. Return on Investments
9. Health claims ratio
IFRS does not prescribe the calculation of return on Investments therefore
a comparable measure under IFRS is not available. Return on investments
measures the return on the investments relative to the value of the investments
for a period. To determine this measure, two times investment income is divided
by the opening financial investments plus the closing financial investments minus
the investment income for the period.
4. Book value per share
To determine the book value per share, shareholders’ equity is divided by the
number of shares outstanding at the period end, net of any treasury shares.
5. Minimum Continuing Capital and Surplus Requirements (MCCSR)
This is the ratio of net health claims including the provision for incurred but not
reported claims, divided by net health premiums revenue earned for the period
under review. The ratio seeks to measure health claims as a percentage of
premium income.
Cautionary Statement Regarding Forward-Looking Information
This MD&A includes “forward-looking information” and “forward-looking
statements” (collectively “forward-looking information”) and assumptions
about, among other things, Sagicor’s business, operations, and financial
performance and condition, approved by the board of directors of Sagicor on
the date of this MD&A.
The MCCSR is a capital adequacy measure for life insurance companies that was
established by the Office of the Superintendent of Financial Institutions Canada
(“OSFI”). It was used to monitor that insurers maintain adequate capital to meet
their financial obligations with 150% being the minimum standard that was
recommended by Canadian regulators when it was in effect; companies were
This forward-looking information and these assumptions include, but are not
limited to, statements about Group’s objectives and strategies to achieve those
objectives, and about its beliefs, plans, expectations, anticipations, estimates,
or intentions. Information included in this MD&A that is not a statement of
historical fact is forward-looking information. When used in this MD&A, words
such as “believes,” “may,” “will,” “estimate,” “should,” “shall,” “plans,” “assumes,”
49
“continue,” “outlook,” “could,” “anticipates,” “intends,” “expects,” and words of
similar import, are intended to identify statements containing forward-looking
statements. These statements appear throughout this MD&A. Such forward-
looking statements are based on Sagicor’s estimates, assumptions, strategies
and projections and subject to known and unknown risks, uncertainties and
other factors, all of which are difficult to predict and many of which are beyond
its control and which may cause actual results, events or developments to be
significantly different from any future results, events or developments expressed
or implied by such forward-looking statements.
Risk factors include, but are not limited to, the following: fluctuations in the
fixed income markets may adversely affect Sagicor’s profitability and financial
condition; the success of Sagicor’s operations in the United States depends
on Sagicor’s ability to grow its business; Sagicor’s financial targets may prove
materially inaccurate or incorrect; Sagicor’s exposure to the credit risk of its
counterparties could adversely affect its profitability; differences between actual
claims experience and estimated claims at the time the product was priced may
result in increased losses, and so Sagicor’s policy reserves may be insufficient
to cover actual policy benefits; Sagicor could be forced to sell investments at a
loss to cover policyholder withdrawals; Sagicor’s risk management policies and
procedures could leave Sagicor exposed to unidentified or unanticipated risks,
which could negatively affect Sagicor’s business or result in losses; illiquidity
of certain investment assets may prevent Sagicor from selling investments
at fair prices in a timely manner; Sagicor’s fiduciary relationship with certain
counterparties could adversely affect its profitability; a prolonged labour
dispute could hurt Sagicor’s business; disease outbreaks may negatively
impact the performance of Sagicor and its subsidiaries; a failure to successfully
integrate Sagicor’s acquisitions could adversely affect Sagicor’s operations
and profitability; a failure to successfully execute current and future strategic
acquisitions could adversely affect Sagicor’s profitability; Sagicor’s business is
highly regulated and subject to numerous laws and regulations; litigation and
regulatory proceedings outcomes could adversely affect Sagicor’s business;
companies in the financial services industry are sometimes the target of law
enforcement investigations and the focus of increased regulatory scrutiny;
there may be adverse consequences if the status of Sagicor’s independent
contractors is successfully challenged; failures to implement or comply with
legally required anti-money laundering practices could subject Sagicor to
sanctions and/or criminal and civil penalties; the amount of statutory capital that
Sagicor’s insurance subsidiaries have and the amount of statutory capital that
they must hold to maintain their financial strength and credit ratings and meet
other requirements can vary significantly from time to time and are sensitive
to factors outside of Sagicor’s control; a failure to maintain adequate levels of
surplus capital may result in increased regulatory scrutiny or a downgrade by the
private rating agencies; Sagicor’s financial condition may be adversely affected
by geopolitical events; Sagicor operates in a highly competitive industry; Sagicor
faces significant competition mainly from national and regional insurance
companies and from self-insurance, and Sagicor also faces competition from
global companies – this competition could limit Sagicor’s ability to gain or
maintain its position in the industry and could materially adversely affect its
business, financial condition and results of operations; brokers that sell Sagicor’s
products may sell insurance products of Sagicor’s competitors and such brokers
may choose not to sell Sagicor’s products; computer viruses, network security
breaches, disasters or other unanticipated events could affect Sagicor’s data
processing systems or those of its business partners and could damage Sagicor’s
business and adversely affect its financial condition and results of operations; a
financial strength downgrade in Sagicor’s A.M. Best ratings or any other negative
action by a rating agency may increase policy surrenders and withdrawals,
adversely affect relationships with advisors and negatively affect Sagicor’s
financial condition and results of operations; the unpredictable nature of the
property and casualty insurance industry may cause fluctuations in Sagicor’s
results; Sagicor may be unable to reinsure risks on terms that are commercially
reasonable or satisfactory to Sagicor, or Sagicor’s reinsurers may fail to meet
assumed obligations, increase rates, or be subject to adverse developments,
negatively affecting Sagicor’s business, financial condition and result of
operations; Sagicor’s business model depends on the performance of various
third parties including actuarial consultants and other service providers; negative
publicity in the insurance industry could adversely affect Sagicor; Sagicor
depends on key personnel, and if they were to leave Sagicor, Sagicor might
have an insufficient number of qualified employees; Sagicor is highly dependent
upon economic, political and other conditions and developments in Barbados,
Jamaica, Trinidad and Tobago, the United States and the other jurisdictions in
which it operates; Sagicor’s financial condition and operating results may be
adversely affected by foreign exchange fluctuations; foreign exchange controls
may restrict Sagicor’s ability to receive distributions from its subsidiaries and
any such distributions may be subject to foreign withholding taxes; catastrophes
and weather-related events, such as hurricanes, may adversely affect Sagicor;
disease outbreaks may negatively impact the performance of Sagicor and
its subsidiaries; the performance of Sagicor’s group life insurance may be
adversely affected by the characteristics of the employees insured or through
unexpected catastrophic events such as natural disasters; Sagicor’s credit ratings
may be reduced, which may adversely affect Sagicor; Sagicor may be subject
to Bermuda tax; Bermuda’s compliance with the Organization for Economic
Cooperation and Development international tax standards could subject Sagicor
to additional taxes; legislation enacted in Bermuda in response to the European
Union’s review of harmful tax competition could adversely affect Sagicor’s
operations and financial condition; any additional taxes resulting from changes to
tax regulations or the interpretation thereof in countries in which it does business
could negatively impact Sagicor’s financial condition; Sagicor Financial Company
50
Ltd. is a holding company and is dependent upon distributions from subsidiaries
to pay taxes and other expenses.
Table of Contents
Additional information about material risk factors that could cause actual results
to differ materially from expectations and about material factors or assumptions
applied in making forward-looking statements may be found in this MD&A under
“Risk Management”, “Key Factors Affecting Results,” and “Critical Accounting
Estimates and Judgements” and in the “Financial Risk” and “Insurance Risk”
notes to the consolidated financial statements. The forward-looking statements
in this document are, unless otherwise indicated, stated as of the date hereof and
are presented for the purpose of assisting investors and others in understanding
our financial position and results of operations, our future operations, as well
as our objectives and strategic priorities, and may not be appropriate for other
purposes. We do not undertake to update any forward-looking statements,
except as required by law.
Additional Information
All documents related to the financial results of Sagicor Financial Company Ltd.
are available on the Company’s website at Sagicor.com, in the Investor Relations
section. Additional information about Sagicor may be found on the SEDAR
website at sedar.com, as well as the Company’s Annual Information Form, which
may be found on the Company’s website or the SEDAR website.
The Management’s Discussion and Analysis is dated March 30, 2021.
1.
2.
3.
4.
5.
6.
7.
8.
HIGHLIGHTS
PROFITABILITY
ANALYSIS BY BUSINESS SEGMENT
FINANCIAL POSITION
FINANCIAL INVESTMENTS
RISK MANAGEMENT
ADDITIONAL FINANCIAL INFORMATION
HISTORICAL FINANCIAL DISCLOSURES
Page
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59
80
96
107
110
123
127
51
1. HIGHLIGHTS
The Group’s financial results for the year ended December 31, 2020 were
materially affected by COVID-19. On March 11, 2020 the World Health
Organisation declared the emergence of COVID-19 coronavirus, a global
pandemic. As a response to this public health emergency, governments
around the world have made significant interventions in responding to this
threat. Most Caribbean countries have experienced periods of shut down and
periods of significantly reduced air and sea traffic. Similar procedures have also
been implemented in the United States, Canada and elsewhere. In addition,
Governments have implemented various forms of public lockdowns which
have largely curtailed economic and social activity during the year. Companies
have therefore implemented work from home policies in response to these
restrictions. Sagicor, like other companies has had to focus on supporting our
staff, customers and suppliers, while developing responses to the business
disruption. The Group has made significant efforts to stabilize revenues while
maintaining customer service levels. During the three-month period ended
December 31, 2020 there have been attempts to modify and relax some of the
restrictions implemented earlier in the year, however some countries experienced
potential second wave of infections which reduced the ability to modify these
restrictions. As a consequence, many of the restrictions have continued with
a dampening impact on economic activity. The overall impact of COVID-19 is
still evolving and there have been developments in research which have yielded
new drugs to fight the pandemic. The ultimate success of the actions taken by
Governments, businesses and communities and the ultimate outcomes may vary
by country as new medical tools and drugs are developed.
Against this backdrop the Sagicor Group recorded net income of US $ 14.4
million for the three months ended December 31, 2020, compared to net income
of US $24.5 million for the same period in 2019. Net income from continuing
operations attributable to common shareholders was US $29.0 million compared
to net income US $11.5 million, for the same period in the prior year. The main
contributing factors to the financial performance during the three-month period
were the normalisation of new business sales levels across all our geographies,
and the positive impact of our asset optimisation efforts in our Sagicor Life
segment which gave rise to a release in actuarial liabilities. These positive
developments were offset by a further strengthening of reserves for forward-
looking assumptions in our United States subsidiary, and group net income
was affected by our share of net loss and impairment related to our associated
company investment in Playa Hotels & Resorts due to the economic environment
occasioned by the pandemic.
period in 2019. Net loss from continuing operations attributable to common
shareholders was US $3.6 million compared to net income US $44.0 million,
for the same period in the prior year. The main contributing factors to the net
loss were slower new business sales in the first half of 2020, higher Expected
Credit Losses (ECLs), the strengthening of our actuarial liabilities within our
USA segment and in the case of Group net income, our share of net loss and
impairment related to our associated company investment in Playa Hotels &
Resorts, all due to the economic environment occasioned by the pandemic.
The Group was also impacted by net mark-to-market losses as a result of the
markets’ response to COVID-19 coupled with declines in fees and other revenues
associated with the hospitality and banking businesses.
Group capital remains strong, with the Group closing 2020 with a Minimum
Continuing Capital and Surplus Requirement (MCCSR) of 252%, well above our
target capital standards.
About Sagicor
Established in 1840 as The Barbados Mutual Life Assurance Society, Sagicor is
one of the oldest providers of insurance in the Americas. Sagicor offers a wide
range of products and services including life and health insurance, annuities,
pension administration, property and casualty insurance, asset management,
investment and merchant banking, securities brokerage, mutual funds and real
estate development, and commercial banking. Sagicor’s principal markets are
Barbados, Jamaica, Trinidad and Tobago, and the United States of America.
Sagicor demutualised in November 2002 and listed its shares on the Barbados
Stock Exchange (BSE: SFC), with subsequent listings on the Trinidad and Tobago
Stock Exchange (TTSE: SFC) and the London Stock Exchange (LSE: SFI). Sagicor
Financial Corporation moved its corporate domicile from Barbados to Bermuda
and continued as Sagicor Financial Corporation Limited (SFCL), an exempted
company, on July 20, 2016.
As a result of its completed business combination with Alignvest Acquisition II
Corporation (AQY) on December 5, 2019, the new Sagicor, known as Sagicor
Financial Company Ltd., now trades on the Toronto Stock Exchange under the
new symbols “SFC” and “SFC.WT”. With a listing on the Toronto Stock Exchange,
Sagicor Financial Corporation Limited’s common shares, formerly listed on the
London Stock Exchange, have ceased trading and have been delisted from the
London Stock Exchange. Former listings on the Barbados and the Trinidad and
Tobago Stock Exchanges have ceased trading and applications for delisting have
been submitted.
Sagicor Group recorded a net loss of US $15.1 million for the year ended
December 31, 2020, compared to net income of US $104.1 million for the same
Sagicor currently operates in 20 countries and maintains a strong market
position in most of the markets where it operates.
52
Sagicor operates its business primarily through its three reporting operating
segments, namely Sagicor Life, Sagicor Jamaica, and Sagicor Life USA.
Financial Summary
Sagicor’s objective is to be a leading insurance and financial services provider
of world class products and services to better serve its customers and other
stakeholders in its markets. Sagicor is expanding its banking and asset
management business in the Caribbean, where it has strong brand recognition
and market shares.
REVENUE BY GEOGRAPHICAL SEGMENTS
For the year ended December 31, 2020
The summary consolidated financial data is derived from the audited annual
financial statements, for each of the periods indicated on the following table.
On December 5, 2019 Sagicor and Alignvest announced they had completed
the business combination involving the transfer of all issued and outstanding
shares in Sagicor to Alignvest. This transaction raised over US $450 million in
new capital for the Group. As a result of the completion of the transaction, all
issued and outstanding shares in Sagicor were transferred to Alignvest, with
former shareholders of Sagicor receiving cash or shares in Alignvest, which
was renamed Sagicor Financial Company Ltd. and trades on the Toronto Stock
Exchange under the symbol SFC.
USA - 36%
Barbados - 10%
Jamaica - 31%
Trinidad & Tobago - 14%
Other Caribbean - 9%
Under the Alignvest transaction, Sagicor Financial Corporation Limited
common shares (other than those purchased for cash), were exchanged for
common shares of Sagicor Financial Company Ltd. on an exchange ratio of one
Sagicor Financial Company Ltd. common share for 4.328 of Sagicor Financial
Corporation Limited common shares (“Exchange Ratio”). This exchange ratio
has been used to convert the 2019 outstanding shares to the Sagicor Financial
Company Ltd. equivalent. All per share ratios for 2016 to 2019 have been
adjusted to reflect the Exchange Ratio.
DECEMBER 2020 REVENUE: US $1,878.4M
REVENUE BY LINE OF BUSINESS
For the year ended December 31, 2020
Other - 2%
Hospitality - 1%
Banking, investment management
and other financial services - 9%
Property and casualty
insurance - 4%
Life, health and annuity insurance
issued to groups - 16%
Life, health and annuity insurance
issued to individuals 68%
DECEMBER 2020 REVENUE: US $1,878.4M
(in millions of US $, unless otherwise noted)
2020
2019
Change
(in millions of US $, unless otherwise noted)
2020
2019
Change
Three months ended
December 31
53
Year ended
December 31
Profitability
Group net income
Group net income (a)
Group net income (a) (b)
Profitability
14.4
14.4
14.4
24.5
24.5
67.9
(41%)
(41%)
(79%)
Group net (loss)/income
Group net (loss)/income (a)
Group net (loss)/income (a) (b)
Net income (a) attributable to common
shareholders
Net income (a) (b) attributable to common
shareholders
29.0
11.5
152%
29.0
54.9
(47%)
Net (loss)/income (a) attributable to common
shareholders
Net (loss)/income (a) (b) attributable to
common shareholders
Earnings per share:
Basic earnings(a)
Basic earnings(a) (b)
Fully diluted (a)
Fully diluted (a) (b)
Return on shareholders’ equity (a)
19.8¢
N/A
19.6¢
N/A
10.8%
12.3¢
58.7¢
10.9¢
51.9¢
61%
N/A
80%
N/A
Earnings per share:
Basic earnings(a)
Basic earnings(a) (b)
Fully diluted (a)
Fully diluted (a) (b)
(15.1)
(15.1)
(15.1)
104.1
103.6
147.0
(115%)
(115%)
(110%)
(3.6)
44.0
(108%)
(3.6)
87.4
(104%)
(2.4 ¢)
N/A
(2.4 ¢)
N/A
57.5¢
114.3¢
54.1¢
107.5¢
(104%)
N/A
(104%)
N/A
6.2%
4.6 pts
Return on shareholders’ equity (a)
(0.3%)
6.8%
(7.1) pts
Return on shareholders’ equity (a) (b)
N/A
30.4%
N/A
Return on shareholders’ equity (a) (b)
N/A
14.0%
N/A
Growth
Revenue:
Growth
Revenue:
Individual life, health and annuity
512.6
288.5
Group life, health and annuity
Property and casualty insurance
Banking and investment management
Hospitality
Farming and unallocated revenues
81.6
18.3
45.0
4.4
12.6
78.7
23.5
54.9
11.3
14.8
Total revenue
674.5
471.7
78%
4%
(22%)
(18%)
(61%)
(15%)
43%
Individual life, health and annuity
1,270.7
1,214.8
Group life, health and annuity
Property and casualty insurance
Banking and investment management
Hospitality
Farming and unallocated revenues
304.8
82.3
171.2
14.3
35.1
317.9
61.9
192.2
41.7
38.8
Total revenue
1,878.4
1,867.3
5%
(4%)
33%
(11%)
(66%)
(10%)
1%
(a) From continuing operations. (b) Before listing expense and other transaction
costs incurred in 2019.
54
(in millions of US $, unless otherwise noted)
2020
2019
Change
(in millions of US $, unless otherwise noted)
2020
2019
Change
Three months ended
December 31
Year ended
December 31
Growth (continued)
Net premium revenue:
Life insurance
Annuity
Health insurance
Property and casualty insurance
Total net premium revenue
Assets from continuing operations
Total assets
Operating liabilities
Notes and loans payable
Book value per common share
Financial strength
Debt to capital ratio
Dividend pay-out ratio
Dividends paid per common share
Dividends paid per common share –
Converted using exchange ratio
118.5
337.4
42.3
12.7
111.8
125.5
45.2
18.0
510.9
300.5
9,266.3
8,728.9
9,266.3
8,728.9
7,136.5
6,461.4
471.6
$7.58
517.7
$7.81
6%
169%
(6%)
(29%)
70%
6%
6%
10%
(9%)
(3%)
22.2%
28.4%
5.6¢
N/A
22.8%
0.6 pts
87.8% (59.4) pts
2.5¢
10.8¢
N/A
N/A
Growth (continued)
Net premium revenue:
Life insurance
Annuity
Health insurance
Property and casualty insurance
Total net premium revenue
Assets from continuing operations
Total assets
Operating liabilities
Notes and loans payable
Book value per common share
Financial strength
Debt to capital ratio
Dividend pay-out ratio(a)
Dividends paid per common share
Dividends paid per common share –
Converted using exchange ratio
440.3
736.5
171.5
55.1
430.6
592.1
173.1
45.7
1,403.4
1,241.5
9,266.3
8,728.9
9,266.3
8,728.9
7,136.5
6,461.4
471.6
$7.58
517.7
$7.81
2%
24%
(1%)
21%
13%
6%
6%
10%
(9%)
(3%)
22.2%
-
22.5¢
N/A
22.8%
37.6%
5.0¢
21.6¢
0.6 pts
-
N/A
N/A
Total capital
2,128.2
2,266.3
Average common shares outstanding (000’s)
147,830
76,519
Outstanding shares, at end of period (000’s)
146,381
147,839
MCCSR, at end of period
N/A
N/A
(6%)
93%
(1%)
N/A
(a) Profits were negative during the period.
Total capital
2,128.2
2,266.3
Average common shares outstanding (000’s)
147,830
76,519
Outstanding shares, at end of period (000’s)
146,381
147,839
MCCSR, at end of period
252%
253%
(6%)
93%
(1%)
(1) pt
55
Profitability
The Sagicor Group recorded a net loss of US $15.1 million for the year ended
December 31, 2020, compared to net income before listing and other transaction
costs of US $147.0 million reported for the same period in 2019. Net loss from
continuing operations attributable to common shareholders, amounted to
US $3.6 million compared to net income before listing expense and other
transaction costs of US $87.4 million for the corresponding period in 2019. Both
Group net income and income attributable to shareholders from continuing
operations were adversely affected by the impact of the COVID-19 pandemic
on the business. The main contributing factors to the net loss were slower than
expected new business generation in the first half of 2020, higher Expected
Credit Losses (ECLs), net mark-to-market losses, the strengthening of our
actuarial liabilities within our USA segment, associated with its forward-looking
assumptions and the long-term impact COVID-19 has had on the economic
policy and outlook in the USA and, for Group net income our share of net loss
and impairment related to our associated company investment in Playa Hotels &
Resorts, all due to the economic environment occasioned by the pandemic. The
Group was also impacted as a result of the markets’ response to COVID-19, as
well as declines in fees and other revenues associated with the hospitality and
banking businesses.
Earnings per share (basic) for the year ended December 31, 2020 was a loss
of $0.024 per share compared to a profit of US $1.143 per share (before listing
expense and other transaction costs), for the year December 31, 2019.
Profitability
(in millions of US $,
unless otherwise noted)
Group net income/
(loss) from continuing
operations (a)
Group net income/
(loss) from continuing
operations
Net income/(loss)
attributable to common
shareholders from
continuing operations (a)
Listing expense and other
transaction costs
Net income/(loss)
attributable to common
shareholders from
continuing operations
Earnings per common
share (EPS) – (basic)
Earnings per common
share (EPS) – (basic) (a)
Three months ended
December 31
Year ended
December 31
2020
2019 Change
2020
2019 Change
14.4
67.9
(79%)
(15.1)
147.0
(110%)
14.4
24.5
(41%)
(15.1)
103.6
(115%)
29.0
54.9
(47%)
(3.6)
87.4
(104%)
-
(43.4)
100%
-
(43.4)
100%
29.0
11.5
152%
(3.6)
44.0
(108%)
$0.198
$0.123
61% ($0.024) $0.575
(104%)
N/A $0.587
N/A
N/A $1.143
N/A
Refer to the Profitability section of this Management’s Discussion and Analysis
for additional information on the Company’s profitability for the year 2020.
(a) Before listing expense and other transaction costs incurred in 2019
Business Growth
Net premiums showed growth for the year ended December 31, 2020, however,
net investment income showed declines when compared to the same period
in the prior year. Net premium revenue grew 13% when compared to 2019
financial year, due in part to a significant increase in premium revenue in our USA
segment in the fourth quarter. Net investment income was impacted by mark-
to-market declines on our financial assets. These declines have impacted our
regional and our international portfolios and were largely a result of the capital
markets reaction to the COVID-19 pandemic. As a result, the Group closed the
year under review with total revenue growing by 1% when compared to the
same period in 2019. Total revenue also includes Credit impairment losses of
US $24.0 million for the year ended December 31, 2020 as the Group updated
its credit impairment assumptions for the COVID-19 economic environment. The
following table summarizes the revenue by operating segment.
56
Total Revenue by
Business Segment
Three months ended
December 31
Year ended
December 31
(in millions of US $,
unless otherwise noted)
Sagicor Life
Sagicor Jamaica
Sagicor Life USA
Head office, Other and
Adjustments
2020
190.6
177.1
295.0
2019 Change
2020
2019 Change
162.2
194.2
103.0
18% 523.3
(9%) 631.9
186% 679.0
533.3
735.3
561.5
(2%)
(14%)
21%
19%
1%
11.8
12.3
(4%)
44.2
37.2
Total revenue
674.5
471.7
43% 1,878.4 1,867.3
Refer to the sections that follow for more information on business growth.
Financial Strength
The consolidated Minimum Continuing Capital and Surplus Requirement (MCCSR
- a Canadian risk-based assessment measure), for the life insurers of the Sagicor
Group as of December 31, 2020 has been estimated at 252% (December 31, 2019
- 253%).
The debt to capital ratio was 22.2% as at December 31, 2020 compared 22.8% at
December 31, 2019.
As of December 31, 2020, capital resources declined to US $2,128.2 million
compared to US $2,266.3 million reported at the end of December 2019, a
reduction of US $138.1 million. Capital resources, which comprises shareholder’s
equity, notes and loans payable, and non-controlling interest, was largely driven
by marked-to-market declines of our financial asset in response to the COVID-19
pandemic, coupled with declines in operating income being reported. During
the year, the distribution of dividends to shareholders and a reduction to notes
and loans payable also impacted capital resources. Non-controlling interests at
December 31, 2020 were lower than reported in the prior year.
For detailed comments on financial strength, refer to the Financial Position
section of the Management’s Discussion and Analysis.
Dividends
On February 3, 2020, the Board of Directors declared a dividend of US $0.05625
per share, on issued and outstanding common shares held by registered holders
on record at the close of business on February 10, 2020. This dividend was paid
on February 28, 2020.
On April 24, 2020, the Board of Directors declared a dividend of US $0.05625
per share, on issued and outstanding common shares held by registered holders
on record at the close of business on May 5, 2020. The dividend was paid on May
29, 2020.
On August 14, 2020, the Board of Directors declared a dividend of US $0.05625
per share, on issued and outstanding common shares held by registered holders
on record at the close of business on August 28, 2020. The dividend was paid on
September 18, 2020.
On November 14, 2020, the Board of Directors declared a dividend of US
$0.05625 per share, on issued and outstanding common shares held by
registered holders on record at the close of business on November 25, 2020. The
dividend was paid on December 16, 2020.
Quality of Investments
As of December 31, 2020, the Sagicor Group held US $7,238.6 million of
diversified financial assets, compared to US $6,685.6 at December 31, 2019,
an increase of US $553.0 million. The Group recorded net investment income
of US $330.9 million for the year ended December 31, 2020 compared to
US $419.8 million for the prior year. The annualized net investment return was
4.9% compared to 7.2% for the prior year, due to the impact of the market’s
reaction to the COVID 19 pandemic. Since becoming a public company in 2002,
Sagicor has had positive and stable investment portfolio performance. As at
December 31, 2020, Sagicor held US $5,230.3 million in debts securities (72% of
the total financial investments on hand). A summary of net investment income
for the three-month periods and years ended December 31, 2020 and 2019, is
shown below.
Investment Income
Summary
Three months ended
December 31
Year ended
December 31
(in millions of US $,
unless otherwise noted)
2020
2019 Change
2020
2019 Change
Interest income (AC)
Interest income (FVOCI)
45.7
34.5
44.3
35.7
3%
178.8
(3%)
136.0
175.5
132.5
2%
3%
Income from FVTPL
investments
40.4
28.3
43%
Other investment income
Investment expenses
0.7
(1.0)
0.1
600%
18.7
4.0
112.8
7.9
(83%)
(49%)
(0.7)
(43%)
(6.6)
(8.9)
26%
120.3
107.7
12% 330.9
419.8
(21%)
57
Litigation or Other Matters
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 to 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 the 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 $8.9 million
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.
(ii) Suit has been filed by an independent contractor against one of the
Group’s subsidiaries for breach of contract arising from an alleged
contractual agreement. The Claimant alleges that the company failed to
pursue initiatives contemplated by the contract with a third party and that
by not doing so, it caused the Claimant company significant losses which
they have estimated at over US $300.0 million. 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
favourable outcome.
Board of Directors
On October 30, 2020 the Board of Directors approved the re-appointment of Mr.
Monish Dutt to the board to fill the vacancy created by the death of Director Mr.
John Shettle. Mr. Dutt also serves as the chairman of the Audit Committee.
Changes to Accounting Policies in 2020
There were no new accounting standards adopted during the year ended
December 31, 2020. Refer to note 2 of the 2020 annual consolidated financial
statements included in pages 12 to 38.
Amendments to existing IFRS and IAS effective January 1, 2020
The Group has adopted the following amendments to IFRS and IAS:
IFRS 3 – Definition of a business, effective January 1, 2020
•
•
IAS 1 and IAS 8 – The definition of material, effective January 1, 2020
• Conceptual Framework for Financial Reporting, effective January 1, 2020
IFRS 9, IAS 39 and IFRS 7 – Interest Rate Benchmark Reform, effective
•
January 1, 2020
None of these amendments had a material effect on the Group’s financial
statements. Refer to note 2.1 of the 2020 annual financial statements for further
details on amendments to existing IFRS and IAS effective January 1, 2020.
Outlook for 2021
The Group’s outlook for 2021 continues to be clouded by the uncertain resolution
to the pandemic that was declared in March 2020. The Group’s financial results
in Q4 2020 continued to normalize with strong premium growth and further
recovery of asset values. However, the economies in which we operate continue
to be directly impacted by the lockdown in our markets and reduction in global
economic activity, including tourism, which affects our Caribbean economies
significantly. It is unclear when the pandemic will recede enough to fully open
the economies in which we operate. As such, we will continue to monitor the
situation and will resume providing specific guidance with respect to earnings
targets when the timing of economic recovery becomes more certain.
The composition of the Board of Directors has been disclosed in the Group’s
Management Discussion and Analysis for the year ended December 31, 2019. The
composition of the Board of Directors was changed on June 30, 2020 as follows:
Economic Environment
• Mr Monish Dutt and Mr Douglas (Rik) Parkhill resigned as directors of
the Company.
• Mr Gilbert Palter and Mr Jonathan Finkelstein were elected as directors of
the Company.
2020 was a challenging year for most developed and developing economies
as the Coronavirus plagued nations, enforced stringent lockdown measures
which constrained economic activity. Against this background, the International
Monetary Fund (IMF) estimated global growth for 2020 contracted by 3.5%.
Along this vein, the second estimates released by the Bureau of Economic
58
Analysis indicated real GDP for the USA declined by 3.5% in 2020. In December
2020, the unemployment rate for the USA stood at 6.7% compared to 3.6% in
December 2019 and 14.8% at the height of lockdown measures in April 2020.
From March 2020, the Federal Open Market Committee switched into a dovish
stance and implemented two interest rate cuts and continued to increase its
holdings of Treasury and agency mortgage-backed securities in the effort to
buffer the US economy from the ongoing pandemic. By the end of the year, the
West Texas Intermediate oil prices declined to approximately US $48 per barrel
from approximately US $61 per barrel at the end of 2019. However, during the
year, oil prices experienced substantial volatility as the demand and supply of oil
fluctuated significantly.
Despite economic activity in the Euro Area improving by 12.4% during the third
quarter, this growth was preceded by declines of 11.7% and 3.7% in the second
and first quarters, respectively. Economic activity in Japan also showed signs
of recovery in the third quarter and increased by 5.3% compared to a decline of
8.3% in the second quarter of 2020. Furthermore, the IMF estimated real GDP in
the Euro Area and Japan contracted by 7.2% and 5.1%, respectively in 2020. Like
most Central Banks, the Bank of England dropped its short-term interest rate to
0.25% on March 11, 2020 and one week later imposed a further reduction to 0.1%
where it was maintained for the remainder of the year. Japan’s short-term rates
remained unchanged at its highly accommodative rate of -0.1% during 2020.
During the first half of the year, equity markets plummeted, and many investors
sought safe haven assets. However, as Central Banks deployed accommodative
strategies and the progression in vaccine trials and distributions continued,
major international equity markets were buoyed and recovered these losses by
the end of the year. In the US market, the S&P 500 Index was up 18.40% for the
year. Similarly, the NASDAQ Composite Index and Dow Jones Industrial Average
Index were up 44.92% and 9.72%, respectively for 2020 and the MSCI Emerging
Market Index grew 18.31%. The 10-year treasury yield started 2020 at 1.88% and
ended the year at 0.93%, maintaining its downward trend from 2019.
The most recent data from the Eastern Caribbean Central Bank (ECCB)
projected the GDP for the Eastern Caribbean Currency Union (ECCU) was
expected to decline within the range of 10% and 20% in 2020. Moreover, the IMF
estimated GDP in the ECCU contracted by 16% in 2020. This double-digit decline
in GDP was hinged on the projected 67.7% contraction in the tourism industry.
Moreover, member governments of the ECCU recorded an aggregate decline of
16% in tax revenue during the first half of the year. According to the ECCB’s June
2020 Economic and Financial Review, the tourism industry for all members of
the ECCU is expected to revert to normal levels by the end of 2023 or the first
quarter of 2024.
Like most tourism dependent economies, economic growth in Barbados
exhibited a sharp decline in 2020 as arrivals were reduced by 71% for the year.
Preliminary estimates indicated real economic activity in Barbados contracted
by 17.6% during 2020. Nonetheless, the agricultural output for Barbados during
2020 increased by 1.9% in comparison to the previous year. At the end of 2020,
the international reserves for Barbados stood at BDS $2,661.9 million compared
to BDS $1,481.0 million at the end of 2019, expanding the country’s import cover
to 40.3 weeks. However, as the Government of Barbados acquired an aggregate
of BDS $968 million in economic policy (fiscal stabilization) loans during 2020
and the acute reality of the country’s constricted GDP during the year became
apparent, its previously downward trend of debt-to-GDP ratio was reversed.
At the end of the year, the debt-to-GDP ratio was up to 144.4% from its 2019
position of 120.2%. The most recent Economic Review from the Central Bank of
Barbados indicated the average unemployment rate in Barbados rose to 18.5% in
2020 from 10.1% in 2019. Moreover, inflation in Barbados trended downward to a
recorded value of 3.5% in 2020 compared to 4.1% in 2019.
Real economic activity in Trinidad and Tobago was adversely impacted in 2020.
The Ministry of Finance in Trinidad and Tobago indicated a widening of the
government’s budget deficit to 11.2% of GDP in FY2019/20 compared to 2.6% in
FY2018/19. Moreover, a deficit of TTD$ 1 billion was recorded for the first 3 months
of FY2020/21 (October – December 2020) compared to TTD$ 386.8 million
for the same period in FY2019/20. At the end of December 2020, Trinidad and
Tobago’s headline inflation was subdued to 0.8%. At the end of December 2020,
Trinidad and Tobago’s gross official reserves remained strong at approximately US
$6,953.8 million, equivalent to 8.5 months of prospective imports of goods and
services. The domestic stock market in Trinidad remained depressed for most of
the year and the Composite Price Index declined by 9.9% for the year 2020.
In the quarter ended September 2020, the Jamaica economy contracted by
10.7% compared to contractions of 18.4% and 2.3% in the second and first
quarters of 2020, respectively. The Bank of Jamaica’s latest forecasts of real
economic activity for the fiscal year 2020/21 estimated a contraction within
a range of 10 – 12%. From the onset of the pandemic, the Bank of Jamaica
embarked on accommodative strategies including the provision of JMD $76
billion in liquidity support via bond-buying initiates and a reduction of the
cash reserve requirements. Moreover, the Bank of Jamaica maintained its
accommodative policy rate at 0.5% for the entirety of 2020. Inflation of 6.4% was
recorded for the calendar year of 2020 in Jamaica. Jamaica’s unemployment
rate rose by 3.5 percentage points to 10.7% as at October 2020, compared to the
same period in 2019. The Jamaica Stock Exchange contracted 22.4% for 2020.
The fixed income market yields continued their downwards trend as the GOJ
180-day Treasury Bill declined to 0.86% at the end of 2020 from 1.60% at the end
of 2019.
59
2. PROFITABILITY
Highlights
The Sagicor Group recorded net loss attributable to common shareholders for
the year ended December 31, 2020 of US $3.6 million, compared to net income
of US $87.4 million (before listing expense and other transaction costs) reported
for the same period in 2019, a decrease of US $91.0 million. Return on equity for
the year 2020 was a loss of 0.3%, compared to 14.0% for 2019 (before listing
expense and other transaction costs). The Earnings per Share (EPS - basic)
moved similarly, closing at a loss of US $0.024 per share for the year compared
to earnings of US $1.143 per share for the prior year (before listing expense and
other transaction costs). These results have been largely driven by the impact
of COVID-19 pandemic as the Group experienced mark-to-market losses on
financial assets, credit impairment losses, declines in new business sales and
strengthening of our actuarial liabilities.
Net (loss)/income attributable to Common
shareholders from continuing operations
(in millions of US $, unless otherwise noted)
Sagicor Life
Sagicor Jamaica
Sagicor Life USA
Head office, Other and adjustments
Net (loss)/income before listing expense and
other transaction costs
Listing expense and other transaction costs
Net (loss)/income
Earnings per common share (EPS):
Year ended December 31
2020
47.7
50.5
(27.1)
(74.7)
2019
60.9
61.4
35.4
(70.3)
Change
(22%)
(18%)
(177%)
(6%)
(3.6)
87.4
(104%)
-
(3.6)
(43.4)
44.0
100%
(108%)
Basic
(2.4¢)
57.5 ¢
(104%)
Basic – excluding listing expense and other
transaction costs
Diluted
Diluted – excluding listing expense and
other transaction costs
Return on common shareholders’ equity
(ROE)
Return on common shareholders’ equity
(ROE) – excluding listing expense and other
transaction costs
N/A
114.3 ¢
N/A
(2.4¢)
54.1 ¢
(104%)
N/A
107.5 ¢
N/A
(0.3%)
6.8%
(7.1) pts
N/A
14.0%
N/A
Group net (loss)/ income for the year ended December 31, 2020 and December
31, 2019.
The table below summarises Sagicor’s net (loss)/income for the year ended
December 31, 2020 and 2019.
(in millions of US $)
Group net (loss)/income
Year ended December 31,
2020
2019
Change
Group net (loss)/income before listing expense
and other transaction costs
Listing expense and other transaction costs
Total
(15.1)
-
(15.1)
147.5
(43.4)
104.1
(110%)
100%
(115%)
Net (loss)/ income is attributable to
Common shareholders:
From continuing operations before listing
expense and other transaction costs
(3.6)
87.4
(104%)
Listing expense and other transaction costs
-
(43.4)
From total continuing operations
From discontinued operation
Participating policyholders
Non-controlling interest
Group net (loss)/income
(3.6)
-
(3.6)
1.4
(12.9)
(15.1)
44.0
0.5
44.5
(1.9)
61.5
104.1
100%
(108%)
(100%)
(108%)
174%
(121%)
(115%)
Group net losses amounted to US $15.1 million for the year ended December 31,
2020, compared to net income of US $147.5 million, excluding listing and other
transaction costs, in the prior year.
Net loss from continuing operations attributable to common shareholders,
closed the period at US $3.6 million compared to income of US $87.4 million
(excluding listing and other transaction costs) for the year 2019. Both Group
net loss and loss attributable to Shareholders from continuing operations, were
impacted by significant mark-to-market losses and credit impairment losses, as
capital markets responded adversely to the COVID-19 pandemic. In addition,
during the year, the group strengthened the actuarial liabilities within our
USA segment, associated with its forward-looking assumptions related to its
policy liabilities and the long-term impact COVID-19 has had on the economic
policy and outlook in the USA. An internal reinsurance transaction also resulted
60
in a strengthening of reserves in our U.S. operation (US $13.4 million). The
Group also experienced a positive impact from its asset optimisation efforts
(US $27.6 million). Group net income was also impacted by our share of net loss
and impairment related to our associated company investment in Playa Hotels
and Resorts, all due to the economic environment occasioned by the pandemic.
Net income from discontinued operation was nil for the year ended December
31, 2020 compared to income of US $0.5 million for the same period in 2019. On
February 12, 2019, The Group completed a review of the consideration related to
the price adjustments to December 31, 2018 and entered into a Deed of Release
to close off this exposure. The final settlement amount was received on February
26, 2019.
Group net (loss)/income from continuing operations
The table below summarises Sagicor’s net income from continuing operations for
the year ended December 31, 2020 and 2019.
Revenue
The following table summarises the main items of Sagicor’s revenue for the year
ended December 31, 2020 and December 31, 2019.
(in millions of US $)
Revenue
Net insurance premiums:
Life and annuity
Health
Property and casualty
Net investment income
Gain on derecognition of amortised cost
investments
Gain on derecognition of assets carried at
FVOCI
Year ended December 31
2020
2019
Change
1,878.4
1,867.3
(1,221.7)
(1,116.5)
(547.1)
(561.1)
(68.0)
(42.7)
Credit impairment losses
Fees and other revenue
Total
Total Revenue by Operating Segment
Sagicor Life
1%
(9%)
(3%)
3.0
(2,367%)
Sagicor Jamaica
(59.7)
28%
Sagicor Life USA
Head office, Other and Adjustments
Year ended December 31
2020
2019
Change
1,176.8
1,022.7
171.5
55.1
173.1
45.7
1,403.4
1,241.5
330.9
419.8
15%
(1%)
21%
13%
(21%)
8.9
12.9
(31%)
20.2
(24.0)
30.0
(4.9)
139.0
168.0
1,878.4
1,867.3
523.3
631.9
679.0
44.2
533.3
735.3
561.5
37.2
1,878.4
1,867.3
(33%)
(390%)
(17%)
1%
(2%)
(14%)
21%
19%
1%
(15.1)
-
147.0
(43.4)
(110%)
100%
(15.1)
103.6
(115%)
Total revenue from continuing operations reached US $1,878.4 million for the
year ended December 31, 2020, an increase of US $11.1 million (1%) from US
$1,867.3 million reported for the same period in 2019.
(in millions of US $)
Group net income from continuing
operations
Revenue
Benefits
Expenses
Other
Income taxes
Group net (losses)/income from continuing
operations before listing expense and other
transaction costs
Listing expense and other transaction costs
Group net (losses)/income from continuing
operations
REVENUE GROWTH BY OPERATING SEGMENT
$420.7
$585.9
$339.5
2018
$561.5
$735.3
$533.3
2019
$679.0
$631.9
$523.3
2020
61
income of US $330.9 million for the year ended December 31, 2020 compared
to US $419.8 million for the same period in 2019, a decrease of US $88.9 million.
The Group experienced mark-to-market losses on its financial assets. Overall, the
Group experienced realised and unrealised losses on financial assets categorised
as FVTPL of US $4.6 million, during the year, which largely related to equities
and equity indexed options in our USA and our Jamaica segments. In 2019,
the Group benefitted from US $95.7 million in realised and unrealised gains on
financial assets categorised as FVTPL.
The interest yields and returns achieved on financial investments are disclosed in
the following table.
s
n
o
i
l
l
i
m
$
S
U
Sagicor Life USA
Sagicor Jamaica
Sagicor Life
Net insurance premium revenue represented 75% (December 2019 – 66%) of
total revenue, and closed the year at US $1,403.4 million, US $161.9 million (13%)
above the amount of US $1,241.5 million reported for the same period in 2019.
Net premium revenue from the life and annuity insurance business totalled US
$1,176.8 million for the year ended December 31, 2020, compared to US $1,022.7
million for the same period in 2019, an increase of US $154.1 million. Net premium
revenue in our Sagicor Life USA segment grew US $152.4 million or 34% during
the year and is consistent with our strategy to increase sales production in this
segment. The Group was able to maintain reasonable sales of new insurance
business notwithstanding the reduced economic activity occasioned by the
COVID-19 pandemic. Our Sagicor Life segment also reported moderate growth
however the impact was reduced by a moderate decline observed in our Jamaica
segment due to the changing interest rate environment.
Net premium revenue from health insurance business totalled
US $171.5 million for the year ended December 31, 2020, a modest decline from
the US $173.1 million reported in 2019. Net premium revenue from property
and casualty insurance totalled US $55.1 million for the year under review, a
US $9.4 million or 21% increase from US $45.7 million for the same period in
2019. Net premium revenue from property and casualty insurance includes net
premiums of US $18.4 million (2019 – US $8.0 million) related to the general
insurance business - Advantage General Insurance Company Limited, acquired
on September 30, 2019, in our Jamaica segment.
Both regional and international capital markets responded adversely to the
uncertainty occasioned by the COVID-19 pandemic, resulting in net investment
Interest yields
Debt securities
Mortgage loans
Policy loans
Finance loans and leases
Securities purchased for resale
Deposits
Year ended December 31
2020
2019
4.6%
5.8%
7.5%
11.2%
2.4%
1.0%
5.1%
6.0%
7.3%
11.6%
6.2%
1.6%
The Group generated Fees and other revenues of US $139.0 million for the year
ended December 31, 2020, compared to US $168.0 million for the prior year,
a decrease of US $29.0 million. The Group recorded lower hotel revenues (US
$22.6 million), a direct consequence of the travel restrictions associated with the
COVID-19 pandemic.
Benefits
Benefits totalled US $1,221.7 million in for the year ended December 31, 2020,
a US $105.2 million or 9% increase from US $1,116.5 million reported in 2019.
The increase in benefits (which include actuarial provisions for future benefits)
reflects and is consistent with higher premium revenue in our Sagicor Life USA
segment and was offset by a net reduction in actuarial provisions updated during
the year in our Jamaica Segment coupled with reductions in actuarial provisions
associated with asset optimisation efforts in our Sagicor Life segment.
The following table summarises the benefits provided by Sagicor to holders
of insurance contracts, investment contracts and deposit and security liability
contracts for the years ended December 31, 2020 and 2019.
62
(in millions of US $)
Benefits
Net insurance benefits:
Life and annuity
Health
Property and casualty
Interest cost
Total
Year ended December 31,
2020
2019
Change
review (US $7.5 million). Taking this into consideration there was an overall
reduction in benefits of US $6.3 million. The improvement in general insurance
claims was largely associated with a reduction in motor claims a direct impact of
movement restrictions associated with the COVID-19 pandemic.
1,017.7
900.0
132.9
28.2
135.3
27.0
1,178.8
1,062.3
42.9
1,221.7
54.2
1,116.5
(13%)
2%
(4%)
(11%)
21%
(9%)
Interest expense totalled US $42.9 million for year ended December 31, 2020,
a decrease from the US $54.2 million reported for the same period in 2019 and
represented lower investment returns paid on contracts due to the current
investment and economic environment.
The following table summarises the interest returns to holders of insurance
contracts, investment contracts and deposit and security liability contracts.
Life and annuity benefits totalled US $1,017.7 million for the year ended
December 31, 2020 of which US $486.5 million related to current benefits and
US $531.2 million related to future benefits. The amounts for the corresponding
period in 2019 were a total of US $900.0 million, of which US $414.6 million
related to current benefits and US $485.4 million related to future benefits.
The change in provision for future benefits from 2019 to 2020 represented an
increase of US $45.8 million.
The change in the future benefits for 2020 comprise primarily of the following:
Interest yields
Investment contracts
Other funding instruments
Customer deposits
Securities sold for repurchase loans and leases
Year ended December 31
2020
2019
2.8%
0.9%
1.2%
2.3%
2.6%
2.3%
1.3%
3.0%
(in millions of US $)
2020
Increase/(decrease)
Expenses and taxes
Expenses and taxes totalled US $603.8 million for the year ended December
31, 2020, down US $3.0 million from the amount reported for the same period
in 2019 (before listing expense and other transaction costs). The table below
summarises Sagicor’s expenses and taxes from continuing operations for the
years ended December 31, 2020 and 2019.
New business - Sagicor Life USA
Update of Actuarial Assumptions - Sagicor Jamaica
Impact of reinsurance agreement - Sagicor USA
Update of forward-looking assumptions - Sagicor USA
Impact of asset optimisation Sagicor Life
Significant premium annuity – Sagicor Life
Other
Total
548.0
(43.0)
13.4
33.6
(27.6)
47.8
(41.0)
531.2
Total health insurance benefits were US $132.9 million representing an overall
claim to premium ratio of 77.5%. In 2019 the Group experienced health insurance
benefits of US $135.3 million and an overall claim to premium ratio of 78.2%.
Property and casualty claims amounted to US $28.2 million in 2020, a
US $1.2 million increase over the US $27.0 million incurred in 2019. The newly
acquired subsidiary Advantage General Insurance, acquired on October 1, 2019
in our Jamaica segment, contributed additional benefits during the period under
63
(in millions of US $)
Expenses and taxes
Administrative expenses
Commissions and related compensation
Finance costs, depreciation and amortisation
Premium, asset and income taxes
Total expenses and taxes
Listing expense and other transaction costs
Total expenses and taxes
Year ended December 31,
2020
2019
Change
2019, a decrease of US $17.0 million, and was largely related to lower net income
levels reported during the year, when compared to the prior year.
340.6
333.3
121.2
84.4
57.6
603.8
-
603.8
120.1
79.1
74.3
606.8
43.4
650.2
(2%)
(1%)
(7%)
22%
-
100%
7%
Earnings from other sources was a loss of US $68.0 million for the year ended
December 31, 2020, compared to income of US $3.0 million for the same period
in 2019. During the year 2020, the Group incurred a loss of US $73.5 million on its
associated company investment in Playa Hotels and Resorts due to the impact
of the COVID-19 travel restrictions’ adverse impact on hotel operations. This
loss largely represents our share of net income/(loss) of the associate and an
impairment charge on the investment in the associate (Shareholder impact: - loss
of US $6.7 million).
Administrative expenses totalled US $340.6 million for the period under review
compared to US $333.3 million for the same period in 2019. Expenses also now
include a full year’s contribution from the general insurance business acquired on
September 30, 2019. Administrative expenses also include restructuring charges
related to the retirement of a senior executive costs.
Commissions and related compensation totalled US $121.2 million for the year
under review, closing US $1.1 million above the US $120.1 million reported for the
same period in 2019; a direct impact of higher new business when compared to
the prior period.
Finance costs, depreciation and amortisation totalled US $84.4 million, for
the period under review, an increase of US $5.3 million over the prior year
and includes US $3.0 million of goodwill impairment on a general insurance
subsidiary company. The Company has also experienced a marginal increase in
finance costs on new facilities in some of its operations.
Sagicor 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. Sagicor is also subject to an asset tax in
Jamaica and Barbados. In Jamaica, the asset tax is levied on insurance, securities
dealers and deposit taking institutions at a percentage 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 at a percentage of adjusted assets held at
the end of the period.
Premium, asset and income taxes were US $57.6 million compared to
US $74.3 million in the prior year results, a decrease of US $16.7 million. Of the
total taxes, income taxes were US $42.7 million, compared to US $59.7 million in
Discontinued operation
Sagicor’s discontinued operation comprised the Sagicor at Lloyd’s business,
which consisted primarily of property and casualty insurance business
written through Lloyd’s of London Syndicate 1206. The Lloyd’s of London
franchise enabled the syndicate to write international business outside of the
United Kingdom.
In December 2012, Sagicor made the decision to dispose of the Sagicor Europe
Limited (“SEL”) segment, which owned the Sagicor at Lloyd’s operations.
The disposal of this segment occurred on December 23, 2013. In accordance
with IFRS, the results of SEL have been separated from Sagicor’s continuing
operations and presented as a discontinued operation.
The following tables summarise Sagicor’s discontinued operation for the year
ended December 31, 2020 and 2019.
(in millions of US $)
Net income - discontinued operation
Currency translation gain realised on sale
Total
Year ended December 31,
2020
2019
Change
-
-
0.5
0.5
(100%)
(100%)
On February 12, 2019, Sagicor Financial Corporation Limited completed a review
of the consideration related to the price adjustments to December 31, 2018 and
entered into a Deed of Release with AmTrust to close off this exposure. The
final settlement amount of £13.5 million was received on February 26, 2019. The
Group has no further exposure to this business.
64
Shareholder returns
Sagicor’s net income and comprehensive income are allocated to the equity
owners of Sagicor’s respective Group companies in accordance with their
results. As some Group companies have minority shareholders, particularly in
the Sagicor Jamaica operating segment, the net income is allocated accordingly
between holders of Sagicor common shares and the minority interest
shareholders. There is also an allocation to Sagicor Life Inc.’s policyholders
who hold participating policies, an arrangement which was established at the
demutualization of the Barbados Mutual Life Assurance Society (now Sagicor
Life), and of its amalgamation with Life of Barbados Limited.
The Group recorded a loss of US $3.6 million from continuing operations for the
year ended December 31, 2020, allocated to the holders of Sagicor’s common
shares. This corresponded to a loss per share for continuing operations of US
$0.024. The comparative amount for the year ended December 31, 2019 was net
income of US $87.4 million (before listing expense and other transaction costs),
which corresponded to earnings per share of US $1.143. The respective annual
returns on equity were a loss of 0.3% for December 2020 and income of 14.0%
for December 2019.
The table below summarises Sagicor’s profitability, dividends and returns in
respect of common shareholders for the years ended December 31, 2020
and 2019.
Year ended December 31,
Common shareholder returns
2020
2019
Net (loss)/income (a) attributable to
common shareholders
Net (loss)/income (a) (b) attributable to
common shareholders
US ($3.6) million
US $44.0 million
US ($3.6) million
US $87.4 million
Basic earnings (a) per share
Basic earnings (a) (b) per share
Fully diluted earnings (a) per share
Fully diluted earnings (a) (b) per share
Return (a) on shareholders’ equity
Return (a) (b) on shareholders’ equity
Dividend pay-out ratio (a) (c)
Dividend pay-out ratio (a) (b) (c)
(2.4¢)
N/A
(2.4¢)
N/A
(0.3%)
N/A
-
-
57.5¢
114.3¢
54.1¢
107.5¢
6.8%
14.0%
37.6%
18.9%
Dividends declared
$ 33.2 million
$15.3 million
Dividends paid per common share
US $0.2250
US $0.2164
(a) From continuing operations. (b) Before listing expense and other transaction
costs incurred in 2019. (c) Profits were negative during 2020.
Comprehensive income
The table below summarises Sagicor’s total comprehensive income for the year
ended December 31, 2020 and 2019.
(in millions of US $)
Total comprehensive (loss)/income
attributable to:
Common shareholders:
65
Year ended December 31
2020
2019
Change
(in millions of US $)
Other comprehensive (loss)/income:
Items net of tax that may be reclassified
subsequently to income:
Financial assets measured at fair value
through other comprehensive income:
Gains on revaluation
Gains transferred to income
Net change in actuarial liabilities
Cash flow hedges
Other reserves
Retranslation of foreign currency operations
Items net of tax that will not be reclassified
subsequently to income:
Losses arising on revaluation of ownership
occupied property
Net losses on equity securities designated
at fair value through other comprehensive
income
Losses on defined benefits plans
Other comprehensive (loss)/income from
continuing operations
Year ended December 31
2020
2019
Change
From continuing operations before listing
expense and other transaction costs
(3.0)
124.1
(102%)
Listing expense and other transaction costs
-
(43.4)
100%
97.3
(16.6)
(52.1)
(0.7)
-
(38.2)
(10.3)
168.7
(20.4)
(95.0)
(3.1)
(0.1)
(42%)
19%
45%
77%
100%
(16.6)
(130%)
33.5
(131%)
(14.9)
(1.0)
(1,390%)
(0.1)
3.5
(11.5)
-
11.2
10.2
-
(69%)
(213%)
(21.8)
43.7
(150%)
From discontinued operation
Participating policyholders
Non-controlling interests
(in millions of US $)
Total comprehensive income
Group net (loss)/income before listing
expense and other transaction costs
Other comprehensive (loss)/income
Total comprehensive (loss)/ income for
the year, before listing expense and other
transaction costs
Listing expense and other transaction costs
Total comprehensive (loss)/income for the
year
(3.0)
-
(3.0)
0.6
(34.5)
(36.9)
80.7
0.5
81.2
(104%)
(100%)
(104%)
(2.7)
122%
69.3
147.8
(150%)
(125%)
Year ended December 31
2020
2019
Change
(15.1)
(21.8)
147.5
43.7
(110%)
(150%)
(36.9)
-
191.2
(43.4)
(119%)
100%
(36.9)
147.8
(125%)
Items recorded within other comprehensive income arise primarily from gains
and losses on employee defined benefit pension plans, from fair value changes
of certain asset classes and from the related movements in actuarial liabilities,
and from the retranslation of foreign currency operations.
Other comprehensive losses for year ended December 31, 2020 amounted to
US $21.8 million, a significant decrease from the income of US $43.7 million
reported for the prior year.
During the period, the Group reported net gains on financial assets totalling
US $97.3 million compared to US $168.7 million in the prior year, a reduction
of US $71.4 million resulting from mark-to-market increases on financial assets
66
in our investment portfolios. The lower gains reported resulted from the
impact of the capital markets’ adverse response to the uncertainties created
by the COVID-19 pandemic. These gains were offset by a net change in
actuarial liabilities reserve of US $52.1 million (2019 - US $95.0 million). Other
comprehensive income for the period also included a loss of US $38.2 million
on the retranslation of foreign currency operations and largely related to the
impact of the depreciation of the Jamaican dollar when compared to the United
States dollar.
Fourth Quarter 2020 Profitability
Group net (loss)/ income for the three-month periods ended December 31, 2020
and December 31, 2019.
The table below summarises Sagicor’s net (loss)/income for the three-month
periods ended December 31, 2020 and 2019.
Overall total comprehensive loss for the year amounted to US $36.9 million. Total
comprehensive loss allocated to shareholders from continuing operations was
US $3.0 million. Total comprehensive income of US $147.8 million was reported in
the prior year.
(in millions of US $)
Group net income
Statement of financial position
From continuing operations before listing
expense and other transaction cost
Listing expense and other transaction cost
The table below summarises Sagicor’s consolidated statement of financial
position as at December 31, 2020 and December 31, 2019, respectively.
Total
Three months ended
December 31,
2020
2019
Change
14.4
-
14.4
67.9
(79%)
(43.4)
100%
24.5
(41%)
29.0
-
29.0
1.0
(15.6)
14.4
54.9
(43.4)
11.5
(1.2)
14.2
24.5
(47%)
100%
152%
183%
(210%)
(41%)
Net income is attributable to
Common shareholders:
From continuing operations before listing
expense and other transaction cost
Listing expense and other transaction cost
Participating policyholders
Non-controlling interest
Group net income
Group net income amounted to US 14.4 million for the three-months ended
December 31, 2020, compared to net income of US $24.5 million in the same
period in the prior year.
Statement of Financial Position
As of December 31,
(in millions of US $)
2020
2019
Change
Sagicor Group
Financial investments
Other assets
Total assets
Policy liabilities
Other operating liabilities
Borrowings
Total liabilities
Shareholders’ equity
Participating accounts
Non-controlling interests
Total equity
7,238.6
6,685.6
2,027.7
2,043.3
9,266.3
8,728.9
4,883.0
4,316.0
2,253.5
2,145.4
471.6
517.7
7,608.1
6,979.1
1,109.8
1,154.1
1.6
1.2
546.8
594.5
1,658.2
1,749.8
8%
(1%)
6%
13%
5%
(9%)
9%
(4%)
33%
(8%)
(5%)
Total liabilities and equity
9,266.3
8,728.9
6%
67
Three months ended
December 31,
2020
2019
Change
674.5
471.7
(454.9)
(228.5)
(157.9)
(147.9)
43%
(99%)
(7%)
(33.4)
(13.9)
(5.4)
(519%)
(22.0)
37%
14.4
-
14.4
67.9
(43.4)
24.5
(79%)
100%
(41%)
Change
(in millions of US $)
Group net income from continuing
operations
Revenue
Benefits
Expenses
20%
(40%)
(47%)
100%
152%
(47%)
Other
Income taxes
Group net income from continuing
operations before listing expense and other
transaction costs
Listing expense and other transaction costs
Net (loss)/income attributable to Common
shareholders from continuing operations
Three months ended
December 31
(in millions of US $, unless otherwise noted)
Sagicor Life
Sagicor Jamaica
Sagicor Life USA
2020
35.2
11.0
8.8
2019
29.4
18.2
16.5
Head office, Other and Adjustments
(26.0)
(9.2)
(183%)
Net income before listing expense and other
transaction costs
Listing expense and other transaction costs
Net income
Earnings per common share (EPS):
29.0
-
29.0
54.9
(43.4)
11.5
Basic
19.8¢
12.3¢
61%
Basic – before listing expense and other
transaction costs
Diluted
Diluted – before listing expense and other
transaction costs
Return on common shareholders’ equity
(ROE)
Return on common shareholders’ equity
(ROE) – before listing expense and other
transaction costs
N/A
19.6¢
58.7¢
10.9¢
N/A
80%
N/A
51.9¢
N/A
10.8%
6.2%
4.6 pts
N/A
30.4%
N/A
Net income from continuing operations attributable to common shareholders
closed the period at US $29.0 million compared to US $54.9 million (before
listing expense and other transaction costs) for the December 2019 quarter.
Both Group net income and income attributable to shareholders from continuing
operations benefited from the positive impact of our asset optimisation efforts in
our Sagicor Life segment which gave rise to a release in net change in actuarial
liabilities. Our administrative expenses include restructuring charges related to
the retirement of a senior executive. Group net income was also impacted by our
share of net loss and impairment related to our associated company investment
in Playa Hotels & Resorts, due to the economic environment occasioned by
the pandemic.
Group net income from continuing operations
The table below summarises Sagicor’s net income from continuing operations for
the three-month periods ended December 31, 2020 and 2019.
68
Revenue
The following table summarises the main items of Sagicor’s revenue for the
three-month periods ended December 31, 2020 and December 31, 2019.
(in millions of US $)
Revenue
Net insurance premiums:
Life and annuity
Health
Property and casualty
Net investment income
Gain on derecognition of amortised cost
investments
Gain on derecognition of assets carried at
FVOCI
Credit impairment losses
Fees and other revenue
Total
Total Revenue by Operating Segment
Sagicor Life
Sagicor Jamaica
Sagicor Life USA
Head office, Other and Adjustments
Three months ended
December 31,
2020
2019
Change
455.9
42.3
12.7
510.9
120.3
237.3
45.2
18.0
300.5
107.7
92%
(6%)
(29%)
70%
12%
3.6
10.0
(64%)
6.8
1.6
31.3
674.5
190.6
177.1
295.0
11.8
674.5
19.5
(10.4)
44.4
471.7
162.2
194.2
103.0
12.3
471.7
(65%)
(115%)
(30%)
43%
18%
(9%)
186%
(4%)
43%
quarter, the Group benefited from an increase in life and annuity premium in our
Sagicor Life USA segment amounting to US $184.5 million which is consistent
with our strategy to increase sales production in this segment. The Sagicor Life
segment also experienced an increase in premium income as the segment closed
a new single premium policy with premiums of US $63.9 million.
Net premium revenue from health insurance business totalled US $42.3 million
for the three-month period ended December 31, 2020 which was US $2.9 million
below the US $45.2 million reported for the same period in 2019. Net premium
revenue from property and casualty insurance totalled US $12.7 million for the
December 2020 quarter, a decrease from US $18.0 million recorded for the same
period in 2019. The decline in premiums was mainly observed in our Sagicor
Jamaica segment (US $4.1 million), a direct result of the loss of a significant plan.
Net investment income for the three-month period ended December 31, 2020
totalled US $120.3 million, up US $12.6 million (12%) from the US $107.7 million
reported for the three-month period ended December 31, 2019. During the
three-month period the Group benefited from realised and unrealised gains of
US $35.5 million on financial assets categorised as FVTPL, compared to gains
of US $23.5 million reported in the same period in 2019, as capital markets
experienced some reversal of the mark-to-market losses reported earlier in the
2020 financial year.
The Group generated Fees and other revenues of US $31.3 million for the three-
month period ended December 31, 2020, compared to US $44.4 million for the
same period in 2019, a decrease of US $13.1 million. Hotel revenues reported by
our Jamaica segment declined by US $6.3 million when compared to the same
period in 2019, as the tourism industry continues to be adversely impacted by
travel restrictions associated with the COVID-19 pandemic. In addition, in 2019,
the segment benefited from higher fee income from the banking business.
Benefits
Revenue from continuing operations reached US $674.5 million for the three-
month period ended December 31, 2020, an increase of US $202.8 million (43%)
from the US $471.7 million reported in 2019.
Benefits totalled US $454.9 million in for the fourth quarter of 2020, a 99%
increase from US $228.5 million reported for the same period in 2019.
Net insurance premium revenue represented 76% (December 2019 – 64%) of
total revenue, and closed the period at US $510.9 million, US $210.4 million (70%)
above the amount of US $300.5 million reported for the same period in 2019.
Net insurance premiums from Life and annuity insurance business totalled
US $455.9 million for the three-month period ended December 31, 2020,
compared to US $237.3 million reported for the same period in 2019. During the
The following table summarises the benefits provided by Sagicor to holders
of insurance contracts, investment contracts and deposit and security liability
contracts for the three-month periods ended December 31, 2020 and 2019.
(in millions of US $)
Benefits
Net insurance benefits:
Life and annuity
Health
Property and casualty
Interest cost
Total
69
Three months ended
December 31,
2020
2019
Change
Total health insurance benefits were US $37.0 million representing an overall
claim to premium ratio of 87.6%. In 2019 the Group experienced health insurance
benefits of US $33.4 million and an overall claim to premium ratio of 74.0%.
400.2
37.0
6.5
443.7
11.2
454.9
174.0
33.4
8.4
215.8
12.7
228.5
(130%)
(11%)
23%
(106%)
12%
(99%)
Property and casualty claims amounted to US $6.5 million in 2020, a
US $1.9 million decrease from US $8.4 million incurred in 2019. Benefits
associated with motor vehicles were down during the period due to lower
accidents occurring during the period; a direct impact of movement restrictions
associated with the COVID-19 pandemic.
Interest expense totalled US $11.2 million for the three-month period ended
December 31, 2020 and was slightly below that reported for the same period
in 2019.
Life and annuity benefits totalled US $400.2 million for the three-month
period ended December 31, 2020 of which US $124.8 million related to current
benefits and US $275.4 million related to future benefits. The amounts for
the corresponding period in 2019 were a total of US $174.0 million, of which
US $108.0 million related to current benefits and US $66.0 million related to
future benefits. The change in provision for future benefits from 2019 to 2020
represented an increase of US $209.4 million and was associated mainly with
the significant new annuity business acquired by our Sagicor Life and Sagicor
Life USA segments during the quarter. During the quarter the group benefited
from better asset liability matching in its Sagicor Life segment, which resulted
in a reduction in actuarial liabilities (US $27.6 million). This however was offset
by the strengthening of actuarial liabilities associated with forward-looking
assumptions surrounding policy liabilities in our Sagicor Life USA segment
totalling US $18.1 million.
The change in the future benefits for Q4 2020 comprise primarily of
the following:
(in millions of US $)
New business - Sagicor Life USA
Update of forward-looking assumptions - Sagicor USA
Impact of asset optimisation - Sagicor Life
Significant premium annuity – Sagicor Life
Other
Total
Increase/(decrease)
236.1
18.1
(27.6)
47.8
1.0
275.4
Expenses and taxes
Total expenses and taxes were US $171.8 million for the three-month period
ended December 31, 2020, compared to US $169.9 million (before listing
expense and other transaction costs) for the same period in 2019, an increase of
US $1.9 million (1%).
The table below summarises Sagicor’s expenses and taxes from continuing
operations for the three-month periods ended December 31, 2020 and 2019.
(in millions of US $)
Expenses and taxes
Administrative expenses
Commissions and related compensation
Finance costs, depreciation and amortisation
2020
Premium, asset and income taxes
Total expenses and taxes before listing
expense and other transaction costs
Listing expense and other transaction costs
Total expenses and taxes
Three months ended
December 31,
2020
2019
Change
97.4
37.2
20.8
16.4
171.8
-
171.8
91.1
32.4
22.1
24.3
169.9
43.4
213.3
(7%)
(15%)
6%
33%
(1%)
100%
19%
Administrative expenses totalled US $97.4 million for the period under review
compared to US $91.1 million for the same period in 2019, an increase of
70
US $6.3 million and includes restructuring charges related to the retirement of a
senior executive.
Commissions and related compensation totalled US $37.2 million for the three-
month period ended December 31, 2020 and was above the US $32.4 million
reported for the same period in 2019, due mainly to increased new
business generated.
Finance costs, depreciation and amortisation totalled US $ 20.8 million for the
December 2020 quarter, and was marginally below the US $22.1 million reported
for the December 2019 quarter.
Sagicor 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. Sagicor is also subject to an asset tax in
Jamaica and Barbados. In Jamaica, the asset tax is levied on insurance, securities
dealers and deposit taking institutions at a percentage 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 at a percentage of adjusted assets held at
the end of the period.
Premium, asset and income taxes were US $16.4 million for the three-month
period ended December 31, 2020, compared to US $24.3 million in the
corresponding period in 2019, a decrease of US $7.9 million. Of the total taxes,
income taxes were US 13.9 million, compared to US $22.0 million in 2019, a
decrease of US $8.1 million, due to higher net income generated in Q4, 2019.
Earnings from other sources was a loss of US $33.4 million for the fourth quarter
of 2020, compared to a loss of US $5.4 million for the same period in 2019.
During the December 2020 quarter, the Group incurred a loss of US $34.6 million
on its associated company investment in Playa Hotels and Resorts due to the
impact of the COVID-19 travel restrictions on the hotel sector. This loss largely
represents our share of net income/(loss) of the associate and an impairment
charge on the investment in the associate (Shareholder impact: - loss of
US $4.0 million).
Comprehensive income
The table below summarises Sagicor’s total comprehensive income for the three-
month periods ended December 31, 2020 and 2019.
(in millions of US $)
Other comprehensive (loss)/income:
Items net of tax that may be reclassified
subsequently to income:
Financial assets measured at fair value
through other comprehensive income:
Gains on revaluation
Gains transferred to income
Net change in actuarial liabilities
Cash flow hedges
Other reserves
Retranslation of foreign currency operations
Items net of tax that will not be reclassified
subsequently to income:
Gains arising on revaluation of ownership
occupied property
Losses on equity securities designated as
FVOCI
Gains on defined benefit plans
Other comprehensive income from
continuing operations
(in millions of US $)
Total comprehensive income
Group net income
Other comprehensive income
Total comprehensive income for the year
Listing expense and other transaction costs
Three months ended
December 31,
2020
2019
Change
80.8
(7.1)
(42.2)
(0.8)
1.2
(4.3)
27.6
17.7
(13.7)
(10.7)
(3.1)
(0.1)
4.6
(5.3)
356%
(48%)
(294%)
74%
1,300%
(193%)
621%
1.0
1.5
(33%)
(0.1)
3.7
4.6
-
11.2
12.7
-
(67%)
(64%)
32.2
7.4
335%
Three months ended
December 31,
2020
2019
Change
14.4
32.2
46.6
-
46.6
67.9
7.4
75.3
(43.4)
31.9
(79%)
335%
(38%)
100%
46%
71
(in millions of US $)
Total comprehensive (loss)/income
attributable to:
Common shareholders:
From continuing operations before listing
expense and other transaction costs
Listing expense and other transaction costs
From continuing operations
Participating policyholders
Non-controlling interests
Three months ended
December 31,
2020
2019
Change
52.9
-
52.9
0.6
(6.9)
46.6
61.6
(43.4)
18.2
(2.1)
15.8
31.9
(14%)
100%
191%
(129%)
(144%)
46%
Items recorded within other comprehensive income arise primarily from gains
and losses on employee defined benefit pension plans, from fair value changes
of certain asset classes and from the related movements in actuarial liabilities,
and from the retranslation of foreign currency operations.
Other comprehensive income for three-month period ended December 31, 2020
totalled US $32.2 million, an increase from the of US $7.4 million reported for the
December 2019 quarter.
During the quarter, the Group reported net gains on financial assets totalling
US $80.8 million resulting from mark-to-market gains on financial assets in our
investment portfolios. These gains reflect a partial reversal of losses reported
earlier in the year resulting from the impact of the capital markets’ response to
the COVID-19 pandemic. These gains were offset by a net change in actuarial
liabilities reserve of US $42.2 million. Other comprehensive income for the period
also included a loss of US $4.3 million on the retranslation of foreign currency
operations and largely related to the impact of the depreciation of the Jamaican
dollar when compared to the United States dollar.
Overall total comprehensive income for the three-month period ended
December 31, 2020 amounted to US $46.6 million. Total comprehensive income
allocated to shareholders from continuing operations was US $52.9 million. Total
comprehensive income of US $31.9 million was reported for the same period in
the prior year.
72
Quarterly Financial Disclosures
The following table provides a summary of Sagicor’s results from continuing operations for the eight most recently completed quarters. A more complete discussion
of our historical quarterly results can be found in our interim and annual MD&A for the relevant periods.
(in millions of US $, unless otherwise noted)
Q4 2020
Q3 2020
Q2 2020
Q1 2020
Q4 2019
Q3 2019
Q2 2019
Q1 2019
Net premium revenue
Net investment and other income
Total revenue
Benefits and expenses
Other
Income(loss)/ before tax
Income tax
Net (loss)/income before listing expense and other
transaction costs
Listing expense and other transaction costs
transaction costs
Net income/(loss)
(Loss)/income attributable to shareholders before
listing expense and other transaction costs
(Loss)/income attributable to shareholders
510.9
163.6
674.5
264.9
137.3
402.2
310.0
148.5
458.5
317.7
25.5
343.2
300.5
171.2
471.7
263.3
148.2
411.5
(612.8)
(373.7)
(440.6)
(355.8)
(376.4)
(379.3)
(33.4)
28.3
(13.9)
14.4
-
14.4
29.0
29.0
(9.2)
19.3
(12.7)
6.6
-
6.6
(3.0)
(3.0)
(19.7)
(1.8)
(9.3)
(11.1)
-
(11.1)
(0.3)
(0.3)
(5.7)
(18.3)
(6.8)
(5.4)
89.9
(22.0)
(25.1)
67.9
-
(25.1)
(29.3)
(29.3)
(43.4)
24.5
54.9
11.5
-
32.2
(11.1)
21.1
-
21.1
6.3
6.3
312.7
155.7
468.4
(429.3)
0.6
39.7
(14.2)
25.5
-
25.5
11.1
11.1
365.1
150.7
515.8
(478.7)
7.7
44.8
(12.4)
32.4
-
32.4
15.1
15.1
73
Quarterly Financial Disclosures, continued
(in millions of US $, unless otherwise noted)
Q4 2020
Q3 2020
Q2 2020
Q1 2020
Q4 2019
Q3 2019
Q2 2019
Q1 2019
Basic EPS before listing expense and other
transaction costs incurred in 2019
Basic EPS
Diluted EPS before listing expense and other
transaction costs incurred in 2019
Diluted EPS
Annualised return on shareholders’ equity before
listing expense and other transaction costs
incurred in 2019
Annualised return on shareholders’ equity
Dividends paid per share
Total assets (a)
Total equity attributable to shareholders (a)
N/A
19.8¢
N/A
19.6 ¢
N/A
10.8%
5.6 ¢
9,266.3
1,109.8
N/A
(2.0) ¢
N/A
(2.0) ¢
N/A
(1.1%)
5.6 ¢
8,894.3
1,062.3
N/A
(0.2) ¢
N/A
(0.2) ¢
N/A
(0.1%)
5.6 ¢
8,734.2
1,072.5
N/A
(19.7) ¢
N/A
(19.7) ¢
N/A
(10.5%)
5.6 ¢
8,457.1
1,049.5
58.7 ¢
12.3 ¢
51.9 ¢
10.9 ¢
30.4%
6.2%
2.5 ¢
8,728.9
1,154.1
N/A
8.9 ¢
N/A
8.6 ¢
N/A
3.8%
-
8,056.4
660.4
(Loss)/Income before listing expense and other transaction costs (incurred in Q4, 2019) attributable to shareholders by operating segment:
Sagicor Life
Sagicor Jamaica
Sagicor Life USA
Head office, other & inter-segment eliminations
Total
(a) From continuing operations.
35.2
11.0
8.8
(26.0)
29.0
8.4
21.3
(18.7)
(14.0)
(3.0)
2.2
9.1
(2.9)
(8.7)
(0.3)
1.9
9.1
(14.3)
(26.0)
(29.3)
29.4
18.2
16.5
(9.2)
54.9
10.2
18.4
6.0
(28.3)
6.3
N/A
15.7 ¢
N/A
15.3 ¢
N/A
6.9%
2.5 ¢
7,861.7
658.6
9.8
14.3
6.0
(19.0)
11.1
N/A
21.3 ¢
N/A
21.0 ¢
N/A
9.9%
-
7,639.8
640.4
11.2
10.4
6.9
(13.4)
15.1
74
Quarterly Financial Disclosures (continued)
First Quarter 2020
Under the Alignvest transaction, Sagicor Financial Corporation Limited common
shares not purchased for cash, were exchanged for common shares of Sagicor
Financial Company Ltd. on an exchange ratio of one Sagicor Financial Company
Ltd. common share for 4.328 of Sagicor Financial Corporation Limited common
shares (“Exchange Ratio”). This exchange ratio has been used to convert the
2018 and 2019 outstanding shares to the Sagicor Financial Company Ltd.
equivalent. The earnings per share ratio for 2019 and 2018 has been adjusted to
reflect the Exchange Ratio.
The Group’s financial results for the quarter ended March 31, 2020 were
materially affected by the COVID-19 pandemic. On March 11, 2020 the World
Health Organisation declared the emergence of COVID-19 coronavirus, a
global pandemic. As a response to this public health emergency, governments
around the world made significant interventions in response to this threat. Most
Caribbean countries shut down air and sea traffic. Similar procedures were also
implemented in the United States, Canada and elsewhere.
Third Quarter 2020
The Group’s financial results for the quarter ended September 30, 2020
continued to be affected by the COVID-19 pandemic.
Against this backdrop the Sagicor Group recorded a net loss from continuing
operations attributable to common shareholders of US $3.0 million compared
to net income US $6.3 million, for the same period in the prior year. The net
loss was primarily related to significant strengthening of reserves in our U.S.
operation associated with forward-looking assumptions.
Second Quarter 2020
The Group’s financial results for the quarter ended June 30, 2020 were
materially affected by the COVID-19 pandemic. On March 11, 2020 the World
Health Organisation declared the emergence of COVID-19 coronavirus, a
global pandemic. As a response to this public health emergency, governments
around the world made significant interventions in response to this threat. Most
Caribbean countries shut down air and sea traffic. Similar procedures were also
implemented in the United States, Canada and elsewhere. During the three-
month period ended June 2020 attempts were made to modify and relax some
of the restrictions implemented in the first quarter of the year, however these
have yielded mixed results and therefore many of the restrictions continued with
a continued slowdown in economic activity.
Against this backdrop the Sagicor Group recorded a net loss from continuing
operations attributable to common shareholders of US $0.3 million compared
to net income US $11.1 million, for the same period in the prior year. The net
loss was primarily related to higher Expected Credit Losses (ECLs) losses due
to the pandemic as well as an internal reinsurance transaction that resulted
in a strengthening of reserves in our U.S. operation. The results also include
impairment losses on an associated company.
Against this backdrop the Sagicor Group recorded a net loss from continuing
operations attributable to common shareholders of US $29.3 million compared
to net income US $15.1 million, for the same period in the prior year. This
result was primarily driven by mark-to-market changes in asset prices (net of
corresponding reserve changes) and increased provisions for Expected Credit
Losses (ECLs) in anticipation of a potential prolonged economic downturn, in the
markets in which the Group operates.
Fourth Quarter 2019
On December 5, 2019 Sagicor and Alignvest announced they had completed
the business combination involving the transfer of all issued and outstanding
shares in Sagicor to Alignvest. This transaction raised over US $450 million in
new capital for the Group. As a result of the completion of the transaction, all
issued and outstanding shares in Sagicor were transferred to Alignvest, with
former shareholders of Sagicor receiving cash or shares in Alignvest, which
was renamed Sagicor Financial Company Ltd. and trades on the Toronto Stock
Exchange under the symbol SFC. The Group incurred listing expense and other
transaction costs of US $43.4 million relating to this exercise.
Net income from continuing operations attributable to shareholders for the
fourth quarter of 2019 totalled US $54.9 million, excluding listing expense
and other transaction costs, compared to US $8.0 million for the same period
in 2018, an increase of US $46.9 million. During the last quarter of 2019, the
Group benefited from a significant increase in mark to market changes on
indexed options in our USA segment coupled with gains arising from the strong
performance of the Jamaica stock market.
Third Quarter 2019
Results for third quarter of 2019 reflected moderate aggregate growth in our
core operating segments, offset somewhat with the effect of Hurricane Dorian.
75
Net income from continuing operations attributable to shareholders was
US $6.3 million for the three-month period ended September 30, 2019, (three-
month period end September 30, 2018 – US $7.0 million), a decrease of
US $0.7 million. During Q3 2019, Sagicor took a provision of US $2.5 million,
representing our maximum potential impact from Hurricane Dorian. During Q3
2018, the Group increased its provisions on the Government of Barbados (GoB)
debt. The net impact on the net income was US $16.4 million. Net income in
2018, also benefitted from certain one-time positive earnings releases that did
not recur in 2019.
Second Quarter 2019
Net income from continuing operations attributable to shareholders was
US $11.1 million for the three-month period ended June 30, 2019, (three-month
period end June 30, 2018 – US $2.0 million), an increase of US $9.1 million. The
Group benefited from net premium growth in our USA segment. Benefits and
expenses also grew over the prior year’s levels driven by business growth. In the
June quarter of 2018 the Group also experienced the net impact of increased
provisions for expected credit impairment losses on the Government of
Barbados debt (US $19.8 million).
First Quarter 2019
Net income from continuing operations attributable to shareholders was $15.1
million for the three months ended March 31, 2019, (first quarter March 2018 –
US $19.5 million). While the Group benefited from net premium growth through
our USA segment, benefits and expenses also grew over the prior year-to-
date levels and was consistent with premium growth due to the provisions for
future benefits on new business. During the first quarter of 2019, the Group also
benefited from increased investment income due to marked to market changes
on equities and indexed options in our Jamaica and USA segments. During the
first quarter of 2018 the results included a one-time gain of US $5.3 million on
the acquisition of the British American insurance portfolio.
Fourth Quarter 2018
Net income from continuing operations attributable to shareholders was
US $8.0 million for the three months ended December 31, 2018, compared to
US $15.7 million for the three-month period ended December 31, 2017. The Group
was impacted by lower realised gains on the sale of securities and lower interest
rates in our Jamaica Segment in 2018. In addition, in 2017, the Group recognised
a tax benefit in our Sagicor USA segment, arising from the 2017 US Federal tax
law changes.
Key Factors Affecting Results
A variety of factors affect Sagicor’s results, including:
sales of core products and services;
life insurance and annuity policy lapse experience;
insurance claims experience;
investment yields;
asset default;
(i)
(ii)
(iii)
(iv)
(v)
(vi) country inflation and taxes;
(vii) Sensitivity arising from the valuation of actuarial liabilities;
(viii) Sagicor’s expansion into new geographic markets (in the United States)
and product markets (in Jamaica) through portfolio and / or company
acquisitions; and
the continuing availability of appropriately priced reinsurance treaties
for life, health and property and casualty insurance.
(ix)
Sales of core products and services
Growth in sales enables Sagicor to allocate its fixed operating expenses over
larger revenues and subsequently increases its profitability. The impact is very
significant for the Sagicor Life and Sagicor Jamaica operating segments which
sell significant amounts of periodic premium life insurance and annuity policies.
The pricing of such products is either fixed at the issue of each policy or may
limit the extent of cost recovery over the duration of the policy which can extend
over decades. Growth in sales enables Sagicor to contain the growth in unit
policy operating expenses.
Lapse experience
With respect to periodic premium life insurance and annuity policies, lapse
experience is a factor of profitability. Many of these polices have up-front
commission, policy issue and medical underwriting costs which are only
recovered in full if the policy is premium paying for the initial years of its
duration. If the policy lapses during the initial years, Sagicor will not fully recover
its up-front costs and incur a loss on that policy.
For the same reasons that the quantum of sales of insurance policies is an
important factor in maintaining insurance policy unit costs of administration,
the rates of lapse or termination of inforce policies impacts the policy unit costs
incurred. The lower the lapse or termination rate, the more policies are inforce,
enabling Sagicor to contain growth in unit policy administrative costs.
Conversely, if asset default rates over time are higher than expected, profitability
is impacted negatively.
Country inflation and taxes
As with other key factors affecting profitability, changes in the level of country
inflation and taxes impact the operating costs of the Sagicor Group, immediately
and in the longer term.
Actuaries within the Group determine each segment’s actuarial liabilities as of
December 31 after factoring in expected levels of operating expenses. Higher
inflation and taxation levels result is adverse consequences for profitability and
lower inflation and taxation levels result in positive consequences for profitability.
Sensitivity arising from the valuation of actuarial liabilities
The estimation of actuarial liabilities is sensitive to the assumptions made.
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, and
• the margins for adverse deviations
76
Insurance claims experience
Across all lines of insurance, claims experience is a factor in profitability. In
establishing rates of premium, Sagicor provides for appropriate levels of
claims experience, be it rates of mortality for life insurance, rates of longevity
for annuities, rates of morbidity for disability and health insurance, or rates of
contingent losses for property and casualty insurance. Claims rates incurred in
excess of pricing have adverse consequences for profitability, and conversely,
claims rates incurred at levels below pricing impact profitability positively.
Investment yields
Across applicable lines of insurance and across financial contracts issued by
Sagicor, investment yield is important to the profitability of the Group. Higher
investment yields enable Sagicor to achieve higher interest margins (defined as
the difference between interest earned and payable) on applicable insurance
contracts and financial contracts. With lower investment yields, the interest
margins are generally lower and may be eliminated if Sagicor is not able to
earn a guaranteed rate of interest which is payable under the insurance or
financial contract.
For long-term life insurance and annuity contracts, the Appointed Actuaries
within the Group determine each segment’s actuarial liabilities at December 31
after factoring in rates of investment return on re-invested assets. These rates,
including the ultimate rates of return, affect the quantum of actuarial liability
determined, with higher re-investment rates resulting in a lower actuarial liability,
and with lower re-investment rates resulting in a higher actuarial liability.
Asset default
The recognition of an un-anticipated default from an invested asset, may have
immediate negative consequences for profitability. Sagicor maintains certain
invested assets for which the full return (of capital and of interest) is borne
by insurance and /or financial contract-holders. In such instances, Sagicor is
generally not exposed to asset default risk. However, for other invested assets,
for which Sagicor is exposed to default risk, the default risk may be entirely
borne by Sagicor’s shareholders, or the risk is shared by Sagicor’s shareholders
and insurance and /or financial contract-holders. In such instances, the impact on
profitability will be negative.
For long-term life insurance and annuity contracts, the Appointed Actuaries
within the Group determine each segment’s actuarial liabilities at December
31 after factoring in the expected rates of asset default. Should asset default
rates over time be lower than expected, profitability is impacted positively.
Under Canadian accepted actuarial standards, the Appointed Actuary is required
to test the actuarial liability under economic scenarios. The scenarios developed
and tested by insurers were as follows:
Sensitivity
Scenario
Sagicor Life Inc
segment
Sagicor Jamaica
segment
Sagicor USA
segment
77
Sensitivity
Scenario
Sagicor Life Inc
segment
Sagicor Jamaica
segment
Sagicor USA
segment
Worsening
rate of
lapse
High
interest rate
Lapse rates were either doubled or halved,
and the more adverse result was selected.
Lapse rates were
increased or
reduced by 30%,
and the more
adverse result
was selected.
Assumed increases
in the investment
portfolio yield rates
of 0.5% for 10 years.
A 1% increase
was applied to
the investment
portfolio rate.
Assumed increases
in the investment
portfolio yield rates
of 0.25% per year
for 5 years, with
the rates remaining
constant thereafter.
Low
interest rate
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.
A 1% decrease
was applied to
the investment
portfolio rate.
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.
For life insurance
and deferred
annuity products,
the base assumed
rates were
increased annually
by 3% cumulatively
over the next 5
years. For pay-out
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
To illustrate the potential impact of some of the foregoing key factors, the
following table presents the estimated sensitivity using the economic scenarios
outlined above, relating to (i) worsening rate of lapse, (ii) higher interest rate
(on invested assets), (iii) lower interest rate (on invested assets), (iv) worsening
rate of mortality and morbidity, and (v) higher operating expenses, to the net
actuarial liabilities of each of operating segments of the Group, as of December
31, 2020 and 2019.
78
(in US $millions)
Sagicor Life Segment
Base net actuarial liability
Scenario
Worsening rate of lapse
Higher interest rate
Lower interest rate
Worsening mortality / morbidity
Higher expenses
Sagicor Jamaica Segment
Base net actuarial liability
Scenario
Worsening rate of lapse
High interest rate
Low interest rate
Worsening mortality / morbidity
Higher expenses
Sagicor Life USA Segment
Base net actuarial liability
Scenario
Worsening rate of lapse
High interest rate
Low interest rate
Worsening mortality / morbidity
Higher expenses
2020
2019
tastes. Sagicor only ventures into new markets or offers new products after
extensive research and appraisal.
Company acquisitions has been a strategy employed by the Sagicor Group over
the last twenty years. As a result of these acquisitions, Sagicor’s assets include
goodwill and other intangibles acquired on company acquisitions. The goodwill
carried by operating segments as of December 31, 2020 and 2019, respectively,
is summarised in the following table
1,136.5
1,038.7
Increase (decrease) in
actuarial liability
202.9
(94.9)
199.4
69.5
39.2
177.6
(97.6)
163.3
42.6
20.4
(in US $millions)
Goodwill
Sagicor Life segment
Sagicor Jamaica segment
345.4
360.0
Sagicor General Insurance
Increase (decrease) in
actuarial liability
Total goodwill
2020
2019
26.5
29.2
2.7
58.4
26.6
31.0
5.7
63.3
88.0
(112.5)
83.9
48.9
17.1
78.5
(116.6)
97.1
56.9
20.9
1,734.8
1,212.2
Increase (decrease) in a
ctuarial liability
25.5
(99.5)
123.2
16.3
2.6
18.4
(72.2)
83.1
17.0
2.9
Goodwill is subject to an annual impairment test, whereby the carrying value of
the business unit including the associated goodwill is compared to the fair value
of the business. As long as the fair value of the business exceeds the carrying
value of the business and its associated goodwill, the goodwill is un-impaired. If
it is not, the goodwill is impaired to the extent of the excess of the carrying value
plus goodwill over its fair value, and the resulting impairment charge is recorded
in the income statement.
In this test, fair value is defined as the higher of ‘value in use’ and ’fair value less
costs to sell’. The computation of fair value includes the use of management
prepared income and cash flow forecasts, and independently determined market
discount and residual growth rates. For some life insurance elements of the
carrying value, the Group uses an actuarially determined ‘embedded value’ to
determine fair value, as this is an appropriate methodology to determine fair
value of long-term insurance business.
As income and cash flow forecasts and market discount and residual factors
vary from year to year, there is the possibility of a significant impairment charge.
During the year, goodwill of US $3.0 million (2019 – US $nil) has been impaired
relating to the Sagicor General Insurance Inc.
Reinsurance treaties
In order to offer useful insurance coverages to potential customers, the Group
holds reinsurance coverages that allow potential policy benefits to exceed
amounts which are prudent for Sagicor to undertake the claims risk. Reinsured
Expansion into new markets and company acquisitions
While Sagicor has endured for 180 years, its product offerings and geographic
markets have evolved. Markets often have different preferences for certain
products and any successful venture into new markets need to adapt to market
amounts may be on a per policy basis, (i.e. in excess of a pre-determined insured
amount) or may be based on the aggregation of the insured’s coverages (i.e. the
insured has several policies and the amount reinsured is the aggregate exceeding
a pre-determined amount).
The tables below illustrate the gross and net (of reinsurance) total life insurance
coverages and annuity liabilities for individual and group polices as of December
31, 2020 and 2019, respectively.
(in US $millions)
2020
2019
Total actuarial liability for annuity contracts
Individual contracts - gross
Individual contracts - net
Group contracts – gross
Group contracts - net
2,561.9
1,909.0
436.6
423.7
2,016.2
1,335.0
428.1
414.2
79
(in US $millions)
Total life insurance coverage
Individual contracts - gross
Individual contracts - net
Group contracts – gross
Group contracts - net
2020
2019
35,710.5
28,982.4
12,542.8
12,037.8
33,486.9
27,482.8
12,350.6
11,853.5
80
3. ANALYSIS BY BUSINESS SEGMENT
Sagicor operates its business primarily through three reporting operating segments. These segments are: Sagicor Life, Sagicor Jamaica and Sagicor Life USA.
A summary analysis of revenue and net income by operating segment are presented on a three-month quarterly basis and on a yearly basis for 2020 and 2019,
as follows:
(in millions of US $)
Revenue
Net premium revenue
Gain on derecognition of amortised cost
investments
Gain on derecognition of assets carried at FVOCI
Interest income earned from financial assets
measured at amortised costs and FVOCI
Other investment income
Credit impairment losses
Fees and other revenues
Inter-segment revenues
Segment revenue
Benefits and expenses
Inter-segment expenses
Gain/(loss) arising on business combinations,
acquisitions and divestitures
Loss on impairment of associates and joint
ventures
Share of operating income of associates and joint
ventures
Segment income before tax
Income taxes
Segment net income/(loss) from continuing
operations
Net income attributable to shareholders
Fourth Quarter (three-month period) – December 2020
Sagicor Life
Sagicor
Jamaica
Sagicor Life
USA
Head office
& other
Adjustments
156.1
0.6
1.7
19.9
2.5
0.9
3.1
5.8
190.6
(151.5)
(0.6)
-
-
0.3
38.8
(2.6)
36.2
35.2
90.6
3.0
3.6
39.4
14.0
0.6
25.9
-
177.1
(139.3)
(0.8)
1.5
(19.0)
(15.5)
4.0
(8.7)
(4.7)
11.0
255.4
-
1.5
19.9
19.8
0.1
(1.7)
-
295.0
(282.7)
(1.5)
-
-
-
10.8
(2.0)
8.8
8.8
8.8
-
-
1.0
3.7
-
4.4
2.0
19.9
(38.5)
(5.6)
(1.5)
-
0.8
(24.9)
(0.1)
(25.0)
(25.1)
-
-
-
-
0.1
-
(0.4)
(7.8)
(8.1)
(0.8)
8.5
-
-
-
(0.4)
(0.5)
(0.9)
(0.9)
Total
510.9
3.6
6.8
80.2
40.1
1.6
31.3
-
674.5
(612.8)
-
-
(19.0)
(14.4)
28.3
(13.9)
14.4
29.0
(in millions of US $)
Revenue
Net premium revenue
Gain/(loss) on derecognition of amortised cost
investments
Gain on derecognition of assets carried at FVOCI
Interest income earned from financial assets
measured at amortised costs and FVOCI
Other investment income
Credit impairment losses
Fees and other revenues
Inter-segment revenues
Segment revenue
Benefits and expenses
Inter-segment expenses
Gain/(loss) arising on business combinations,
acquisitions and divestitures
Share of operating income of associates and joint
ventures
Segment income before tax
Income taxes
Segment net income/(loss) from continuing before
listing expense and other transaction costs
Listing expense and other transaction costs
Segment net income/(loss) from continuing
operations
Net income attributable to shareholders
Net income attributable to shareholders before
listing expense and other transaction costs
Fourth Quarter (three-month period) – December 2019
Sagicor Life Sagicor Jamaica
Sagicor Life
USA
Head office &
other
Adjustments
Total
81
126.0
0.5
2.9
20.1
3.1
(0.4)
4.9
5.1
162.2
(131.2)
(1.4)
0.1
0.3
30.0
(1.8)
28.2
-
28.2
29.4
29.4
93.7
10.3
15.1
40.9
8.6
(9.5)
35.1
-
194.2
(139.8)
(0.9)
-
(5.7)
47.8
(15.5)
32.3
-
32.3
18.2
18.2
70.9
-
1.5
18.2
13.8
(0.5)
(0.9)
-
103.0
(81.7)
(0.4)
-
-
20.9
(4.4)
16.5
-
16.5
16.5
16.5
9.9
(0.8)
-
0.8
2.6
-
5.8
18.5
36.8
(22.3)
(5.0)
(0.1)
-
9.4
(0.5)
8.9
(43.4)
(34.5)
(8.4)
35.0
-
-
-
-
(0.3)
-
(0.6)
(23.6)
(24.5)
(1.4)
7.7
-
-
(18.2)
0.2
(18.0)
-
(18.0)
(44.2)
(44.2)
300.5
10.0
19.5
80.0
27.8
(10.4)
44.3
-
471.7
(376.4)
-
-
(5.4)
89.9
(22.0)
67.9
(43.4)
24.5
11.5
54.9
82
Change December 2020 Quarter vs December 2019 Quarter (%)
Sagicor Life Sagicor Jamaica
Sagicor Life
USA
Head office &
other
Adjustments
(3%)
260%
(11%)
Revenue
Net premium revenue
Gain/(loss) on derecognition of amortised cost
investments
Gain on derecognition of assets carried at FVOCI
Interest income earned from financial assets
measured at amortised costs and FVOCI
Other investment income
Credit impairment losses
Fees and other revenues
Inter-segment revenues
Segment revenue
Benefits and expenses
Inter-segment expenses
(Loss)/gain arising on business combinations,
acquisitions and divestitures
Share of operating income of associates and joint
ventures
Segment income before tax
Income taxes
Segment net income/(loss) from continuing
operations before listing expense and other
transaction costs
Listing expense and other transaction costs
Segment net income/(loss) from continuing
operations
Net income attributable to shareholders
Net income attributable to shareholders before
listing expense and other transaction costs
24%
20%
(41%)
(1%)
(19%)
325%
(37%)
14%
18%
(15%)
57%
(71%)
(76%)
(4%)
63%
106%
(26%)
-
(9%)
-
11%
(100%)
-
-
29%
(44%)
28%
-
28%
20%
20%
(172%)
(92%)
44%
(115%)
-
(115%)
(40%)
(40%)
-
-
9%
43%
120%
(89%)
-
186%
(246%)
(275%)
-
-
(48%)
55%
(47%)
-
(47%)
(47%)
(47%)
100%
-
25%
42%
-
(24%)
(89%)
(46%)
(73%)
(12%)
1,400%
-
(365%)
80%
(381%)
100%
28%
(199%)
(172%)
-
-
-
-
133%
-
33%
67%
67%
43%
10%
-
-
98%
(350%)
95%
-
95%
98%
98%
Total
70%
(64%)
(65%)
-
44%
115%
(29%)
-
43%
(63%)
-
-
(167%)
(69%)
37%
(79%)
100%
(41%)
152%
(47%)
(in millions of US $)
Revenue
Net premium revenue
Sagicor Life Sagicor Jamaica
414.2
355.4
Gain on derecognition of amortised cost
investments
Gain/(loss) on derecognition of assets carried at
FVOCI
Interest income earned from financial assets
measured at amortised costs and FVOCI
Other investment income
Credit impairment losses
Fees and other revenues
Inter-segment revenues
Segment revenue
Benefits and expenses
Inter-segment expenses
Loss arising on business combinations, acquisitions
and divestitures
Loss on impairment of associates and joint
ventures
Share of operating income of associates and joint
ventures
Segment income before tax
Income taxes
Segment net income/(loss) from continuing
operations
Net income attributable to shareholders
0.6
2.9
74.8
4.1
(7.4)
11.4
22.7
523.3
(465.0)
(4.1)
-
-
3.3
57.5
(8.4)
49.1
47.7
8.3
21.7
160.5
(14.3)
(12.1)
112.4
-
631.9
(480.7)
(2.1)
(1.3)
(31.8)
(38.2)
77.8
(40.0)
37.8
50.5
Year ended December 31, 2020
Sagicor Life
USA
Head office &
other
Adjustments
Total
83
597.1
-
(4.2)
74.8
18.9
(4.0)
(3.6)
-
679.0
(709.3)
(4.3)
-
-
-
(34.6)
7.5
(27.1)
(27.1)
36.7
-
(0.2)
4.7
7.4
(0.5)
19.3
7.8
75.2
(126.2)
(21.7)
-
-
-
(72.7)
(1.4)
(74.1)
(73.9)
-
-
-
-
-
-
(0.5)
(30.5)
(31.0)
(1.6)
32.2
-
-
-
(0.4)
(0.4)
(0.8)
(0.8)
1,403.4
8.9
20.2
314.8
16.1
(24.0)
139.0
-
1,878.4
(1,782.8)
-
(1.3)
(31.8)
(34.9)
27.6
(42.7)
(15.1)
(3.6)
84
(in millions of US $)
Revenue
Net premium revenue
Gain/(loss) on derecognition of amortised cost
investments
Gain on derecognition of assets carried at FVOCI
Interest income earned from financial assets
measured at amortised costs and FVOCI
Other investment income
Credit impairment losses
Fees and other revenues
Inter-segment revenues
Segment revenue
Benefits and expenses
Inter-segment expenses
Loss arising on business combinations, acquisitions
and divestitures
Share of operating income of associates and joint
ventures
Segment income before tax
Income taxes
Segment net income/(loss) from continuing
operations before listing expense and other
transaction costs
Listing expense and other transaction costs
Segment net income/(loss) from continuing
operations
Net income attributable to shareholders
Net income attributable to shareholders before
listing expense and other transaction costs
Sagicor Life Sagicor Jamaica
Year ended December 31, 2019
Sagicor Life
USA
Head office &
other
Adjustments
Total
409.2
350.1
444.7
0.5
6.2
74.2
10.8
1.4
11.0
20.0
533.3
(465.1)
(5.0)
(0.4)
4.0
66.8
(7.9)
58.9
-
58.9
60.9
60.9
13.3
21.3
160.3
52.1
(6.1)
144.3
-
735.3
(568.2)
(2.5)
-
(0.6)
164.0
(40.4)
123.6
-
123.6
61.4
61.4
-
2.5
70.2
46.9
(0.4)
(2.4)
-
561.5
(515.4)
(1.3)
-
-
44.8
(9.4)
35.4
-
35.4
35.4
35.4
37.5
(0.9)
-
3.3
2.6
0.2
17.2
41.7
101.6
(107.0)
(19.3)
-
-
(24.7)
(2.2)
(26.9)
(43.4)
(70.3)
(69.6)
(26.2)
-
-
-
-
(0.6)
-
(2.1)
(61.7)
(64.4)
(7.9)
28.1
-
-
(44.2)
0.2
(44.0)
-
(44.0)
(44.1)
(44.1)
1,241.5
12.9
30.0
308.0
111.8
(4.9)
168.0
-
1,867.3
(1,663.6)
-
(0.4)
3.4
206.7
(59.7)
147.0
(43.4)
103.6
44.0
87.4
Revenue
Net premium revenue
Gain/(loss) on derecognition of amortised cost
investments
Gain/(loss) on derecognition of assets carried at
FVOCI
Interest income earned from financial assets
measured at amortised costs and FVOCI
Other investment income
Credit impairment losses
Fees and other revenues
Inter-segment revenues
Segment revenue
Benefits and expenses
Inter-segment expenses
Loss arising on business combinations, acquisitions
and divestitures
Share of operating income of associates and joint
ventures
Segment income before tax
Income taxes
Segment net income/(loss) from continuing
operations before listing expense and other
transaction costs
Listing expense and other transaction costs
Segment net income/(loss) from continuing
operations
Net income attributable to shareholders
Net income attributable to shareholders before
listing expense and other transaction costs
Change December 31, 2020 vs December 31, 2019 (%)
Sagicor Life Sagicor Jamaica
Sagicor Life
USA
Head office &
other
Adjustments
1%
20%
(53%)
1%
(62%)
(629%)
4%
14%
(2%)
-
18%
2%
(38%)
2%
-
(127%)
(98%)
(22%)
-
(14%)
15%
16%
(100%)
-
(18%)
(14%)
(6%)
(17%)
-
(17%)
(22%)
(22%)
(6,267%)
(53%)
1%
(69%)
-
(69%)
(18%)
(18%)
34%
-
(268%)
7%
(60%)
(900%)
(50%)
-
21%
(38%)
(231%)
-
-
(177%)
180%
(177%)
-
(177%)
(177%)
(2%)
100%
-
42%
185%
(350%)
12%
(81%)
(26%)
(18%)
(12%)
-
-
(194%)
36%
(175%)
100%
(5%)
(6%)
(177%)
(182%)
-
-
-
-
100%
-
(76%)
51%
52%
80%
15%
-
-
99%
(300%)
98%
-
98%
98%
98%
85
Total
13%
(31%)
(33%)
2%
(86%)
(390%)
(17%)
-
1%
(7%)
-
(225%)
(1,126%)
(87%)
28%
(110%)
100%
(115%)
(108%)
(104%)
The performance of these reporting segments for the three-month and twelve-month periods ended December 31, 2020 compared to the same period in 2019 is
discussed in the following sections.
86
Sagicor Life segment
The Sagicor Life segment conducts life, health insurance, property & casualty
insurance, pensions, annuities, and asset management services in Barbados,
Trinidad and Tobago, Eastern Caribbean, Dutch Caribbean, the Bahamas
and Central America. Sagicor Life has a diversified customer base providing
financial solutions to both individuals and corporations, mainly through a captive
distribution network and local brokers. Sagicor Life’s strong corporate image,
people, financial strength, and diverse insurance solutions has contributed to
Sagicor Life’s leading position in the insurance market in the Caribbean. Sagicor
Life has an “A-stable” rating from A.M. Best.
Sagicor Life Highlights
REVENUE GROWTH BY OPERATING SEGMENT
$320.5
2018
$409.2
2019
$414.2
2020
Three months ended
December 31
Year ended
December 31
(in millions of US $)
2020
2019 Change
2020
2019 Change
Sagicor Life segment
Net premium revenue
156.1
126.0
24%
414.2
409.2
1%
Gain on derecognition of
amortised cost
investments
0.6
0.5
20%
0.6
0.5
20%
1.7
2.9
(41%)
2.9
6.2
(53%)
Gain on derecognition of
assets carried at FVOCI
Interest income earned
from financial assets
measured at amortised
costs and FVOCI
Other investment income
Credit impairment gains/
(losses)
Fees and other revenue
Inter-segment revenues
Total revenue
Benefits
19.9
2.5
0.9
3.1
5.8
20.1
3.1
(1%)
(19%)
74.8
4.1
(0.4)
325%
4.9
5.1
(37%)
14%
18%
(7.4)
11.4
22.7
74.2
10.8
1.4
11.0
20.0
190.6
162.2
523.3
533.3
(112.8)
(94.6)
(19%) (330.4)
(331.4)
1%
(62%)
(629%)
4%
14%
(2%)
-
-
Expenses and taxes
(35.3)
(34.5)
(2%)
(125.7)
(126.3)
s
n
o
i
l
l
i
m
$
S
U
$47.1
2018
$58.9
2019
$49.1
2020
Net Premium Revenue
Net Income
Return on Total Equity
Return on Shareholder’s Equity
Return on Investments
2020
9.1%
8.8%
5.4%
2019
12.2%
12.7%
6.1%
2018
9.5%
8.1%
5.9%
The following table summarises the results of the Sagicor Life segment for the
three-month and year ended December 31, 2020 and 2019.
Depreciation and
amortisation
Inter-segment expenses
Other
Segment income before
taxes
Income taxes
Net segment income
from continuing
operations
Income attributable to
shareholders
Return on Investments
(annualised)
Return on Equity
(annualised)
Return on Shareholder’s
Equity (annualised)
(3.4)
(0.6)
0.3
(2.1)
(1.4)
0.4
(62%)
57%
(25%)
38.8
(2.6)
30.0
29%
(1.8)
(44%)
(8.9)
(4.1)
3.3
57.5
(8.4)
(7.4)
(5.0)
3.6
(20%)
18%
(8%)
66.8
(7.9)
(14%)
(6%)
36.2
28.2
28%
49.1
58.9
(17%)
35.2
29.4
20%
47.7
60.9
(22%)
6.1%
6.6% (0.5) pts
5.4%
6.1% (0.7) pts
26.3% 22.0% 4.3 pts
9.1%
12.2% (3.1) pts
25.7% 23.0% 2.7 pts
8.8%
12.7% (3.9) pts
87
Fourth quarter (three-month period) results of the Sagicor Life Segment analysis
Notwithstanding the continued impact of the COVID-19 pandemic, the Sagicor
Life segment demonstrated a strong performance for the three-month period
ended December 31, 2020, with growth in its new business sales to individuals
closing 13% over the previous quarter together with a significant new single
premium annuity sale amounting to US $63.9 million during the quarter.
Additionally, the segment was able to improve its asset liability matching by
acquiring debt securities that better match its policy liability maturity profile at
attractive yields, resulting in a reduction of its actuarial provisions.
The net income attributable to shareholders was US $35.2 million for the
three-month period ended December 31, 2020, US $5.8 million above the
US $29.4 million recorded for the same period in 2019.
The Sagicor Life segment generated total revenue of US $190.6 million for the
three-month period, US $28.4 million (18%) above the US $162.2 million reported
for the same period in the prior year. Net premium revenue was US $156.1 million
compared to US $126.0 million for the same period in 2019, an increase of
US $30.1 million, as the segment benefited from a new single premium annuity
sale as mentioned above.
Net investment income including interest income, gains on derecognition of
financial assets and other investment income totalled US $24.7 million for the
three-month period ended December 31, 2020 and was marginally below the
US $26.6 million reported for the same period in 2019. Interest income for the
three-month period was US $19.9 million and was on par with that reported for
the three-month period ended December 31, 2019. Other investment income
was US $2.5 million, compared to US $3.1 million for Q4 2019, a decrease of
US $0.6 million. During Q4 2020, the segment reported unrealised losses on
investment property totalling US $1.3 million (Q4, 2019 – US $0.7 million).
Fees and other revenues decreased by US $1.8 million to close at US $3.1 million
for the three-month period ended December 31, 2020, compared to
US $4.9 million for the corresponding period in 2019.
Benefits incurred for the Sagicor Life segment totalled US $112.8 million for the
three-month period ended December 31, 2020 compared to benefits incurred
of US $94.6 million reported for the same period in the prior year an increase of
US $18.2 million. Net policy benefits excluding the changes in actuarial reserves
increased by US $8.1 million mainly due to higher benefits paid, driven by the
impact of higher annuity business, along with the continued growth in the life
insurance portfolio. In addition, net change in actuarial liabilities increased
by US $9.3 million to close at US $43.9 million and includes the impact of the
single premium new annuity sale (US $47.8 million). The impact of a new single
premium annuity sale was partially offset by better asset liability matching, the
impact of which was a reduction in the actuarial liabilities of US $ 27.6 million.
Total expenses and taxes for the Sagicor Life segment totalled US $41.9 million
for the three-month period ended December 31, 2020, US $2.1 million above the
US $39.8 million reported for the same period in 2019. The increase in expenses
was due to restructuring charges related to the retirement of a senior executive.
Year-to-date (twelve-month period) results of the Sagicor Life Segment analysis
The Sagicor Life segment was impacted by the COVID-19 pandemic during
the year ended December 31, 2020. The impact is reflected primarily in higher
expected credit losses and lower sales in our individual life and annuities lines of
business versus the previous year. Despite these challenges this segment had a
creditable performance and was buoyed by a new single premium annuity sale
during 2020 with premium of US $63.9 million.
The net income attributable to shareholders was US $47.7 million for the year
ended December 31, 2020, US $13.2 million below the US $60.9 million recorded
for the same period in 2019.
The Sagicor Life segment generated total revenue of US $523.3 million,
US $10.0 million (2%) lower than the US $533.3 million reported for the same
period in the prior year. Net premium revenue was US $414.2 million compared to
US $409.2 million for the same period in 2019, an increase of US $5.0 million. The
segment was impacted by growth in net premium revenue for the life and annuity
insurance business when compared to the prior year. The segment benefited from
a new significant single premium policy in Q4 2020 amounting to US $63.9 million.
Net investment income including interest income, gains on derecognition
of financial assets and other investment income totalled US $82.4 million,
US $9.3 million below the US $91.7 million reported for the same period in 2019.
Interest income for the year ended December 31, 2020 was US $74.8 million
which was on par with the prior year’s levels. Other investment income totalled
US $4.1 million, as the segment recorded realised and unrealised losses on
financial assets categorised as FVTPL of US $2.9 million due to the impact of
COVID-19 on capital markets. During the same period in 2019, the segment
reported gains of US $3.8 million.
Credit impairment losses for the year 2020 totalled US $7.4 million, compared
to impairment gains of US $1.4 million, for the corresponding period in 2019 and
resulted from the update of credit assessment assumptions due to the impact of
the pandemic.
88
Fees and other revenues increased marginally, closing at US $11.4 million for the
period under review.
Benefits incurred for the Sagicor Life segment totalled US $330.4 million
for the year ended December 31, 2020 compared to benefits incurred of
US $331.4 million reported for the same period in the prior year. Benefits include
the impact of the single premium new annuity sale (US $47.8 million), offset by
the reduction in actuarial liabilities relating to asset matching of US $ 27.6 million.
Total expenses and taxes for the Sagicor Life segment totalled
US $147.1 million for the year ended December 31, 2020 and was slightly above
the US $146.6 million reported for the same period in 2019.
The following table summarises the financial position of the Sagicor Life segment
as of December 31, 2020 and December 31, 2019.
Statement of Financial Position
As of December 31
(in millions of US $)
2020
2019
Change
out our business continuity plan and moved to provide services to our clients
remotely. New products were launched during the year targeted at the annuities
market and the life insurance market. Additionally, we continue to be competitive
in the single premium annuity market and were able to grow new business here
in the fourth quarter.
Sagicor Jamaica segment
The Sagicor Jamaica segment offers life, health, annuity, property and casualty
insurance, pension administration services, commercial banking, investment
banking, hospitality and real estate investment services in the markets of Jamaica,
Cayman Islands, Costa Rica and the United States of America. Sagicor Jamaica’s
strong brand, together with its wide range of products and highly skilled work
force, has allowed it to maintain a leading position in market segments in which
it operates. Its commercial banking services are offered through a network of
sixteen (16) branches. Sagicor Life Jamaica Limited, a life insurance subsidiary
within the Sagicor Jamaica segment, currently holds a financial strength rating of
B++ stable and an issuer credit rating of bbb+ stable, with A.M. Best.
Sagicor Life segment
Financial investments
Other assets
Inter-segment assets
Total assets
Policy liabilities
Other liabilities
Inter-segment liabilities
Total liabilities
Net assets
1,551.0
337.6
390.6
2,279.2
1,477.9
82.8
126.4
1,687.1
592.1
1,438.6
341.4
335.8
2,115.8
1,379.8
77.3
120.0
1,577.1
538.7
8%
(1%)
16%
8%
7%
7%
5%
7%
10%
Sagicor Jamaica Highlights
NET PREMIUM REVENUE AND NET INCOME GROWTH
$309.7
2018
$350.1
2019
$355.4
2020
Financial investments totalled US $1,551.0 million (December 31, 2019 - US
$1,438.6 million) and comprised 68% (December 31, 2019 - 68%) of the segment’s
total assets, and policy liabilities totalled US $1,477.9 million (December 31,
2019 - US $1,379.8 million) and comprised 88% (December 31, 2019 - 87%) of
the segment’s total liabilities at the end of December 2020. Overall, net assets
increased by 10% or US $53.4 million due to strong operating results.
s
n
o
i
l
l
i
m
$
S
U
$110.8
2018
$123.6
2019
$37.8
2020
Net Premium Revenue
Net Income
New initiatives and developments
The COVID-19 virus has had a significant impact on all the territories in which
we operate during 2020. In response, Sagicor implemented several initiatives
to assist the communities in which we operate in these difficult times. We rolled
Return on Total Equity
Return on Shareholder’s Equity
Return on Investments
2020
4.1%
14.3%
5.6%
2019
15.1%
20.3%
8.8%
2018
17.4%
18.9%
7.6%
Three months ended
December 31
Year ended
December 31
Three months ended
December 31
Year ended
December 31
(in millions of US $)
2020
2019 Change
2020
2019 Change
(in millions of US $)
2020
2019 Change
2020
2019 Change
89
Sagicor Jamaica segment
Net premium revenue
90.6
93.7
(3%)
355.4
350.1
2%
Gain on derecognition
of amortised cost
investments
Gain on derecognition of
assets carried at FVOCI
Interest income earned
from financial assets
measured at amortised
costs and FVOCI
Other investment income
/(expenses)
Credit impairment gains/
(losses)
Fees and other revenue
Total revenue
Benefits
3.0
10.3
(71%)
8.3
13.3
(38%)
3.6
15.1
(76%)
21.7
21.3
2%
39.4
40.9
(4%)
160.5
160.3
-
14.0
8.6
63%
(14.3)
52.1
(127%)
(9.5)
106%
(12.1)
(6.1)
(98%)
0.6
25.9
177.1
35.1
(26%)
112.4
144.3
194.2
(9%)
631.9
735.3
(73.6)
(65.0)
(13%)
(231.9) (308.9)
(22%)
(14%)
25%
4%
Expenses and taxes
(61.0)
(69.3)
12% (228.6) (238.9)
Depreciation,
amortisation and
impairments
Inter-segment expenses
Gain/(loss) arising on
business combination,
acquisitions and
divestitures
Loss on impairment
of associates and joint
ventures
Share of operating losses
from associates and joint
ventures
Segment income before
taxes c/fwd
(4.7)
(0.8)
(5.5)
(0.9)
15%
11%
(20.2)
(20.4)
(2.1)
(2.5)
1%
16%
1.5
(19.0)
-
-
-
-
(1.3)
(31.8)
-
-
-
-
(15.5)
(5.7)
(172%)
(38.2)
(0.6) (6,267%)
4.0
47.8
(92%)
77.8
164.0
(53%)
Segment income before
taxes b/fwd
4.0
47.8
(92%)
77.8
164.0
(53%)
Income taxes
(8.7)
(15.5)
44%
(40.0)
(40.4)
1%
Net segment income from
continuing operations
Income attributable to
shareholders
Return on Investments
(annualised)
Return on Total Equity
(annualised)
Return on Shareholder’s
Equity
(4.7)
32.3
(115%)
37.8
123.6
(69%)
11.0
18.2
(40%)
50.5
61.4
8.0%
7.6% 0.4 pts
5.6%
8.8%
(18%)
(3.2)
pts
(2.1%)
14.3% (16.4) pts
4.1%
15.1% (11.0) pts
11.5%
21.3% (9.8) pts
14.3% 20.3% (6.0) pts
Fourth quarter (three-month period) results of the Sagicor Jamaica Segment
analysis
The Sagicor Jamaica segment reported a net loss of US $4.7 million for the
three-month period ended December 31, 2020 (Q4 2019 – net income of
US $32.3 million) which was impacted by our share of net losses on our Associate
Playa Hotels and Resorts (US $14.8 million) coupled with impairment losses
$19.0 million arising from investment in Associate (Playa Hotels and Resorts).
Net income attributable to shareholders was US $11.0 million for the three-month
period ended December 31, 2020 compared to US $18.2 million for the three-
month period ended December 31, 2019.
This segment generated total revenue of US $177.1 million for the three-month
period ended December 31, 2020, compared to US $194.2 million for the same
period in the prior year. This represented a decrease of US $17.1 million or 9%.
Premium income closed at US $90.6 million for the fourth quarter of 2020
compared to US $93.7 million, for the same period in 2019, a decrease of
US $3.1 million. While the Life, health and property and casualty insurance
businesses observed declines, improvements were seen in the annuities business.
Interest income was US $39.4 million, for the three-month period ended
December 31, 2020 compared to US $40.9 million in the corresponding prior
period. Other investment income totalled US $14.0 million, for the period
under review, compared to income of US $8.6 million for the same period in
90
the prior year. Investment gains totalled US $11.9 million were higher than the
US $6.9 million reported in the prior year and was affected by mark-to-market
movements experienced in the local and international capital markets.
Year-to-date (twelve-month period) results of the Sagicor Jamaica Segment
analysis
Credit impairment assessment resulted in a of gain totalled US $ 0.6 million
for the three-month period ended December 31, 2020, compared to losses of
US $9.5 million for the same period in 2019, a decrease in the impairment loss of
US $10.1 million.
Fees and other revenue closed at US $25.9 million for the three-month period
under review, compared to US $35.1 million for the same period in 2019, a
decrease of US $9.2 million or 26%. During the period, the segment was
impacted by lower hotel revenues of US $6.3 million, as the hotel business
line continues to grapple with worldwide travel restrictions occasioned by the
COVID-19 pandemic. In addition, in 2019, the segment of benefited from higher
fee income from the banking business.
Benefits totalled US $73.6 million compared to US $65.0 million reported for the
same period in 2019 an increase of US $8.6 million. The segment reported net
change in actuarial liabilities increase of US $9.4 million compared to a release of
US $0.1 million in 2019, an increase of US $9.5 million. The Individual Life reserve
releases for assumption changes in Q4 2020 was lower than in Q4 2019 coupled
with higher actuarial liabilities in Employee Benefits driven by higher annuities
new business.
Expenses and taxes incurred amounted to US $75.2 million for the three-month
period compared to US $91.2 million for the same period in 2019, a decrease of
US $16.0 million. Depreciation, amortisation and impairment charges totalled
US $4.7 million, a decrease of US $0.8 million when compared to that reported
for the same period in 2019. Administrative expenses declined by US $9.0 million
to close at US $43.8 million and was partially as a result to lower hotel expenses,
as the tourism industry continued to grapple with restricted travel associated
with the COVID-19 pandemic, coupled with declines in income taxes of
US $6.8 million due to the lower net income levels in Q4 2010.
Earnings from other sources was a loss of US $33.0 million for the fourth
quarter of 2020, compared to a loss of US $5.7 million for the same period in
2019. During the December 2020 quarter, our Jamaica segment incurred a
loss of US $33.8 million (including US $19.0 million in impairment losses) on its
associated company investment in Playa Hotels and Resorts due to the impact
of the COVID-19 travel restrictions’ adverse impact on hotel operations. This
loss largely represents our share of net income/(loss) of the associate and an
impairment charge on the investment in the associate (Shareholder impact: - loss
of US $3.3 million).
Net income for the Sagicor Jamaica segment for the year ended December
31, 2020 was US $37.8 million (2019 - US $123.6 million). The impact of the
COVID-19 pandemic and the resulting travel restrictions adversely impacted our
investments in hotel operations, caused recognition of a significant share of loss
and impairment charges on the associated company investment, Playa Hotels
and Resorts (US $73.5 million). Net income attributable to the shareholders
was US $50.5 million compared to US $61.4 million in 2019, a decline of 18%
(US $10.9 million).
This segment generated total revenue of US $631.9 million for the year period
ended December 31, 2020, compared to US $735.3 million for the same period in
the prior year. This represented a decrease of US $103.4 million or 14%.
Premium income totalled US $355.4 million for the year compared to
US $350.1 million, for the same period in 2019, an increase of US $5.3 million.
The segment’s acquisition of a 60% interest in Advantage General Insurance
Company Limited (AGI) effective September 30, 2019, contributed
US $18.4 million in net premiums income. However, this impact was reduced by
declines in life and annuity premium revenue.
Interest income was US $160.5 million and was on par with the US $160.3 million
reported for the same period in 2019. Other investment losses totalled
US $14.3 million, for the year under review, compared to income of
US $52.1 million for the prior year. Realised and unrealised losses on financial
assets categorised as FVTPL totalled US $17.6 million for the year 2020,
compared to gains of US $46.7 million for the same period in 2019. These
investment losses resulted from the impact of mark-to-market declines in the
local and international capital markets, as capital markets responded to the
economic uncertainty created by the COVID-19 pandemic.
Credit impairment losses totalled US $12.1 million for the year ended December
31, 2020, compared to US $6.1 million for the same period in 2019, an increase in
impairments losses of US $6.0 million, due to the continuing economic impact
of the pandemic. Sagicor Jamaica strengthened the provisions on loans and
investments, given the slow economic recovery projected.
Fees and other revenue closed at US $112.4 million for the year under review,
compared to US $144.3 million for the same period in 2019, a decrease of
US $31.9 million or 22%. During the period, the segment benefited from fees
and other revenue generated in the property and casualty lines of business
acquired effective September 30, 2019. Hotel revenues however, declined by
US $22.6 million, as the industry continues to be negatively impacted by travel
restrictions associated with the COVID-19 pandemic. Declines were also reported
in fee income from the segment’s banking business, primarily from the slowing
of consumer activity and the decline in corporate financing deals closed during
the period.
Benefits totalled US $231.9 million compared to US $308.9 million reported
for the same period in 2019, a decrease of US $77.0 million. Net change in
actuarial liabilities was a release of US $26.3 million compared to an increase
of US $59.3 million reported in 2019. During the year under review the change
in actuarial liabilities was positively influenced by improvements in mortality,
morbidity, lapse experience and other assumptions, which were updated during
the period (US $70.1 million). The impact of the releases was reduced by an
increase related to the strengthening of the actuarial liabilities as a result of a
change in the yield curve (US $27.1 million).
Expenses and taxes incurred amounted to US $290.9 million for the year
compared to US $302.2 million for the same period in 2019, a decrease of
US $11.3 million over the prior year’s levels. Expenses excluding taxes decreased
by US $10.9 million to close at US $250.9 million. While the segment incurred
additional expenses of US $7.1 million in the newly acquired property and
casualty business, this was offset by lower expenditure in the hotel business
(US $16.8 million). Income taxes totalled US $40.0 million for the period under
review, compared to US $40.4 million for the same period in 2019.
Earnings from other sources was a loss of US $71.3 million for the year ended
December 31, 2020, compared to a loss of US $0.6 million for the same period
in 2019. During the year, the segment incurred a loss of US $73.5 million on its
associated company investment in Playa Hotels and Resorts due to the impact
of the COVID-19 travel restrictions’ adverse impact on hotel operations. This
loss largely represents our share of net income/(loss) of the associate and an
impairment charge on the investment in the associate (Shareholder impact: - loss
of US $6.7 million).
The following table summarises the financial position of the Sagicor Jamaica
segment as of December 31, 2020 and December 31, 2019.
Statement of Financial Position
As of December 31
(in millions of US $)
2020
2019
Change
91
Sagicor Jamaica segment
Financial investments
Other assets
Inter-segment assets
Total assets
Policy liabilities
Other liabilities
Inter-segment liabilities
Total liabilities
Net assets
2,714.5
2,670.3
730.0
10.6
795.8
15.9
3,455.1
3,482.0
824.5
1,690.4
12.9
865.9
1,673.1
6.1
2,527.8
2,545.1
927.3
936.9
2%
(8%)
(33%)
(1%)
(5%)
1%
111%
(1%)
(1%)
Financial investments totalled US $2,714.5 million (December 31, 2019 – US
$2,670.3 million) and comprised 79% (December 31, 2019 - 77%) of the
segment’s total assets. Total assets closed at US $3,455.1 million, a decrease
of 1% (US $26.9 million). Policy liabilities totalled US $824.5 million (December
31, 2019 – US $865.9 million) and other liabilities totalled US $1,690.4 million
(December 31, 2019 – US $1,673.1 million), representing 33% (December 31, 2019
- 34%) and 67% (December 31, 2019 - 66%) of the segment’s total liabilities at the
end of December 31, 2020 and December 31, 2019.
Overall net assets declined by 1% from US $936.9 million as at December 31, 2019
to US $927.3 million at the end of December 2020, mainly due to the decline
in the value of the Jamaican dollar relative to the US dollar, coupled with lower
operating results.
New initiatives and developments
The COVID-19 virus had a significant impact on the Sagicor Jamaica segment.
In response, Sagicor Jamaica Group implemented several initiatives to assist
the communities in which we operate in these difficult times. Additionally, we
rolled out our business continuity plan and moved to provide services to our
clients remotely.
92
Sagicor Life USA segment
Sagicor Life USA Highlights
Sagicor USA, Inc. and its operating entity, Sagicor Life Insurance Company,
(collectively, Sagicor USA) operate in 45 states and the District of Columbia.
Sagicor USA is focused on providing life and annuity products to middle market
America through independent producers and direct-to-consumer platforms
(SagicorNOW.com and PeaceAssured.com). Middle market America has been
defined broadly as individuals and families with household incomes of $40,000
to $100,000 or retirees or near-retirees with retirement portfolios of $100,000 to
$1,000,000.
Sagicor USA’s products can be broadly placed in three categories:
• Periodic premium – This would include products such as several variations
of term insurance, non-participating whole life, indexed universal life and
no-lapse universal life. All of these products usually allow the owner to pay
premiums on a monthly, quarterly, or annual basis.
• Single premium life – This category includes two products developed to
support an older demographic who are looking principally to provide a
larger legacy upon their death, while having access to funds to assist if
they need critical care. We offer a standard interest crediting whole life
product as well as an indexed universal life product.
s
n
o
i
l
l
i
m
$
S
U
NET PREMIUM REVENUE AND NET INCOME/LOSS
$390.0
2018
$444.7
2019
$597.1
2020
$18.3
2018
$35.4
2019
($27.1)
2020
Net Premium Revenue
(loss)
Net Income/(loss)
• Annuities – Currently all of Sagicor USA’s annuity offerings are single
Return on Shareholder’s Equity
Return on Total Equity
premium products including such products as multi-year guaranteed, fixed
interest crediting, indexed crediting as well as immediate annuities. Most of
the products are focused on helping the customer accumulate assets with
little to no market risk to their initial premium.
Return on Investments
The following table summarises the results of the Sagicor Life USA segment for
the three-month periods and years ended December 31, 2020 and 2019.
2020
(9.2%)
(9.2%)
4.2%
2019
14.0%
14.0%
6.8%
2018
7.8%
7.8%
3.1%
Three months ended
December 31
Year ended
December 31
Fourth quarter (three-month period) results of the Sagicor Life USA Segment
analysis
93
(in millions of US $)
2020
2019 Change
2020
2019 Change
Sagicor Life USA
segment
Net premium revenue
255.4
70.9
260%
597.1
444.7
34%
1.5
1.5
-
(4.2)
2.5 (268%)
Gain/(loss) on
derecognition of
assets carried at FVOCI
Interest income earned
from financial assets
measured at amortised
costs and FVOCI
Other investment income
Credit impairment losses
Depreciation and
amortisation
Inter-segment expenses
Segment income/(loss)
before taxes
19.9
19.8
0.1
18.2
13.8
9%
43%
(0.5)
120%
74.8
18.9
(4.0)
(3.6)
70.2
46.9
7%
(60%)
(0.4) (900%)
(2.4)
(50%)
Fees and other revenue
(1.7)
(0.9)
(89%)
Total revenue
Benefits
295.0
103.0
186% 679.0
561.5
21%
(263.9)
(64.5) (309%)
(643.1) (448.3)
(43%)
Expenses and taxes
(17.6)
(15.9)
(11%)
(62.0)
(62.4)
1%
(1.2)
(1.5)
(1.3)
8%
(0.4)
(275%)
(4.2)
(4.3)
(4.7)
11%
(1.3)
(231%)
Income taxes
(2.0)
(4.4)
55%
7.5
10.8
20.9
(48%)
(34.6)
44.8
(9.4)
(177%)
180%
Net segment income/
(loss) from continuing
operations
Income/(loss)
attributable to
shareholders
Return on Investments
(annualised)
Return on Equity
(annualised)
Return on Shareholder’s
Equity (annualised)
8.8
16.5
(47%)
(27.1)
35.4
(177%)
8.8
16.5
(47%)
(27.1)
35.4
(177%)
6.6%
6.5% 0.1 pts
4.2%
6.8% (2.6) pts
13.4% 23.6% (10.2 pts) (9.2%)
14.0% (23.2) pts
13.4% 23.6% (10.2 pts) (9.2%)
14.0% (23.2) pts
The Sagicor Life USA segment reported net income of US $8.8 million, for the
three-month period ended December 31, 2020.
The segment generated revenue of US $295.0 million for the three-month period
ended December 31, 2020, compared to US $103.0 million reported for the same
period in 2019, an increase of 186% or US $192.0 million. Net premium revenue
closed the period at US $255.4 million, up 260% or US $184.5 million, compared
to the US $70.9 million reported for the same period in 2019. The segment
benefitted from higher multi-year guaranteed annuity (MYGA) business during
Q4 2020 the result of a direct strategy to increase its sales.
Interest income totalled US $19.9 million for the three-month period ended
December 31, 2020 and was moderately above that reported for the same period
in 2019.
Other investment income totalled US $19.8 million for the fourth quarter of 2020
compared to US 13.8 million for the same period in 2019. During the three-month
period the segment continued to experience a reversal of the unrealised mark-
to-market losses incurred earlier in the financial year, when the capital markets
responded negatively to the impact of the COVID-19 pandemic.
Benefits reflect policy payments (surrenders, deaths, lapses, etc.) and changes
in actuarial liabilities. Policy payments totaled US $40.7 million compared to
US $32.3 million, an increase of US $8.4 million, as surrenders and other policy
benefits increased, consistent with the growth in the insurance portfolio. The
changes in actuarial liabilities totaled US $223.6 million for the fourth quarter in
2020, compared to US $30.3 million, for the same quarter in 2019, an increase
of US $193.3 million, driven by increased new business during the quarter. The
changes in actuarial liabilities for the fourth quarter 2020, also reflected a
US $18.1 million strengthening associated with its forward-looking assumptions
surrounding its policy liabilities and the long-term impact COVID-19 has had on
the economic policy and long-term outlook in the USA.
Total expenses and taxes totaled US $22.3 million and was on par with that
reported for the same period in 2019. Expenses increased by US $2.7 million and
was driven by the increased sales for the quarter.
In summary, the net income for the three-months ended December 31, 2020 was
impacted significantly by the segment’s increase in new annuity business.
94
Year-to-date (twelve-month period) results of the Sagicor Life USA Segment
analysis
The Sagicor Life USA segment incurred a loss of US 27.1 million, for the
year ended December 31, 2020, as noted previously due to the significant
ramifications of COVID-19 and the SRBL transaction (see below), representing a
US $63.7 million decrease from the US $35.4 million net income reported for the
same period in the prior year.
The Sagicor Life USA segment generated revenue of US $679.0 million for
the year ended December 31, 2020, compared US $561.5 million reported for
the same period in 2019, an increase of 21% or US $117.5 million. Net premium
revenue closed the period at US $597.1 million, up 34% or US $152.4 million,
compared to the US $444.7 million reported for the same period in 2019, due to
the higher annuity sales.
The investment portfolio increase drove increased interest income totalling
US $74.8 million, up US $4.6 million from the US $70.2 million reported for 2019.
Other investment income totalled US $18.9 million for the year ended December
31, 2020 compared to income of US $46.9 million for the same period in 2019
and includes market movements in the segment’s hedging portfolio which
reflected a cumulative gain for the year 2020 of $7.7 million compared to
a gain of US $32.9 million in the prior year. Additionally, the segment also
reported realised and unrealised gain on financial assets categorised as FVTPL
of US $4.1 million during the year ended December 31, 2020 compared to
gains of US $9.1 million in the prior period, a reduction of US $5.0 million,
as capital markets still experience significant volatility as a result of the
COVID-19 pandemic.
Benefits totaled US $643.1 million for the year ended December 31, 2020
compared to US $448.3 million for the same period in 2019, an increase of
US $194.8 million. Net policy benefits excluding changes in actuarial liabilities
totaled US $177.2 million for the year, compared to US $115.2 million for the
prior year, an increase of US $62.0 million and reflects expected increases in
surrenders and other policy benefits, as the in-force business continues to grow.
Net changes in actuarial liabilities totaled US $463.4 million, compared to
US $325.9 million, an increase of US $137.5 million due to the growth in business
over the prior year. The segment also reflected in this increase US $33.6 million
associated with its forward-looking assumptions surrounding its policy
liabilities and the long-term impact COVID-19 has had on the economic policy
and long-term outlook in the USA. In addition, during the June 2020 quarter,
Sagicor Life USA completed a transaction whereby it transferred the insurance
risks associated with certain life products and US $195 million of financial
instruments supporting those liabilities to Sagicor Reinsurance Bermuda Limited
(SRBL), providing approximately US $26 million of regulatory capital relief to
SLIC. However, this transaction did result in a strengthening of the associated
policy liabilities recognized in the consolidated segment of approximately
US $13.4 million.
Driven by lower income taxes, total expenses and taxes decreased by 19%.
Commission and premium taxes are 5% higher than the same period a year
ago due to higher new business. The segment recognized a tax credit of
US $7.5 million compared to a tax charge of US $9.4 million in 2019, driven by the
loss recorded for the year.
In summary, the net loss for year ended December 31, 2020 was impacted by the
significant volatility of the capital markets as a result of the global pandemic and
the associated impact of investment returns (both current and projected) on the
actuarial liabilities.
Statement of Financial Position
As of December 31
(in millions of US $)
2020
2019
Change
Sagicor Life USA segment
Financial investments
Other assets
Inter-segment assets
Total assets
Policy liabilities
Other liabilities
Inter-segment liabilities
Total liabilities
Net assets
2,556.3
2,040.8
767.8
59.0
3,383.1
2,507.8
452.6
152.8
735.7
65.2
2,841.7
1,997.4
437.9
110.8
3,113.2
2,546.1
25%
4%
(10%)
19%
26%
3%
38%
22%
269.9
295.6
(9%)
Consistent with prior reporting periods, Sagicor Life USA’s financial position is
dominated by the liabilities it recognizes on its in force life and annuity policy
obligations; 81% of total liabilities as of December 31, 2020 (December 31, 2019
– 78%) and the financial investments that support those liabilities (76% of total
assets as of December 31, 2020 and 72% of total assets as of December 31, 2019).
Policy liabilities and the supporting financial investments grew during the
twelve months ended December 31, 2020 as the company wrote approximately
95
US $568.0 million of new single premium life and annuities while paying out
approximately US $204.2 million in benefits and commissions.
Overall, the decrease in net assets from December 31, 2019 to December 31,
2020 of US $25.7 million (9%) was a direct result of the market impact of the
COVID-19 pandemic coupled with increases in the actuarial assumptions for the
policy liabilities, offsetting the growth noted above.
New initiatives and developments
Strategic initiatives for 2020 have been focused on continuing the segment’s
long-standing initiatives on serving the middle-market consumer. While COVID-
19 has disrupted the timing of some of these initiatives, the segment’s focus
in prior periods on Accelewriting ® and SagicorNOW (the segment’s direct-
to-consumer platform) has allowed for increased life insurance sales from
the prior year and we are focusing on growing these platforms (allowing for
contactless future sales). Also, the segment focused its attention on ”simple”
annuity products, specifically its MYGA suite, offering the consumer a measure of
certainty in an unsettled economic environment.
96
4. FINANCIAL POSITION
Capitalisation and Solvency
Capitalisation
The Group’s objectives when managing capital, which is a broader concept than
equity in the statement of financial position, are:
At December 31, 2020, the Company’s capital totalled US $2,128.2 million, a
decrease of US $138.1 million from the December 31, 2019 position (US $2,266.3
million). Capital resources’ decline during the year was largely driven by marked-
to-market declines of our financial asset in response to the COVID-19 pandemic,
coupled with declines in operating income being reported. During the year, the
distribution of dividends to shareholders and a reduction to notes and loans
payable also impacted capital resources. Non-controlling interests at December
31, 2020 were lower than reported in the prior year.
• To comply with capital requirements established by insurance, banking and
Financial Leverage
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; and
• To maintain a strong capital base to support the future development of
Group operations.
Capital resources
The principal capital resources of the Group are as follows:
(in millions of US $)
2020
2019
2018
2017
Restated (i)
Shareholders’ equity
Non-controlling interest
Notes and loans payable
Total financial statement
capital resources
1,109.8
546.8
471.6
1,154.1
594.5
517.7
600.9
530.5
490.3
624.6
311.8
413.8
As of December 31, 2020, Sagicor had a debt to equity ratio of 28.5%, compared
to 29.6% as of December 31, 2019, respectively. To determine the debt to equity
ratio, loans and notes payable, as presented note 16 to the annual financial
statements, is divided by total equity.
The Debt to Capital ratio was 22.2%, at December 30, 2020, compared to
22.8% as of December 31, 2019. To determine the debt to capital ratio, notes
and loans payable as presented in note 16 to the annual financial statements, is
divided by total capital, where capital is the summation of total equity excluding
Participating accounts, (as presented in the Statement of Financial Position
in the annual financial statements) and notes and loans payable, as at the
reporting date.
Both the debt to equity ratio and the debt to capital ratio experienced
improvements when compared to December 2019, due in part to a reduction
in notes and loans payable (US $46.1 million) arising from repayments, coupled
with declines in equity and by extension, capital, associated with the impact of
COVID-19 on the financial results.
2016
537.1
261.1
395.2
Debt Ratios
2,128.2
2,266.3
1,621.7
1,350.2
1,193.4
(i) For details of the restatement, refer to page 128.
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.
Debt ratios
Notes and Loans
Payable/capital
Notes and Loans
Payable/equity
2020
2019
2018
2017
Restated (i)
2016
22.2%
22.8%
30.2%
30.6%
33.1%
28.5%
29.6%
43.2%
44.2%
49.4%
(i) For details of the restatement, refer to page 128.
Capital adequacy
Capital adequacy is managed at the operating company level. It is calculated
by the company’s Appointed Actuary and reviewed by executive management,
the audit committee and the board of directors of the company. In addition,
the Group seeks 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 MCCSR
standard. The minimum standard recommended by the Canadian regulators for
companies is an MCCSR of 150.0%. A number of jurisdictions in the Caribbean
region have no internationally recognised capital adequacy requirements, and
in accordance with its objectives for managing capital, Sagicor has adopted
the Canadian MCCSR standard. Jamaica and the United States have recognised
capital adequacy standards.
Sagicor’s consolidated MCCSR as of December 31, 2020 has been estimated at
252%, compared to 253% at December 31, 2019. This is the principal standard
of capital adequacy used to assess Sagicor’s overall strength. 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 Sagicor Group as a whole and not necessarily applicable to each individual
segment, insurance subsidiary or insurance subsidiary branch.
Sagicor Life Jamaica Limited
Sagicor Life Jamaica is governed by the Jamaican MCCSR regime (based on
Canadian standards in effect in 2001), which requires an insurer to maintain a
minimum ratio of 150%. For the year ended December 31, 2019, this ratio was
179%. At December 31, 2020, the ratio was 183%.
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
97
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 USA looks to maintain at least 300% of the risk-based capital
amount and has maintained these ratios as of December 31, 2020 and December
31, 2019, respectively.
Sagicor Investments Jamaica Limited and Sagicor Bank Jamaica Limited
The 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 Bank of
Jamaica 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 following table summarises the capital adequacy ratios. During 2020 and
the year 2019, all applicable externally imposed capital requirements were
complied with.
98
Sagicor Investments
Actual capital base to risk weighted assets
Required capital base to risk weighted assets
Sagicor Bank
Actual capital base to risk weighted assets
Required capital base to risk weighted assets
Notes and Loans Payable
2020
2019
15%
10%
14%
10%
20%
10%
14%
10%
and bear interest at an annual rate of 8.875%. Pursuant to the terms of the
Notes, the Group may redeem the Notes under the scenario as summarised
below and described in more detail herein:
Optional Redemption without an Applicable Premium - At any time on or
after August 11, 2019, the Group may redeem the Notes in whole or in part
at specified redemption prices, plus accrued and unpaid interest, if any, on
the Notes redeemed, to the applicable date of redemption.
The Group has estimated the fair value of this embedded derivative at
US $5.9 million as at December 31 (2019 – US $2.8 million).
As of December 31, 2020, Sagicor had US $471.6 million in notes and loans
payable compared to US $517.7 million as of December 31, 2019.
issued US $30.6 million and US $3.4 million notes respectively, carrying an
annual rate of 5.10%. The notes matured October 26, 2020.
(b) On September 18 and 26, 2019, Sagicor Financial Corporation Limited
Summary details of carrying values and fair values of notes and loans payable
as of December 31, 2020 and December 31, 2019, respectively are set out in the
following tables.
(c) On September 26, 2019, Sagicor Financial Corporation Limited issued a
Jamaican $ bond in the amount of J$5,731,140,000 carrying an annual
interest rate of 5.95% per annum. The bond matured October 26, 2020.
(in millions of US $)
Notes and loans payable
December 31,
2020
December 31,
2019
Carrying
value
Fair
value
Carrying
value
Fair
value
On October 27, 2020, Sagicor Financial Corporation Limited refinanced
the above facility with the issue of a bond in two Tranches, Tranche A up
to J$5,737,140,000 and Tranche B up to US $31,807,000, carrying annual
interest rates of 6.25% and 5.50% respectively. Interest is payable quarterly
commencing January 27, 2021. The Tranches mature on April 26, 2022, with
an option for further extension.
8.875% senior notes due 2022(a)
315.9
324.7
318.2
330.2
5.50% unsecured bond due 2022 (c)
6.25% unsecured bond due 2022 (c) &(d)
32.0
27.0
32.8
28.5
5.10% unsecured bond due 2020 (b)
5.95% unsecured bond due 2020 (c)
5.00% notes due 2020 (e)
6.75% notes due 2024 (e)
Mortgage loans
Bank loans & other funding
instruments (f)
Total
(a) Valuation of Call Option Embedded Derivative
-
-
33.7
42.9
16.9
16.6
75.0
-
-
34.3
44.8
17.3
15.8
77.0
-
-
-
-
-
-
15.4
59.6
16.3
60.8
21.7
21.7
471.6
484.8
14.4
517.7
14.4
533.8
(d) At December 31, 2020, Sagicor Investments Jamaica Limited held an
investment of US $13.5 million in Tranche A above.
(e) On August 16, 2019, Sagicor Investments Jamaica Limited issued J$4.4
billion notes in two Tranches, Tranche A J$2.22 billion and Tranche B J$2.18
billion, carrying annual rates of 5.00% and 6.75% respectively. Tranche
A matured on September 16, 2020 and Tranche B has a maturity date of
August 16, 2024.
(f) Bank loans and other funding instruments include the following:
(i) On May 24, 2019, Sagicor General Insurance Inc entered into a
US $12 million loan agreement. The interest rate is 3.50% per annum
and the loan matures on July 31, 2024.
As at December 31, 2020, the Group had US $318 million principal amount
of senior unsecured notes (the “Notes”). The Notes are due August 11, 2022
(ii) On October 1, 2020, The Estates (Residential Properties) Limited
issued cumulative preference shares in the amount of US $9 million.
Dividends accrue at a rate of 6.75% per annum and are payable
semi-annually. The preference shares are redeemable on September
30, 2027.
Outstanding Common Shares
Book Value per Common Shares
99
2020
2019
2018
2017
Restated (i)
2016
The authorised share capital of the Company is US $200,000,000 divided
into 10,000,000,000 common shares of US $0.01 each and 10,000,000,000
preference shares of US $0.01 each.
Book value per common
shares
$7.58
$ 7.81
$8.50
$8.83
$7.66
(i) For details of the restatement, refer to page 128.
The number of issued and outstanding common shares at December 31, 2020
was 146,381,394. During the year, the Company purchased for cancelation
2,942,500 shares through its Normal Course Issuer Bid on the Toronto Stock
Exchange for total consideration of US $13.1 million.
Common Shares
Dividends
In total, the Group paid out US $33.3 million in dividends to common
shareholders during the year 2020.
(In millions)
2020
2019
2018
2017
2016
2020
2019
2018
2017
Restated (b)
2016
Number of common
shares outstanding
146.4
147.8
306.6
306.6
304.5
Securities convertible, exercisable or exchangeable into common
shares
• The number of issued and outstanding options at December 31, 2020 was
2,021,000
• The number of issued and outstanding warrants at December 31, 2020 was
34,774,993.
Share Price and Market Capitalization
The Company’s share price closed the December 31, 2020 period-end at US
$5.04, with market capitalisation of US $737.8 million.
2020
2019
2018
2017
2016
Dividends declared and
paid during the year, per
common share
Dividends declared
and paid during the
year, per common
share – Converted using
exchange ratio
Dividend pay-out ratio
before listing expense
and other transaction
costs (a)
Dividend pay-out ratio (a)
$0.2250 $0.0500 $0.0500
$0.0500 $0.0450
N/A $0.2164 $0.2164
$0.2164
$0.1948
-
-
18.9%
37.6%
N/A
41.8%
N/A
N/A
24.4%
22.5%
(a) Profits were negative during the year.
(b) For details of the restatement, refer to page 128.
Share price
$5.04
$7.50
$.980
$1.020
$1.005
Market capitalisation
$737.8
million
$1,108.5
million
$467.5
million
$321.9
million
$306.0
million
On February 3, 2020, the Board of Directors declared a dividend of US $0.05625
per share, on issued and outstanding common shares held by registered holders
on record at the close of business on February 10, 2020. The dividends were paid
on February 28, 2020.
100
On April 24, 2020, the Board of Directors declared a dividend of US $0.05625
per share, on issued and outstanding common shares held by registered holders
on record at the close of business on May 5, 2020. The dividend was paid on May
29, 2020.
On August 14, 2020, the Board of Directors declared a dividend of US $0.05625
per share, on issued and outstanding common shares held by registered holders
on record at the close of business on August 28, 2020. The dividend was paid on
September 18, 2020.
On November 14, 2020, the Board of Directors declared a dividend of US
$0.05625 per share, on issued and outstanding common shares held by
registered holders on record at the close of business on November 25, 2020. The
dividend was paid on December 16, 2020.
Liquidity and Capital Resources
The following discussion is qualified by reference to the consolidated statement
of cash flows and note 36 of the 2020 annual financial statements.
Liquidity sources immediately available to the Sagicor Group include: (i) existing
cash and cash equivalents; (ii) the Group’s portfolio of highly rated, highly liquid
investments; (iii) cash flow from operating activities which include net premiums
receipts, fee income and investment income; and (iv) borrowing facilities. These
funds are used primarily to pay current benefits and operating expenses, service
the Group’s long-term debt, purchase investments to support future benefits and
maturing obligations, and for distribution of dividends. Sagicor expects to have
sufficient liquidity to fund its operations and to meet its current business plans.
However, should the need arise, additional liquidity sources include further bank
loans and new issuances of debt or shares in the private or public markets.
Cash flow
The following table summarise the Group’s cash flows for the three-month
and twelve-month periods ended December 31, 2020 and December 31,
2019, respectively.
(in millions of US $)
Net cash flows from
continuing operations:
Operating activities
Investing activities
Three months ended
December 31
Year ended
December 31
2020
2019 Change
2020
2019 Change
10.2
(5.6)
25.9
(61%)
(99.1)
41.5
(339%)
(5.5)
(2%)
(24.4)
(44.5)
45%
Financing activities
(19.1) 438.5
(104%)
(98.8) 443.8
(122%)
Effect of exchange rate
changes
Net cash flows from
discontinued operation
Cash and
cash equivalents:
(0.9)
2.5
(136%)
(5.8)
(4.9)
(18%)
(15.4) 461.4
(103%)
(228.1) 435.9
(152%)
-
-
-
-
17.8
(100%)
Beginning of period
562.6
313.9
79%
775.3
321.6
141%
End of period
547.2
775.3
(29%)
547.2
775.3
(29%)
Fourth quarter (three-month period) - Cash flows analysis
For the three-month period ended December 31, 2020, Sagicor’s net cash
inflows associated with operating activities was US $10.2 million compared to
US $25.9 million for the same period in 2019. Lower operating inflows were
observed mainly in our USA segment as more funds were utilised during Q4
2020, to invest in securities.
Sagicor’s net cash used in investing activities was US $5.6 million compared to
US 5.5 million for the same period in 2019, an increase of US $0.1 million.
Sagicor’s net cash used for financing activities totalled US $19.1 million during the
December 2020 quarter, compared to inflows of US $438.5 million for the same
period in 2019, an increase of US $457.6 million. The December 2020 quarter
includes cash outflows of US $1.8 million associated with the repurchase of
354,500 shares under a share buyback program. During the year two unsecured
For the year ended December 31, 2020, the effect of exchange rate changes
was a loss of US $5.8 million compared to a loss of US $4.9 million for the
corresponding period in 2019.
In February 2019, the Group received cash flows of US $17.8 million from the
close-out of discontinued operations.
101
bonds matured and were refinanced. Refer to the Notes and Loans Payable
section for details.
In Q4 2019, Sagicor and Alignvest completed the business combination involving
the transfer of all issued and outstanding shares in Sagicor to Alignvest. This
transaction raised over US $450.0 million in new capital for the Group, which
resulted in higher cash inflows from financing activities.
For the three-month period ended December 31, 2020, the effect of exchange
rate changes was a loss of US $0.9 million compared to a gain of US $2.5 million
for the corresponding period in 2019.
Year-to-date (twelve-month period) - Cash flows analysis
For the year ended December 31, 2020, Sagicor’s net cash outflows associated
with operating activities were US $99.1 million compared to inflows of
US $41.5 million for the same period in 2019, an increase in outflows of
US $140.6 million. Funds obtained from the Alignvest transaction capital
injection, which occurred during the last quarter of 2019, were invested in
securities during the year 2020, the impact of this was however was reduced by
increased inflows from operating activities across all business segments.
Sagicor’s net cash used in investing activities was US $24.4 million compared
to US $44.5 million for the same period in 2019, a decrease of US $20.1 million.
During the year Sagicor increased its outflows associated with the acquisition
of property, plant and equipment when compared to the prior year. In addition,
on June 15, 2020, the Company acquired a further 1,500,000 shares of our
Associated Company, Playa, for a total of US $6.0 million. In 2019, our Jamaica
Segment acquired a subsidiary Group, Advantage General Insurance Company
Limited, for US $31.2 million.
Sagicor’s net cash used for financing activities totalled US $98.8 million during
the year 2020, compared to inflows of US $443.8 million for the same period in
2019. The year 2020 includes cash outflows of US $13.1 million associated with
the repurchase of 2,942,500 shares under a share buyback program. Dividends
paid to common shareholders during 2020, increased by US $18.3 million to
close at US $33.3 million for the year. During the year two unsecured bonds
matured and were refinanced, while a loan totalling US $16.9 million was repaid.
Mortgage repayments were also made during the year. Refer to the Notes and
Loans Payable section for details. In 2019, the cash inflows mainly related to the
Alignvest transaction which raised capital of over US $450.0 million.
102
Ratings
Sagicor Financial Corporation Limited, its principal operating subsidiaries, and its
debt financing vehicle, have been rated by the rating agencies AM Best, Standard
and Poor’s, or Fitch. The ratings as of the date of issue of this Management
Discussion and Analysis are as follows.
Sagicor Financial Corporation Limited
Long-term Issuer Default Rating
Sagicor Finance (2015) Limited
Senior Unsecured
(d) Updated June 8, 2020.
Fitch Rating (d)
BB (Stable)
BB- (Stable)
Sagicor Life Inc(a)
Financial Strength
Issuer Credit Rating
Sagicor Life Jamaica Limited(a)
Financial Strength
Issuer Credit Rating
Sagicor Life Insurance Company (USA)(a)
Financial Strength
Issuer Credit Rating
Sagicor Financial Corporation Limited(a)
Issuer Credit Rating
Sagicor Finance (2015) Limited(a)
Senior Unsecured
Sagicor General Insurance Inc(b)
Financial Strength
Issuer Credit Rating
AM Best Rating
Critical Accounting Estimates and Judgments
A - Stable
a- Stable
B++ Stable
bbb+ Stable
A- Stable
a- Stable
bbb- Stable
bbb Stable
A- Stable
a- Stable
Certain accounting estimates and judgements are recognised as critical because
they require us to make particularly subjective or complex judgments about
matters that are inherently uncertain and significantly different amounts could
be reported under different conditions or using different assumptions.
These accounting estimates and judgements are discussed in the sections below.
The notes to the annual financial statements outline the relevant accounting
policies or give specific relevant disclosure to the matters identified in these
sections. These notes are also referred to below.
1.
Impairment of financial assets – IFRS 9
(note 2.9 of the financial statements)
In determining ECL (Expected Credit Losses), management is required to
exercise judgement in defining what is considered a significant increase
in credit risk and in making assumptions and estimates to incorporate
relevant information about past events, current conditions and forecasts of
economic conditions.
(a) Updated September 11, 2020. (b) Updated October 14, 2020
a)
Establishing staging for debt securities and deposits
Sagicor Financial Corporation Limited
Issuer Credit Rating
Sagicor Finance (2015) Limited
Senior Unsecured
(c) Updated November 25, 2020
S&P Rating (c)
BB+ (Stable)
BB+ (Stable)
The Group’s internal credit rating model is a 10-point scale which allows for
distinctions in risk characteristics and is referenced to the rating scale of
international credit rating agencies.
The scale is set out in the following table:
b)
Establishing staging for other assets measured at amortised cost, lease
receivables, loan commitments and financial guarantee contracts.
103
Classification
S&P
Moody’s
Fitch
AM Best
Exposures are considered to have resulted in a significant increase in credit risk
and are moved to Stage 2 when:
aaa, aa
Qualitative test
Category
Sagicor
Risk
Rating
t
n
e
m
t
s
e
v
n
I
e
d
a
r
g
-
n
o
N
t
n
e
m
t
s
e
v
n
i
e
d
a
r
g
t
l
u
a
f
e
d
-
n
o
N
h
c
t
a
W
Default
1
2
3
4
5
6
7
8
9
Minimal risk
Low risk
AAA,
AA
A
Moderate risk
BBB
Acceptable
risk
BB
Aaa, Aa
A
Baa
Ba
Average risk
B
B
Higher risk
Special
mention
Substandard
Doubtful
CCC,
CC
Caa, Ca
C
D
C
C
AAA,
AA
A
BBB
BB
B
CCC,
CC
C
DDD
DD
D
a
bbb
bb
b
ccc, cc
c
d
10
Loss
The Group uses its internal credit rating model to determine which of the three
stages an asset is to be categorized for the purposes of ECL.
Once the asset has experienced a significant increase in credit risk the
investment will move from Stage 1 to Stage 2. Sagicor has assumed that the
credit risk of a financial instrument has not increased significantly since initial
recognition if the financial instrument is determined to have low credit risk at the
reporting date. A financial asset that is investment grade or Sagicor risk rating of
1-3 is considered low credit risk.
Stage 1 investments are rated (i) investment grade, or (ii) below investment
grade at origination and have not been downgraded more than 2 notches since
origination. Stage 2 investments are assets which (i) have been downgraded
from investment grade to below investment grade, or (ii) are rated below
investment grade at origination and have been downgraded more than 2 notches
since origination. Stage 3 investments are assets in default.
• accounts that meet the portfolio’s ‘high risk’ criteria and are subject to
closer credit monitoring.
Backstop Criteria
• accounts that are 30 calendar days or more past due. The 30 days past
due criteria is a backstop rather than a primary driver of moving exposures
into stage 2.
c)
Forward looking information
When management determines the macro-economic factors that impact the
portfolios of financial assets, they first determine all readily available information
within the relevant market. Portfolios of financial assets are segregated based
on product type, historical performance and homogenous country exposures.
There is often limited timely macro-economic data for Barbados, Eastern
Caribbean, Trinidad and Jamaica. Management assesses data sources from
local government, International Monetary Fund and other reliable data sources.
A regression analysis is performed to determine which factors are most
closely correlated with the credit losses for each portfolio. Where projections
are available, these are used to look into the future up to three years and
subsequently the expected performance is then used for the remaining life of the
product. These projections are re-assessed on a quarterly basis.
2.
Fair value of securities not quoted in an active market
(note 41.8 of the financial statements)
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.
104
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.
Recognition and measurement of intangible assets
(note 2.7 of the financial statements)
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.
4.
Impairment of intangible assets
(note 2.7 of the financial statements)
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.
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.
5.
Valuation of actuarial liabilities
(note 2.15 of the financial statements)
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, to which margins for adverse deviations are added.
The Appointed Actuary (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, and the
distribution of the reserve by policy, and other individual components in the
actuarial liabilities.
b)
Best estimate reserve assumptions & provisions for adverse deviations
Actuarial liabilities include two major components: a best estimate reserve and a
provision for adverse deviations. The latter provision is established in recognition
of the uncertainty in computing best estimate reserves, to allow for possible
deterioration in experience and to provide greater comfort that reserves are
adequate to pay future benefits.
105
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 Canadian standards of practice.
e)
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.
f)
Assumptions for investment yields
The principal assumptions and margins used in the determination of actuarial
liabilities are summarised sub-sections c) to i) which follow. 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.
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.
c)
Process used to set actuarial assumptions and margins for adverse
deviations
g)
Assumptions for operating expenses and taxes
At each date for valuation of actuarial liabilities, the 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.
Any changes in actuarial standards and practice are also incorporated in the
current valuation.
d)
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 (CIA). 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.
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.
h)
Asset default
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 Sagicor’s 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.
i)
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:
106
(in US $millions)
Provisions for adverse deviations
Mortality and morbidity
Lapse
Investment yield and asset default
Operating expenses and taxes
Other
Total
6.
Investment in associate
December 31
2020
97.3
90.7
69.9
10.5
14.9
283.3
2019
95.2
76.4
66.0
10.0
13.9
261.5
potential rights. Management has one representative out of eight on the Board
of Playa.
Management has previously concluded, given its participation in the policy-
making decisions, significant involvement in, and influence over strategic
financial and operational decision-making of Playa, that it has significant
influence over Playa and as such was of the view that SGJ’s strategic investment
in Playa should be treated as an investment in associate in accordance with IAS
28, even though Sagicor owns less than 20% of Playa’s shares. Subsequent to the
year end, SGJ has sold a portion of its investment as part of Playa’s secondary
public offering and transferred the remaining shares to Sagicor Financial
Corporation Limited (see note 50 of the 2020 annual financial statements).
Management concluded that the investment in Playa did not meet the definition
of held for sale as at December 31, 2020.
As at October 1, 2018, Sagicor Group Jamaica (SGJ) had a shareholding in Playa
of 15%, which increased to 16% on June 15, 2020 (see note 6.1 of the 2020 annual
financial statements). From an accounting perspective, IAS 28 (Investments in
Associate and Joint Ventures) paragraph 5, 6 and 8 guidance was considered
as follows:
Where an entity holds 20% or more of the voting power (directly or through
subsidiaries) in an investee, it will be presumed the investor has significant
influence unless it can be clearly demonstrated that this is not the case. If the
holding is less than 20%, the entity will be presumed not to have significant
influence unless such influence can be clearly demonstrated. A substantial or
majority ownership by another investor does not necessarily preclude an entity
from having significant influence.
The existence of significant influence by an entity is usually evidenced in one or
more of the following ways:
• representation on the board of directors or equivalent governing body of
the investee;
• participation in the policy-making process, including participation in
decisions about dividends or other distributions;
• material transactions between the entity and the investee;
•
interchange of managerial personnel; or
• provision of essential technical information.
In assessing whether potential voting rights contribute to significant influence,
the entity examines all facts and circumstances (including the terms of exercise
of the potential voting rights and any other contractual arrangements whether
considered individually or in combination) that affect potential rights, except the
intentions of management and the financial ability to exercise or convert those
5. FINANCIAL INVESTMENTS
Each principal operating entity within the Group has an investment policy
that provides a framework of maximizing investment yield subject to the
management of the Asset Liability Management (ALM) risks and the investment
regulations of each country.
As of December 31, 2020, Sagicor had US $7.2 billion of diversified financial
assets and experienced net investment income of US $330.9 million, a return on
net investment of 4.9% for the year. Since becoming a public company in 2002,
Sagicor has had positive and stable investment portfolio performance. This
performance has been impacted by the stock market declines resulting from the
COVID-19 pandemic.
Carrying Values
The table below shows the carrying value of Sagicor’s investment portfolio as of
December 31, 2020 and December 31, 2019.
(in millions of US $,
except percentages)
Analysis of Financial Investments
Investments at FVOCI:
Debt securities and money market
funds
Equity securities
Investments at FVTPL:
Debt securities
Equity securities
Derivative financial instruments
Mortgage loans
Investments at amortised cost:
Debt securities
Mortgage loans
Policy loans
Finance loans
Securities purchased for re-sale
Deposits
107
As of
December 31, 2020
As of
December 31, 2019
Carrying
value
% of
Total
Carrying
value
% of
Total
3,611.9
50%
3,673.5
1.1
-
1.3
3,613.0
50%
3,674.8
348.9
659.5
37.2
26.1
1,071.7
5%
9%
1%
-
15%
243.1
370.2
36.9
28.9
679.1
1,269.5
17%
1,148.7
393.2
151.0
555.4
57.1
127.7
5%
2%
8%
1%
2%
362.5
151.5
595.3
10.9
62.8
55%
-
55%
4%
6%
1%
-
11%
17%
5%
2%
9%
-
1%
Total financial investments
2,553.9
7,238.6
35%
2,331.7
100%
6,685.6
34%
100%
Our debt security portfolios constitute the major asset class of the Group and are
reflected in the statement of financial position as follows:
(in millions of US $)
Debt securities and money market funds
Measured at fair value through other
comprehensive income
Measured at amortised cost
Measured at fair value through income
(FVTPL)
Total
As of
December
31, 2020
As of
December
31, 2019
Change
3,611.9
1,269.5
3,673.5
1,148.7
348.9
243.1
5,230.3
5,065.3
(2%)
11%
44%
3%
108
FVOCI debt securities are held to collect contractual cash flows and to sell
periodically to collect gains. These securities primarily support our business
in the USA and in Jamaica, where there is reasonable opportunity to realise
investment gains.
Amortised cost debt securities are held to collect contractual cash flows and are
sold infrequently. These securities primarily support our business in the southern
and eastern Caribbean.
FVTPL debt securities are classified as such when the Group insurance or
investment contract-holder is credited with the full return on the underlying
asset. Debt securities held for trading are also classified as FVTPL.
The pie charts below represent a breakdown of the carrying value and risk
exposure of Sagicor’s consolidated investments portfolio as of December
31, 2020.
INVESTMENT PORTFOLIO RISK EXPOSURE
As at December 31, 2020
Un-rated and other - 1%
AAA/AA- 10%
A - 9%
BBB - 44%
BB - 6%
B - 31%
Default- 0%
DECEMBER 2020 DEBT SECURITIES: US $5.2bn
INVESTMENT PORTFOLIO AS OF DECEMBER 31, 2020
Carrying Value (As a % of Total Investment Portfolio)
Investments at FVTPL - 15%
Investments at FVOCI - 50%
Investments at
amortised cost - 35%
DECEMBER 2020 FINANCIAL INVESTMENTS: US $7.2bn
NET INVESTMENT INCOME
Three months ended
December 31
Year ended
December 31
Three months ended
December 31
Year ended
December 31
(in millions of US $)
2020
2019 Change
2020
2019 Change
109
(in millions of US $)
Income from financial
investments
Interest income:
Debt securities
Mortgage loans
Policy loans
Finance loans and
finance leases
Securities purchased
for resale
Deposits, cash and
other items
Interest Income (FVOCI):
Debt securities and
money market funds
Fair value changes and
interest income (FVTPL
Assets):
Debt securities
Equity securities
Mortgage loans
Derivative financial
instruments
Investment income:
Other income on financial
investments
Investment property
income and fair value
(losses)/gains
Other investment
income
Gross Investment Income
2020
2019 Change
2020
2019 Change
Gross investment income
121.3
108.4
12%
337.5
428.7
(21%)
21.5
5.6
2.7
20.6
5.1
2.7
4%
10%
-
83.8
21.1
10.9
81.7
20.5
10.5
15.2
15.2
-
61.2
60.9
3%
3%
4%
-
Investment expenses:
Direct operating
expenses of investment
property
Other direct investment
expenses
0.5
(0.5) (200%)
4.1
6.3
35%
0.5
1.0
1.2
0.7
58%
43%
2.5
6.6
2.6
8.9
4%
26%
0.3
0.4
(25%)
0.8
0.5
60%
Net investment income
120.3
107.7
12% 330.9
419.8
(21%)
0.4
45.7
0.3
44.3
33%
3%
1.0
178.8
1.4
175.5
(29%)
2%
Return on Investments
(annualised)
6.9%
6.8% 0.1 pt.
4.9%
7.2% (2.3 pts)
34.5
35.7
(3%)
136.0
132.5
3%
INSURANCE AND INVESTMENT CONTRACT LIABILITIES
7.4
16.5
0.2
16.3
40.4
6.5
6.8
0.5
14%
143%
(60%)
16.5
(9.2)
0.6
14.5
28.3
12%
43%
10.8
18.7
25.3
49.3
2.5
35.7
112.8
(35%)
(119%)
(76%)
(70%)
(83%)
0.1
(0.2)
150%
0.5
0.3
67%
(0.3)
1.2
(125%)
1.8
7.9
(77%)
0.9
0.7
121.3
(0.9) 200%
600%
0.1
12%
108.4
1.7
4.0
337.5
(0.3)
7.9
428.7
667%
(49%)
(21%)
The amount of liabilities held in respect of long-term or recurring insurance or
investment contracts is a measure of the quantum of business held from such
contracts. The liabilities of such contracts are summarised in the following table.
(in US $ millions)
Principal insurance and investment contract
liabilities
Actuarial liabilities of life, health, and annuity
insurance contracts
Deposit administration and other policy
investment contracts
Customer deposits of banking operations
Securities sold for re-purchase contracts
Other funding instruments
Structured product contracts
Total
As of December 31
2020
2019
Change
4,152.7
3,604.7
437.6
861.7
575.6
388.5
424.3
808.1
512.9
418.0
15%
3%
7%
12%
(7%)
-
6.8
(100%)
6,416.1
5,774.8
11%
110
6. RISK MANAGEMENT
ERM Process
Sagicor is in the business of taking risks and must manage those risks effectively
to generate profitable growth, safeguard its reputation and protect its solvency.
In its management of risks, the Group seeks to optimize the relationship between
risk and reward across the entire enterprise and to limit possible losses resulting
from its risk exposure.
Enterprise Risk Management (ERM) at Sagicor has been ongoing for many
years, having appointed its first Chief Risk Officer in 2005. For about a decade,
a standardized risk taxonomy and dictionary has been utilized across the Group
and group-wide exposures to key financial risks (credit, interest rate, liquidity and
currency risks) have been aggregated and reported to the Board. Further, each
of the Group’s major operating segments has implemented ERM appropriate to
the nature, scale and complexity of their operations. Sagicor continues to evolve
its ERM especially as it relates to strategic and operational risks.
The Group defines risk as an event that causes a deviation from its strategic
plan. Risk is also viewed holistically recognizing that one risk event may cause
downside deviations in several business segments but also simultaneously
causes upside deviations in one or more other business segments or may also
be highly correlated with a second risk event. Lastly, the Group considers risks
defined by source (e.g., data breach) as opposed to intermediate (e.g., reputation
damage) or ultimate (e.g., lower earnings) outcomes. This not only provides
the necessary specific context for risk assessment but also facilitates complete
assessment of any and all downstream outcomes resulting from the risks.
Sagicor’s ERM process is depicted graphically below:
Identified risks are categorized as illustrated in the table below and further
classified as key risks or non-key risks.
FINANCIAL
INSURANCE
OPERATIONAL
STRATEGIC
MARKET
PRICING
HUMAN
RESOURCES
STRATEGY
CREDIT
LIQUIDITY
ECONOMIC
UNDERWRITING
TECHNOLOGY
EXECUTION
RESERVING
LITIGATION
COMPETITOR
COMPLIANCE
FRAUD
DISASTERS
PROCESSES
LEGISLATIVE/
REGULATORY
SUPPLIER
GOVERNANCE
EXTERNAL
RELATIONS
STRATEGIC
RELATIONSHIPS
INTERNATIONAL
Non-key risks are monitored for any changes in likelihood and/or severity and, if
warranted, elevated to key risk status.
Risk are assessed both qualitatively and quantitatively. Credit risk exposures
are tracked for each of the investment portfolio, the lending portfolio and the
reinsurance portfolio. Credit concentration risk is also tracked by the ultimate
parent of each counterparty. Liquidity risk exposures are tracked by both
asset-liability maturity profile and 24-month cashflow projections. Interest rate
risk exposures are tracked using asset and liability durations for each major
yield curve exposure. Currency risk exposures are tracked by stress testing net
currency positions for major currency exposure.
Risk information is regularly communicated to external stakeholders including
regulators, rating agencies, and the public. The Group files an Own Risk Solvency
Assessment (ORSA) Summary Report with the Texas Department of Insurance.
It also meets regularly with rating agencies (S&P, Fitch and A.M. Best) providing
them with a description of our ERM framework and key risk exposures. Sagicor
also provides extensive risk disclosures in its Notes to the Financial Statements.
Roles and Responsibilities
Responsibility for ERM permeates the organization. Business and functional units
are responsible for monitoring and managing risks within their respective areas.
The Group’s Corporate ERM teams’ responsibilities include but are not limited
to the key ERM tools and techniques, oversight over all key ERM activities,
ensuring consistent ERM definitions, concepts, and terminology, acting as a
central clearing house for coordinating ERM information, monitoring individual
and enterprise risk exposures, and providing key ERM information to the Board
Investment and Risk Committees (both Group and subsidiary level). The Board
Investment and Risk Committees oversee key risks and exposures and approve
key ERM decisions and policies. Internal audit provides independent verification
of policies and procedures.
1.
Credit risk
The Group takes on exposure to credit risk, which is the risk that a counterparty
will be unable to pay amounts in full when due. Credit risks are primarily
associated with financial investments and reinsurance contracts held. Credit
risk is the possibility that counterparties may not be able to meet payment
obligations when they become due. As premiums, deposits and other receivables
are received, these funds are invested to pay for future policyholder and
other obligations.
The Group in most, but not all, instances bears the risk for investment
performance, i.e. return of principal and interest. Any credit defaults or other
reductions in the value of debt securities, loans, deposits and receivables could
111
have a material adverse effect on Sagicor’s business, results of operations and
financial condition.
The investment committees of Group operating companies establish policies
to manage credit risk. Specific limits are set for concentration by asset class
and issuer, in addition to minimum standards for asset quality. Further, Sagicor
deals only with highly rated reinsurers to contain counterparty risk. The Group
minimises credit risk from financial investments through holding a diversified
portfolio of investments, purchasing securities and advancing loans only after
careful assessment of borrowers, and placing deposits with financial institutions
that have a strong capital base. Sagicor’s policy is to not invest more than 10% of
the debt of a single borrower, unless security is held for the debt.
However, many jurisdictions mandate that the operating companies invest a
portion of the assets supporting the policy liabilities in government instruments
such as treasury bills and bonds.
The Group has significant concentrations of credit risk with respect to its holding
of bonds and treasury bills issued by the governments of Jamaica, Barbados
and Trinidad and Tobago. In the United States, Sagicor has significant exposure
to United States Government issued and/or government-backed investments
(including state and local governments), Guggenheim Partners reinsurance
assets and Heritage Life Insurance reinsurance assets.
In Sagicor Jamaica’s banking business, the Group is exposed to credit risk in
both its securities and lending activities. In connection with securities activities,
Sagicor Investments trades on a “delivery versus payment” policy where
Government of Jamaica securities are accepted on a mark-to-market basis
with its counterparties. Exposure limits are also established and monitored. In
its lending activities, Sagicor Bank seeks to adequately collateralise its loans,
particularly where they exceed certain thresholds. Loan applicants undergo a
thorough screening and credit analysis process.
The following table summarises credit exposure of the Group’s financial
investments as of December 31, 2020. It shows the gross carrying value, the
accumulated loss allowance and the net carrying value, analysed by expected
credit loss (ECL) staging (see critical accounting estimates and judgements – 1.
impairment of financial assets).
112
(in US $millions)
Stage 1
Stage 2
Stage 3
POCI (c)
Total
(in US $millions)
Stage 1
Stage 2
Stage 3
POCI (c)
Total
Credit exposure – December 31, 2020
Credit exposure – December 31, 2020
ECL Staging
ECL Staging
FVOCI (b) debt securities:
Gross value
Loss allowance
Net value
3,208.2
(2.6)
3,205.6
164.1
(8.5)
155.6
Debt securities (a)
Gross value
Loss allowance
Net value
Policy loans(a)
Gross value
Loss allowance
Net value
1,066.1
(2.4)
1,063.7
28.3
(1.9)
26.4
151.3
(0.3)
151.0
-
-
-
7.9
(6.2)
1.7
3.9
(1.4)
2.5
-
-
-
Mortgage loans(a)
28.6
3,408.8
Gross value
-
(17.3)
Loss allowance
28.6
3,391.5
Net value
Finance loans (a)
177.2
1,275.5
Gross value
(0.4)
(6.1)
Loss allowance
176.8
1,269.4
Net value
306.1
(1.3)
304.8
523.6
(5.2)
518.4
42.8
(0.6)
42.2
33.5
(0.9)
32.6
47.9
(1.8)
46.1
11.0
(6.6)
4.4
-
-
-
151.3
(0.3)
151.0
Securities purchased for
re-sale (a)
Gross value
Loss allowance
Net value
Deposits (a)
Gross value
Loss allowance
Net value
57.1
-
57.1
-
-
-
117.8
(0.3)
117.5
11.5
(1.3)
10.2
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
396.8
(3.7)
393.1
568.1
(12.7)
555.4
57.1
-
57.1
129.3
(1.6)
127.7
(a) Financial investments carried at amortised cost.
(b) FVOCI – fair value through other comprehensive income classification.
(c) POCI - purchased or originated credit impaired.
2.
Foreign exchange risk
The Group is exposed to foreign exchange risk as a result of fluctuations in
exchange rates since Sagicor’s 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, Sagicor seeks to maintain investments
and cash in each operating currency sufficient to match liabilities denominated
in the same currency. Sagicor also invests limited amounts in United States dollar
assets, which are held to pay liabilities in operating currencies. Management
believes that this strategy adequately meets Sagicor’s asset and liability
113
management goals with respect to currencies and in the long-term is likely to
either maintain capital value or provide satisfactory returns.
The Sagicor Group operates and issues contracts in the currencies prevailing in
the countries where it conducts business. 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. Exchange rates of the
other principal operating currencies to the United States dollar are set out in the
following table.
Currency exchange rate of US $1.00:
Barbados dollar
Eastern Caribbean dollar
Jamaica dollar
Trinidad & Tobago dollar
Currency exchange rate of US $1.00:
Barbados dollar
Eastern Caribbean dollar
Jamaica dollar
Trinidad & Tobago dollar
2020
closing rate
2019
closing rate
2.0000
2.7000
142.4534
6.7612
2.0000
2.7000
132.5324
6.7624
2020
average rate
2019
average rate
2.0000
2.7000
141.7506
6.7462
2.0000
2.7000
132.8772
6.7510
114
The following tables show the Group’s significant foreign exchange exposure as of December 31, 2020 and 2019 by presenting assets and liabilities by the currency in
which they are denominated for its continuing operations.
December 31, 2020
(in US $millions)
ASSETS
Financial investments (1)
Reinsurance assets (1)
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
Lease liabilities
Deposit and security liabilities
Provisions
Accounts payable and accruals
Total monetary liabilities
Other liabilities (2)
Total liabilities of continuing operations
Net position
US $million equivalents of balances denominated in
Barbados $
Jamaica $
Trinidad $
Eastern
Caribbean $
US $
Other
Currencies
362.2
1.8
21.2
29.3
414.5
202.6
617.1
441.9
81.8
30.4
21.7
0.4
-
16.0
45.5
637.7
20.2
657.9
(40.8)
1,296.9
10.1
58.0
98.2
1,463.2
416.2
1,879.4
330.9
54.7
74.8
51.9
19.5
694.0
26.0
88.4
1,340.2
45.7
1,385.9
493.5
575.1
1.2
12.7
42.2
631.2
87.3
718.5
456.7
32.1
175.5
-
0.4
19.3
13.1
19.1
716.2
14.2
730.4
(11.9)
164.0
4,065.6
1.2
13.2
15.5
193.9
19.9
213.8
82.6
11.9
56.0
-
-
15.2
(0.1)
4.4
170.0
5.0
175.0
38.8
673.8
31.1
203.8
4,974.3
692.7
5,667.0
2,713.7
40.1
91.3
398.0
18.5
1,080.5
0.6
87.4
4,430.1
35.8
4,465.9
1,201.1
Total
6,578.0
688.9
140.1
439.6
7,846.6
1,419.7
9,266.3
114.2
0.8
3.9
50.6
169.5
1.0
170.5
126.9
4,152.7
14.0
9.6
-
0.8
17.8
10.9
5.7
185.7
2.3
188.0
(17.5)
234.6
437.6
471.6
39.6
1,826.8
66.5
250.5
7,479.9
123.2
7,603.1
1,663.2
(1) Monetary balances only (2) Non-monetary balances, income tax balances and retirement plan assets
December 31, 2019
(in US $millions)
ASSETS
Financial investments (1)
Reinsurance assets (1)
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
Lease liabilities
Deposit and security liabilities
Provisions
Accounts payable and accruals
Total monetary liabilities
Other liabilities (2)
Total liabilities of continuing operations
Net position
US $million equivalents of balances denominated in
Barbados $
Jamaica $
Trinidad $
Eastern
Caribbean $
US $
Other
Currencies
341.2
6.7
22.8
21.2
391.9
199.2
591.1
438.5
80.6
31.6
14.4
2.7
1.3
11.9
40.7
621.7
18.8
640.5
(49.4)
1,344.1
3.8
69.4
91.6
1,508.9
477.8
1,986.7
411.4
55.8
81.8
104.4
23.4
684.2
25.2
116.9
1,503.1
32.5
1,535.6
451.1
474.2
4.8
10.3
26.5
515.8
90.8
606.6
366.1
32.8
182.9
-
2.3
1.1
12.9
18.1
616.2
15.2
631.4
(24.8)
150.1
2.1
15.7
9.7
177.6
20.8
198.4
79.4
12.2
53.4
-
0.1
15.3
-
1.9
162.3
5.1
167.4
31.0
3,879.2
681.6
14.8
165.4
4,741.0
425.8
5,166.8
2,194.7
31.8
65.3
398.9
6.4
1,033.1
2.3
57.4
3,789.9
42.2
3,832.1
1,334.7
115
Total
6,314.2
699.4
138.0
361.6
7,513.2
1,215.7
8,728.9
125.4
0.4
5.0
47.2
178.0
1.3
179.3
114.6
3,604.7
14.7
9.3
-
0.8
17.6
7.5
5.4
169.9
2.2
172.1
7.2
227.9
424.3
517.7
35.7
1,752.6
59.8
240.4
6,863.1
116.0
6,979.1
1,749.8
(1) Monetary balances only (2) Non-monetary balances, income tax balances and retirement plan assets
Interest exposure – December 31, 2020
Less
than
1 year
1 to 5
years
After
5 years
Not
exposed
to
interest
Total
(in US $millions)
Other insurance liabilities
13.7
4.1
66.5
150.4
234.7
Investment contract
liabilities
Notes and loans payable
Lease liabilities
Other funding
instruments
Customer deposits
Securities sold for
re-purchase
Bank overdrafts
Accounts payable and
accrued liabilities
366.9
15.3
7.7
352.3
845.3
573.5
1.0
0.8
46.7
445.7
20.5
20.3
14.9
-
-
1.1
23.9
9.9
10.3
15.7
-
-
-
-
0.1
0.7
1.1
0.2
1.4
2.1
-
437.6
471.6
39.6
388.5
861.6
575.6
1.0
248.5
250.4
Total
2,176.5
553.3
126.3
404.5
3,260.6
116
3.
Interest rate risk
Sagicor is exposed to interest rate risk, which arises when the returns earned
from invested assets decrease.
The return on investments may be variable, fixed for a term or fixed to maturity.
Upon reinvestment of a matured investment, the returns available on new
investments may be significantly different from the returns formerly achieved.
Sagicor guarantees minimum returns on the cash values of certain types
of policies, for example universal life and annuity contracts, and decreased
investment returns may be insufficient to pay these guaranteed returns.
Sagicor is thereby exposed to the effects of fluctuations in the prevailing levels
of market interest rates on Sagicor’s 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.
Movements in short-term and long-term interest rates affect the level and timing
of recognition of gains and losses on securities Sagicor holds, and cause changes
in realised and unrealised gains and losses. Generally, Sagicor’s investment
income will be reduced during sustained periods of lower interest rates as higher
yielding fixed income securities are called, mature, or are sold and the proceeds
reinvested at lower rates. During periods of rising interest rates, the market
value of Sagicor’s existing fixed income securities will generally decrease and
Sagicor’s realised gains on fixed income securities will likely be reduced. Realised
losses will be incurred following significant increases in interest rates only if the
securities are sold; otherwise the losses will be unrealised as assets are fairly
matched to similar duration liabilities and may be held to maturity. Conversely,
declining interest rates result in unrealised gains in the value of fixed income
securities Sagicor continues to hold, as well as realised gains to the extent the
relevant securities are sold.
Sagicor’s primary interest rate exposures relate to Sagicor’s long-term insurance
and annuities liabilities as well as funds on deposit. Sagicor may incur a loss
on certain contracts where the investment return does not exceed the interest
credited to the policyholder.
The tables following summarise the exposures to interest rates on the Group’s
monetary insurance and financial liabilities (excluding actuarial liabilities), for
the years ended December 31, 2020 and 2019. They set out liabilities at carrying
amounts, categorised by the earlier of contractual re-pricing or maturity dates.
Insurance liabilities are categorised by their expected maturities.
Interest exposure – December 31, 2019
Less
than
1 year
1 to 5
years
After
5 years
Not
exposed
to
interest
Total
The tables following summarise the exposures to interest rate and reinvestment
risks of the Group’s monetary insurance and financial assets, for the years ended
December 31, 2020 and 2019. 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.
(in US $millions)
117
Other insurance liabilities
8.1
3.9
49.3
166.6
227.9
Investment contract
liabilities
Notes and loans payable
Lease liabilities
Other funding
instruments
Customer deposits
Structured products
Securities sold for
re-purchase
Derivative liabilities
Bank overdrafts
346.2
419.6
6.5
395.4
804.9
6.8
511.3
-
6.6
60.4
27.1
19.0
9.8
0.2
-
-
-
-
Accounts payable and
accrued liabilities
Total
1.1
2,506.5
1.1
121.5
17.7
71.5
4.2
12.6
-
-
-
-
-
-
155.3
0.1
424.4
(0.4)
5.9
0.2
3.0
-
1.5
0.3
-
517.8
35.6
418.0
808.1
6.8
512.8
0.3
6.6
(in US $millions)
Debt securities
Equity securities
Mortgage loans
Policy loans
Finance loans
Securities purchased for
re-sale
Deposits
238.2
415.4
240.4
3,198.7
Derivative assets
Reinsurance assets: other
Premiums receivable
Other assets and
receivables
Cash resources
Total
Interest exposure – December 31, 2020
Less
than
1 year
1 to 5
years
After
5 years
Not
exposed
to
interest
Total
787.8
889.1
3,472.8
80.6
5,230.3
-
660.6
-
93.7
3.9
528.9
57.0
125.4
-
-
-
0.9
84.2
-
65.8
13.4
15.3
-
2.1
-
-
-
1.1
-
256.4
127.8
6.2
-
-
-
0.2
-
-
-
660.6
419.3
151.0
555.4
57.1
127.7
37.2
49.1
59.8
3.4
5.9
5.0
0.1
0.2
37.2
48.9
59.8
77.4
355.4
79.4
439.6
1,681.8
986.8
3,863.4
1,334.5
7,866.5
118
Interest exposure – December 31, 2019
Less
than
1 year
1 to 5
years
After
5 years
Not
exposed
to
interest
Total
1,308.2
727.1
2,969.8
60.2
5,065.3
-
77.7
4.4
572.4
10.9
57.9
0.3
0.2
0.1
2.8
220.5
-
30.3
14.1
15.6
-
2.7
-
-
-
1.2
-
-
371.5
281.2
131.8
5.7
-
1.8
-
0.2
-
-
-
2.3
1.2
1.6
-
0.3
36.6
37.3
57.5
74.5
141.0
371.5
391.5
151.5
595.3
10.9
62.7
36.9
37.7
57.6
78.5
361.5
2,255.4
791.0
3,390.5
784.0
7,220.9
(in US $millions)
Debt securities
Equity securities
Mortgage loans
Policy loans
Finance loans
Securities purchased for
re-sale
Deposits
Derivative assets
Reinsurance assets: other
Premiums receivable
Other assets and
receivables
Cash resources
Total
4.
Liquidity risk
Liquidity risk is inherent in much of the Group’s business. Liquidity risk is risk
stemming from a lack of marketability in Sagicor’s assets. Some liabilities may
be surrendered at the call of the contract-holder, while some assets have low
liquidity such as mortgage loans and real estate. In order to manage liquidity
risks, the Group seeks to maintain levels of cash and short-term deposits in each
of its operating currencies that can meet expected short-term obligations.
The Group is exposed to daily demands on its available cash resources for
payment of policy benefits and withdrawals, operating expenses and taxes,
loan drawdowns, repayment of borrowings, maturing deposit liabilities and
other security obligations. The Group maintains cash resources to meet what it
predicts it will have to pay as policy benefits. Demands on its cash resources may
exceed the Group’s projections.
maintaining a portfolio of short-term, highly liquid securities to meet funding
gaps. The Group monitors its daily, weekly and monthly liquidity risk and
manages its maturing asset and liability portfolios.
The Group purchases custom options (hedges) that are selected to materially
replicate the policy benefits that are associated with the equity indexed
components of certain of its products. These options are appropriate to
reduce or minimise the risk of movements in the equity market (market risk).
The hedging transactions are accounted for as call options and are originally
valued at the premium paid, with the statement carrying value being adjusted
to fair value. To minimise potential counterparty risk from the purchase of these
customised contracts from broker dealers, the Group only transacts with banks
and brokers carrying an unsecured debt rating of at least A or P-1 by either
Standard and Poor’s or Moody’s.
The Group’s monetary insurance liabilities mature in periods which are
summarised in the following tables for the years ended December 31, 2020 and
2019. 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.
December 31, 2020
Expected discounted cash flows
(in US $millions)
Maturing
within
1 year
Maturing
1 to 5
Years
Maturing
after
5 years
Actuarial liabilities
Other insurance liabilities
Total
323.1
149.4
472.5
1,251.5
18.1
2,578.1
67.2
1,269.6
2,645.3
Total
4,152.7
234.7
4,387.4
December 31, 2019
Expected discounted cash flows
(in US $millions)
Maturing
within
1 year
Maturing
1 to 5
Years
Maturing
after
5 years
Total
Actuarial liabilities
260.0
1,004.3
2,340.3
3,604.6
Other insurance liabilities
Total
127.1
387.1
30.5
70.3
227.9
1,034.8
2,410.6
3,832.5
The Group diversifies its liability portfolio by limiting concentrations of
liabilities in each market segment. Where practical, given the Group’s operating
environment, Sagicor seeks to match maturities of assets and liabilities while
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.
December 31, 2020
Contractual un-discounted cash flows
(in US $millions)
Financial liabilities:
Investment contracts
Notes and loans payable
Lease liabilities
Other funding
instruments
Customer deposits
Structured products
Securities sold for
re-purchase
Derivative liabilities
Bank overdrafts
Accounts payable &
accrued liabilities
Total liabilities
Off balance
sheet commitments:
Loan commitments
Non-cancellable lease
and rental payments
Customer guarantees and
letters of credit
Investments and
Investment management
fees
Capital commitments
Total commitments
On
demand
or within
1 year
372.3
23.5
9.5
355.1
852.8
-
578.0
-
1.0
1 to 5
years
After
5 years
56.5
480.3
24.8
38.8
17.1
-
-
-
-
21.1
11.1
22.3
24.3
-
-
-
-
-
Total
449.9
514.9
56.6
418.2
869.9
-
578.0
-
1.0
248.2
2,440.4
1.9
619.4
0.4
79.2
250.5
3,139.0
63.8
0.4
20.1
32.5
15.3
132.1
0.3
-
5.4
2.3
-
8.0
0.6
-
9.6
-
-
10.2
89.4
64.7
0.4
35.1
34.8
15.3
150.3
3,289.3
Total
2,572.5
627.4
December 31, 2019
Contractual un-discounted cash flows
119
(in US $millions)
Financial liabilities:
Investment contracts
Notes and loans payable
Lease liabilities
Other funding
instruments
Customer deposits
Structured products
Securities sold for
re-purchase
Derivative liabilities
Bank overdrafts
Accounts payable &
accrued liabilities
Total liabilities
Off balance
sheet commitments:
Loan commitments
Non-cancellable lease
and rental payments
Customer guarantees and
letters of credit
Investments and
Investment management
fees
Capital commitments
Total commitments
On
demand
or within
1 year
347.9
445.9
8.3
397.1
815.4
6.8
514.6
0.3
6.6
1 to 5
years
After
5 years
66.5
45.3
25.6
14.1
0.3
-
-
-
-
22.2
68.3
13.2
19.9
-
-
-
-
-
Total
436.6
559.5
47.1
431.1
815.7
6.8
514.6
0.3
6.6
238.6
2,781.5
1.3
153.1
0.4
124.0
240.3
3,058.6
66.6
0.5
14.4
14.3
17.9
113.7
11.0
-
9.0
4.8
-
24.8
177.9
1.1
-
78.7
0.5
11.4
34.8
-
-
12.5
136.5
19.1
17.9
151.0
3,209.6
Total
2,895.2
120
The contractual maturity periods of monetary financial assets and the expected
maturity periods of monetary insurance assets are summarised in the following
tables for the years ended December 31, 2020 and 2019. Amounts are stated
at their carrying values recognised in the financial statements. For this table,
monetary insurance assets comprise policy loans and reinsurance assets.
December 31, 2020
Contractual discounted or expected cash flows
Maturing
within
1 year
Maturing
1 to 5
Years
Maturing
after
5 years
December 31, 2019
Contractual discounted or expected cash flows
(in US $millions)
Financial assets:
Debt securities
Mortgage loans
Policy loans
Maturing
within
1 year
Maturing
1 to 5
Years
Maturing
after
5 years
Total
1,166.9
21.2
5.3
774.1
39.0
14.3
3,124.2
5,065.2
331.4
131.9
391.6
151.5
Total
Finance loans and finance
leases
184.4
286.6
124.3
595.3
(in US $millions)
Financial assets:
Debt securities
Mortgage loans
Policy loans
Finance loans and finance
leases
Securities purchased for
re-sale
Deposits
Derivative assets
Reinsurance assets: share
of actuarial liabilities
Reinsurance assets: other
Premiums receivable
Other assets and
receivables
Cash resources
Total
699.7
944.7
3,585.9
5,230.3
24.1
4.6
72.3
13.8
322.9
132.7
419.3
151.1
161.0
207.2
187.2
555.4
57.1
127.6
37.2
67.2
48.9
59.8
76.9
439.6
-
0.2
-
-
-
-
291.1
281.4
-
-
2.0
-
0.2
-
0.5
-
57.1
127.8
37.2
639.7
49.1
59.8
79.4
439.6
1,803.7
1,531.3
4,510.8
7,845.8
Securities purchased for
re-sale
Deposits
Derivative assets
Reinsurance assets: share
of actuarial liabilities
Reinsurance assets: other
Premiums receivable
Other assets and
receivables
Cash resources
Total
10.9
58.3
36.9
70.6
37.4
57.6
75.9
361.5
-
2.7
-
279.5
-
-
2.1
-
-
1.8
-
311.7
0.2
-
0.5
-
10.9
62.8
36.9
661.8
37.6
57.6
78.5
361.5
2,086.9
1,398.3
4,026.0
7,511.2
5.
Insurance 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 Group. In the discussion below, the term insurer refers to the Group
subsidiary issuing insurance contracts.
Risks are priced to achieve an adequate return on capital on the insurer’s
business. 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, from insurance market softening conditions, or from future changes in
the economic environment.
The underwriting process has established pricing guidelines; and may include
specific enquiries which determine the insurer’s assessment of the risk. Insurers
may also establish deductibles and coverage limits for property, casualty and
121
health risks which will limit the potential claims incurred. The pricing of a contract
therefore consists of establishing appropriate premium rates, deductibles and
coverage limits. For long-term insurance contracts, Sagicor assesses the future
cash flows attributable to the contract.
Sagicor carries significant underwriting risks concentrated in certain countries
within the Caribbean, namely Antigua, Barbados, Cayman Islands, Curacao,
Jamaica, St. Lucia and Trinidad and Tobago. In these countries, Sagicor insures a
substantial proportion of the insured population (life, annuity, health).
6.
Insurance claims risk
a)
Life, annuity and health contracts
The principal claims risks for these contracts are mortality, longevity and
morbidity risk. For long-term contracts, principal risks affecting claims and
benefits also include lapse, expense and investment risk.
For long-term contracts in force, Sagicor invests in assets with cash flow
characteristics that closely match the cash flow characteristics of the related
policy liabilities. The primary purpose of this matching is to seek to ensure that
cash flows from these assets are synchronised with the timing and the amounts
of payments that must be paid to policyholders.
Policy benefits payable under long-term contracts may be triggered by an
insurable event (such as a death, disability or critical illness claim) a specified
time (such as for an annuity settlement or a policy maturity) or on the exercise
of a surrender or withdrawal request by the policyholder. While settlement of
these benefits is therefore expected over the remaining lives of the insureds and
annuitants, Sagicor remains subject to uncertainty related to the timing of future
benefit cash outflows.
For long-term insurance contracts, significant risks arise from mortality and
morbidity experience. Worsening mortality and morbidity will increase the
incidence of death and disability claims. Improving mortality (i.e. longevity) will
lengthen the pay-out period of annuities.
Policy benefits payable under short-term contracts are generally triggered by
an insurable event, i.e., a medical expense or a death claim. Settlement of these
benefits is expected generally within a short period.
For Sagicor’s health insurance contracts, significant risk exposures arise from
mortality and morbidity experience.
b)
Property and casualty contracts
Claims payable under property and casualty contracts are triggered by an
insurable 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 is refined over time until final settlement occurs. In addition, from the
pricing methodology used for risks, it is assumed that at any 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 very many claims. Concentration of risk is mitigated
through risk selection, line sizes, event limits, quota share reinsurance and
excess of loss reinsurance. The Group takes reinsurance cover to mitigate the
geographic concentrations of its property risks.
7.
Reinsurance risk
To limit Sagicor’s loss exposure on insurance policies, Sagicor may cede some
risk to reinsurers that have well-established capability to meet their contractual
obligations and that generally have high credit ratings, which ratings Sagicor
monitors, or Sagicor requires that a trust account be maintained as collateral for
the obligations.
Under reinsurance contracts, the Group retains some part of the risk (amounts
below the “retention limit”) and coverage in excess of these limits is ceded
122
to reinsurers. The retention programs used are summarised in notes 42.3 and
43.3 of the annual financial statements. Sagicor also maintains catastrophic
reinsurance coverage whereby reinsurance coverage is obtained for multiple
claims arising from one event or occurring within a specified time period.
8.
Fiduciary risk
Sagicor provides investment management, insurance and pension administration,
and corporate trust services to corporate customers. Investment management
services requires the Group to make allocation, purchase and sale decisions
in relation to a wide range of investments on behalf of these corporate
customers. These services may expose Sagicor to claims for maladministration
or underperformance of these investments. As of December 31, 2020,
the Group administered US $3,520.7 million in assets on behalf of these
corporate customers.
123
7. ADDITIONAL FINANCIAL INFORMATION
1.
Derivative Financial Instruments
The Group’s derivative activities give rise to open positions in portfolios of
derivatives. These positions are managed to seek 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. The contract or notional amounts of
derivatives and their fair values are set out in the following table.
(in US $millions)
December 31, 2020:
Equity indexed options
December 31, 2019:
Equity indexed options
Contract/
notional
Fair Value
Asset
Liability
756.6
37.2
-
807.0
36.9
0.3
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 of the 2020
annual financial statements), equity indexed options give the holder the ability
to participate in the upward movement of an equity index while being protected
from downward risk.
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. 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.
2.
Related Party Transactions
Note 47 of the annual financial statements provides additional information on
related party transactions.
Developments during the reporting period
COVID-19 Pandemic
On March 11, 2020, the World Health Organisation declared the emergence of
COVID-19 coronavirus, a global pandemic. This pandemic has affected many
countries and all levels of society and has affected our economic environment
in significant ways. The COVID-19 situation continues to evolve and many of
the markets in which Sagicor operates have implemented public health safety
protocols. At various stages during the year, most Caribbean countries have shut
down air and sea traffic. Similar procedures have also been applied in the United
States, Canada and elsewhere. The COVID-19 pandemic has caused significant
economic and financial turmoil and uncertainty, both in the U.S. and around the
world, and has fuelled concerns that have led to a global recession.
The pandemic has also caused a contraction in the economies in which the
Group operates. The spread of the virus, which resulted in widespread travel
restrictions and cancellations, has had a significant, negative effect on global
travel and the demand for entertainment and related products offered in key
markets in which the Group holds investments. Declines in global demand for oil
and gas impacted prices and also constrained the Group’s customers.
Investment portfolios have been impacted by the widening of credit spreads
which resulted in significant fall-off in asset prices, causing significant
reduction in investment income and portfolio management fee income. While
international markets have largely recovered, those in the Caribbean remain
depressed. Income has also been negatively affected by waivers and reduction
of fees associated with loans, in addition to the decline in loan volumes due to
contraction in economic activity.
The Group, on recognising that certain of its customers were experiencing
financial difficulties, offered extensions of moratoriums, payment deferrals and
other accommodative measures to several clients on a case by case basis. By
offering some reprieve in these areas, the Group noted positive effects on the
delinquency levels of its borrowing and insurance portfolios. Despite these
measures, the Group has made significant adjustments to ECLs to recognise the
124
increased credit risk associated with the fall-out in relation to its borrowing and
investment portfolios, driven by the downturn in the economy.
Share buyback programme
In response to the changing, and increasingly uncertain, economic environment,
the Sagicor Group has performed reviews and updated its assumptions, including
those related to asset impairment, where necessary. Changes in the economic
outlook data have been reported in note 41.3 on credit risk and impairment. As
part of this process, goodwill was reviewed, and stress testing was performed on
assessment assumptions. As a result of this exercise, goodwill has been impaired
relating to the subsidiary, Sagicor General Insurance Inc (note 8.2 of the 2020
annual financial statements). Impairment related to the investment in Playa is
detailed in note 6.2 of the 2020 annual financial statements and the Group has
revalued downwards certain of its hotel properties. Management considered
the potential impact of the pandemic on actuarial reserves but concluded that it
had not had a significant impact on actuarial assumptions and the valuation of
actuarial liabilities of the Group.
The Group continues to monitor the health crisis and the economic impact on its
investments, actuarial reserves, customer and trading partners, and the effect on
the industries in which it operates. While global vaccination programmes should
allow the world, and more particularly the markets in which the Group operates,
to gradually return to normal, this will take time. As a result, the pandemic
may continue to negatively impact levels of new business and the level of
policyholder lapses and surrenders, as well as loan and credit card delinquencies.
During the year, the Company repurchased 2,942,500 shares, at a total cost of
US $13.1 million, which were subsequently cancelled. Share capital and share
premium in equity have been reduced by the cost of the shares repurchased and
commission paid on the transactions. The premium paid on the repurchase of
shares has been recorded in retained earnings.
The cost of shares totaling US $0.006 million, which were repurchased at the
year-end date but not cancelled, has been reflected in treasury shares.
Investment in Associate - Playa Hotels and Resorts
Changes in Subsidiary and Associate Holdings
On June 12, 2020, in addition to entering into certain financing transactions
to support its ongoing operations, Playa sold 4,878,049 ordinary shares at a
price of $20 million which resulted in a 0.6% dilution of Sagicor Group Jamaica
Limited’s 15.4% shareholding, and ultimately the Sagicor Group’s ownership
interest of 15.4%, in Playa.
On June 15, 2020, Sagicor Financial Corporation Limited, the intermediate
parent company of SGJ, acquired a further 1,500,000 shares of Playa by a series
of purchases, at a weighted average price of $3.9676 per share, for a total of
$5,966.4 including commissions paid. This represented an increase of 1.1% in the
Group’s shareholding, bringing the Group’s total shareholding in Playa to 16%.
The transactions gave rise to a net loss of $2.7 million on dilution of the
shareholding (deemed disposal), and negative goodwill of $1.5 million on the
acquisition of additional shares, as follows:
(i) Deemed disposal of 0.6% holding in associate:
The Group’s share of the carrying value of the investment in Playa on its balance
sheet as at June 30, 2020 was compared to its share of the proceeds of $20
million received by Playa and adjusted for recycling of net unrealised foreign
exchange gains and unrealised interest rate swap losses in OCI to income.
125
Assessments of the carrying value of this investment have been performed at
each quarter end. A recoverable value was determined using the value-in-use
method which is a discounted cash flow technique that utilises a significant
amount of judgement in estimating key variables such as earnings before
interest, taxes, depreciation and amortisation (EBITDA), terminal growth rates
and a discount factor. Value-in-use calculations are very sensitive to changes
in these estimates. In arriving at its estimates for EBITDA, management also
considered the impact of the uncertainty surrounding the COVID-19 coronavirus
and its impact on the tourism sector going forward. As a result of this exercise,
the investment was written down by US $31.8 million as at the year-end date.
Reinsurance Agreement
During the year, Sagicor Reinsurance Bermuda Limited (“SRBL”), the Bermuda
reinsurance subsidiary of Sagicor Financial Corporation Limited, executed a
reinsurance arrangement with Sagicor Life Insurance Company (“SLIC”) through
a segregated account of SRBL (see note 39 to the 2020 Annual Financial
Statements). Through this arrangement, SLIC transferred the insurance risks
associated with certain life products, and financial instruments supporting those
liabilities, to SRBL for a ceding commission. This ceding commission will be used
to continue the growth of business in the USA.
Commitments
Effective June 25, 2020, the Group entered into a letter of credit arrangement
with a facility up to the amount of US $40 million, whereby an irrevocable
standby letter of credit was issued on behalf of Sagicor Reinsurance Bermuda
Ltd (SRBL) in favour of Sagicor Life Insurance Company (SLIC), USA, in support
of a coinsurance agreement between the two parties (note 4(d)) to the 2020
Annual Financial Statements. The letter of credit facility is guaranteed by Sagicor
Financial Corporation Limited and SRBL. It is due to expire on June 26, 2021
and is deemed to be automatically extended for one-year periods, subject to
notice of the intention to terminate the facility being given sixty days prior to an
expiration date.
(in US $millions)
Group’s share of proceeds received by Playa on issuance of
shares
Share of carrying value of investment in Playa as an associate
on the balance sheet of SGJ as at June 30, 2020
Net unrealised gains recycled to income
Loss on deemed disposal of 0.6% holding in associate
(ii) Acquisition of 1.1% holding in associate:
2020
3.0
(6.1)
(3.1)
0.4
(2.7)
The Group compared its share of the net identifiable assets and liabilities of
Playa, at fair value, to the purchase price paid. The resulting negative goodwill
has been recorded in these financial statements.
(in US $millions)
Share of net assets acquired
Purchase consideration
Negative goodwill arising on acquisition
2020
7.5
(6.0)
1.5
Negative goodwill arose as Playa’s shares have been trading below the
company’s book value per share in response to depressed share prices which
occurred as the hotel industry has been severely impacted by the effects of
COVID-19 coronavirus on tour and hotel bookings, given widespread travel
restrictions and cancellations.
Impairment
Following the emergence of COVID-19 coronavirus, which was declared a
global pandemic by the World Health organisation on March 11, 2020, the Group
considered that travel restrictions, the impact on tour and holiday bookings
and cancellations have resulted in a downturn in revenues and profits, thereby
negatively impacting the carrying value of this asset.
126
The Group is required to comply with the following covenant in respect of
the facility:
at a price equal to the price offered through the public offering, less
commission expenses associated with the public offering.
COVENANT
DESCRIPTION
Cash Collateralisation Event
The Group must maintain an aggregate
MCCSR of at least 175% at the end of
any fiscal quarter.
(Under this requirement, the Group
must fully collateralise the facility if the
noted conditions are breached.)
The Group must maintain a Fixed
Charge Coverage Ratio, at the end of
any fiscal quarter, of an excess of 2.00
to 1.00.
Following this transaction, Sagicor Financial Corporation Limited holds
10,001,000 shares directly in Playa Hotels and Resorts and the Group’s
reduced interest in Playa will result in the investment being designated as a
FVTPL investment.
II.
Subsequent to the year end, the Board of Directors of Sagicor Financial
Company Ltd. approved and declared a quarterly dividend of US $0.05625
per common share payable on April 21, 2021 to the shareholders of record
at the close of business on March 31, 2021.
The ratio of Consolidated Total
Indebtedness to Consolidated Total
Capitalisation, at the end of any fiscal
quarter, must not exceed 0.35 to 1.00.
The credit rating of the Group
must not fall below a specific
predetermined level.
The aggregate amount of unrestricted
cash and cash equivalents held with
the Bank, at any time, should not be
less than US $25 million.
Upon an Event of Default, the Bank
may declare the obligations due
and payable.
Event of Default
Subsequent Events
I.
On January 15, 2021, Sagicor Group Jamaica (SGJ) completed the disposal
of its 14.9% equity interest (20,000,000 ordinary shares) in Playa Hotels
and Resorts for a net cash consideration of US $96 million. The sale of
shares took place in a public offering of 11,499,000 ordinary shares held by
the Group, concurrent to an underwritten public offering of 25,000,000
new shares by Playa Hotels and Resorts at a public offering price of US
$5.00 per share. These transactions were simultaneous with an assignment
of an additional 8,501,000 ordinary shares in Playa Hotels and Resorts held
by SGJ to Sagicor Financial Corporation Limited, for cash consideration,
8. HISTORICAL FINANCIAL DISCLOSURES
The following table provides a summary of Sagicor’s results from continuing operations for the five most recently completed years.
In US $millions, unless otherwise noted
Net premium revenue
Net investment and other income
Total revenue
Benefits and expenses
Other
Income before tax
Income tax
Net (loss)/income before listing expense and other
transaction costs
Listing expense and other transaction costs
Net (loss)/income
Net (loss)/income attributable to common
shareholders
Basic EPS before listing expense and other
transaction costs
Basic EPS (a)
Diluted EPS before listing expense and other
transaction costs
Diluted EPS(a)
Annualised return on common shareholders’ equity
before listing expense and other transaction costs
Annualised return on common shareholders’ equity
Dividends paid per common share
Total assets
Total equity attributable to common shareholders
2020
1,403.4
475.0
1,878.4
(1,782.8)
(68.0)
27.6
(42.7)
(15.1)
-
(15.1)
(3.6)
N/A ¢
(2.4 ¢)
N/A ¢
(2.4 ¢)
N/A
(0.3%)
22.5¢
9,266.3
1,109.8
2019
1,241.5
625.8
1,867.3
(1,663.6)
3.0
206.7
(59.7)
147.0
(43.4)
103.6
44.0
114.3¢
57.5¢
107.5¢
54.1¢
14.0%
6.8%
5.0 ¢
8,728.9
1,154.1
2018
1,054.1
332.5
1,386.6
(1,260.4)
20.3
146.5
(50.7)
95.8
-
95.8
36.5
N/A
51.7¢
N/A
50.8¢
N/A
6.2%
5.0 ¢
7,308.2
600.9
2017
Restated
745.6
463.2
1,208.8
(1,095.8)
12.1
125.1
(19.3)
105.8
-
105.8
62.3
N/A
88.7 ¢
N/A
86.6 ¢
N/A
11.3%
5.0 ¢
6,804.5
624.6
127
2016
664.0
464.7
1,128.7
(984.5)
5.4
149.6
(41.7)
107.9
-
107.9
60.3
N/A
84.4¢
N/A
80.9¢
N/A
12.3%
4.5 ¢
6,531.9
536.1
128
8. HISTORICAL FINANCIAL DISCLOSURES, CONTINUED
In US $millions, unless otherwise noted
2020
2019
2018
Net income attributable to common shareholders
by operating segment:
Sagicor Life
Sagicor Jamaica
Sagicor Life USA
Head office, other & inter-segment eliminations
Net income attributable to common shareholders
Net income attributable to common shareholders
before listing expense and other transaction costs
Restatements of the Financial Statements (2017)
47.7
50.5
(27.1)
(74.7)
(3.6)
(3.6)
60.9
61.4
35.4
(113.7)
44.0
87.4
39.6
55.7
18.3
(77.1)
36.5
36.5
2017
Restated
64.7
46.6
13.3
(62.3)
62.3
62.3
2016
64.8
44.3
10.5
(59.3)
60.3
60.3
Effective January 1, 2018 the Group implemented a policy to harmonise its actuarial reserving practices across operational segments. This voluntary change in policy
was reflected as a prior period adjustment in accordance with IAS 8. In addition, a detailed review of Sagicor USA’s actuarial model was completed and concluded
that the model inputs were generally appropriate; however, certain items which were identified were treated as errors and prior periods were adjusted accordingly.
These adjustments required a restatement for the 2017 financial year and impacted the Statement of Financial Position, Statement of Income and Statement of
Comprehensive Income.
The information above in respect of the year 2016, has not been restated to include the prior year adjustments applied retrospectively to January 1, 2017.
Management does not believe these adjustments are material to impact the ability of the users of the financial information, to assess the performance and/or the
financial position of the Group. Effective January 1, 2018, the Group adopted IFRS 9 - Financial Instruments (IFRS 9). As a result of the application of the standard,
the Group adopted new accounting policies for financial assets. As permitted by the transition provisions in IFRS 9, the Group elected not to restate comparative
period results. Accordingly, the 2017 comparative information on financial assets is presented in accordance with IAS 39 – Financial Instruments – Recognition and
Measurement. Adjustments to the carrying amounts of financial instruments as of January 1, 2018 were recognised in the statement of changes in equity.
Further, as allowed, on adoption of IFRS 15 – Revenue from Contracts with Customers, on January 1, 2018, comparative figures in prior years, have not been adjusted.
On January 1, 2019, the Group adopted IFRS 16 – Leases using the modified retrospective method with no restatement of comparative information as allowed by
the standard.
Stronger Together | 2020 Annual Report
129
CONSOLIDATED
FINANCIAL
STATEMENTS
INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS
Appointed Actuary’s Report
Independent Auditor’s Report
Consolidated Statements of Financial Position
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Statements of Changes in Equity
Consolidated Statements of Cash Flows
Notes to the Consolidated Financial Statements
1 General Information
2 Accounting Policies
3 Critical Accounting Estimates and Judgements
4 Segments
5
Investment Property
6 Associates and Joint Ventures
7 Property, Plant and Equipment
8
Intangible Assets
9 Financial Investments
10 Reinsurance Assets
11
Income Tax Assets
12 Miscellaneous Assets and Receivables
13 Actuarial Liabilities
14 Other Policy Liabilities
15
Investment Contract Liabilities
16 Notes and Loans Payable
17 Deposit and Security Liabilities
18 Other Liabilities / Retirement Benefit Liabilities
19
Income Tax Liabilities
20 Accounts Payable and Accrued Liabilities
21 Common Shares
22 Reserves
130
23 Participating Accounts
24 Premium Revenue
25 Policy Benefits & Change in Actuarial Liabilities
26 Net Investment Income
27 Fees and Other Revenue
28
Interest and Finance Costs
29 Employee Costs
30 Equity Compensation Benefits
31 Employee Retirement Benefits
32
Income Taxes
33 Deferred Income Taxes
34 Earnings per Common Share
35 Other Comprehensive Income (OCI)
36 Cash Flows
37 Changes in Subsidiary and Associate Holdings
38 Discontinued Operation
39 Contingent Liabilities
40 Fair Value of Property
41 Financial Risk
42
Insurance Risk - Property & Casualty Contracts
43
Insurance Risk - Life, Annuity & Health Contracts
44 Fiduciary Risk
45 Statutory Restrictions on Assets
46 Capital Management
47 Related Party Transactions
48 Lease Liabilities
49 Developments during the Year
50 Subsequent Events
132
133
137
138
139
140
142
143
145
172
176
187
188
195
196
199
201
201
201
202
205
206
206
208
209
209
209
210
212
214
214
214
215
216
217
217
218
222
228
229
231
232
233
235
238
238
240
240
289
294
299
299
300
305
306
306
307
ACRONYMS
Certain acronyms have been used throughout the financial statements and notes
thereto to substitute phrases.
The more frequent acronyms and associated phrases are set out below.
Acronym Phrase
AA
EAD
ECL
FVOCI
FVTPL
IAS
IASB
IFRS
IFRS 9
IFRS 16
LGD
MCCSR
OCI
PD
POCI
SICR
SPPI
Appointed Actuary
Exposure at Default
Expected Credit Losses
Fair Value through Other Comprehensive Income
Fair Value through Profit and Loss
International Accounting Standards
International Accounting Standards Board
International Financial Reporting Standards
International Financial Reporting Standard No.9 – Financial Instruments
International Financial Reporting Standard No.16 – Leases
Loss Given Default
Minimum Continuing Capital and Surplus Requirement
Other Comprehensive Income
Probability of Default
Purchased or Originated Credit-Impaired
Significant Increase in Credit Risk
Solely Payments of Principal and Interest
131
ACTUARY’S REPORT
132
AUDITOR’S REPORT
133
AUDITOR’S REPORT
134
AUDITOR’S REPORT
135
AUDITOR’S REPORT
136
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)
As of December 31, 2020 and December 31, 2019
Amounts expressed in US $000
Note
2020
2019
Note
2020
2019
ASSETS
Investment property
Property, plant and equipment
Associates and joint ventures
Intangible assets
Financial investments
Financial investments repledged
Reinsurance assets
Income tax assets
Miscellaneous assets and receivables
Cash
Restricted cash
Total assets
5
7
6
8
9
9
10
11
12
78,295
266,569
165,791
95,872
95,577
289,870
230,558
106,864
6,626,839
6,080,758
611,730
715,739
26,330
239,538
359,972
79,638
604,886
724,237
26,594
208,059
273,072
88,396
9,266,313
8,728,871
These financial statements have been approved for issue by the Board of Directors on March 30, 2021.
LIABILITIES
Actuarial liabilities
Other policy liabilities
Investment contract liabilities
Total policy liabilities
Notes and loans payable
Lease liabilities
Deposit and security liabilities
Other liabilities / retirement benefit liabilities
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 interests
Total equity
13
14
15
16
48
17
18
19
20
21
21
22
23
4.4
4,152,701
3,604,653
292,676
437,604
286,960
424,340
4,882,981
4,315,953
471,622
39,609
517,732
35,700
1,826,759
1,752,689
66,542
65,128
255,462
59,795
56,889
240,333
7,608,103
6,979,091
1,463
753,490
(14,868)
369,695
1,477
762,015
(9,023)
399,582
1,109,780
1,154,051
1,607
546,823
1,223
594,506
1,658,210
1,749,780
………………………………………………
Director
………………………………………………
Total liabilities and equity
9,266,313
8,728,871
Director
4
137
CONSOLIDATED STATEMENTS OF INCOME
Year ended December 31, 2020 and December 31, 2019
SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)
Amounts expressed in US $000
REVENUE
Premium revenue
Reinsurance premium expense
Net premium revenue
Gain on derecognition of amortised cost investments
Gain on derecognition of assets carried at FVOCI
Interest income earned from financial assets measured at
amortised cost and FVOCI
Other investment income
Credit impairment losses
Fees and other revenue
Total revenue, net
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 costs
Total benefits
EXPENSES
Administrative expenses
Commissions and related compensation
Premium and asset taxes
Finance costs
Depreciation and amortisation
Listing expense and other transaction costs
Total expenses
5
138
Note
2020
2019
Note
2020
24
24
26
26
27
25
25
28.1
28.2
1
1,501,952
(98,525)
1,403,427
8,889
20,169
314,759
16,144
(23,997)
138,976
1,323,252
(81,708)
1,241,544
12,920
29,954
308,014
111,800
(4,877)
167,971
1,878,367
1,867,326
1,269,184
(90,418)
1,178,766
42,893
1,221,659
340,567
121,158
14,914
44,885
39,559
-
1,169,640
(107,308)
1,062,332
54,192
1,116,524
333,236
120,155
14,560
43,633
35,506
43,396
OTHER
Loss
acquisitions and divestitures
arising
on
business
combinations,
Share of operating (loss) / income of associates
and joint ventures
Loss on impairment of investment in associates
and joint ventures
Total other (loss) / income
INCOME BEFORE TAXES
FROM CONTINUING OPERATIONS
Income taxes
NET (LOSS) / INCOME FROM CONTINUING
OPERATIONS
Net income from discontinued operation
NET (LOSS) / INCOME FOR THE YEAR
Net (loss) / income is attributable to:
Common shareholders:
From continuing operations
From discontinued operation
Participating policyholders
Non-controlling interests
Basic earnings per common share:
From continuing operations
From discontinued operation
37
6.1
6.1
32
38
4.1
34
561,083
590,486
Fully diluted earnings per common share:
34
From continuing operations
From discontinued operation
(1,262)
(34,957)
(31,804)
(68,023)
27,602
(42,732)
(15,130)
-
(15,130)
(3,605)
-
(3,605)
1,359
(12,884)
(15,130)
(2.4) cents
0.0 cents
(2.4) cents
(2.4) cents
0.0 cents
(2.4) cents
2019
(379)
3,347
-
2,968
163,284
(59,710)
103,574
517
104,091
43,981
517
44,498
(1,937)
61,530
104,091
57.5 cents
0.7 cents
58.2 cents
54.1 cents
0.6 cents
54.7 cents
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)
Year ended December 31, 2020 and December 31, 2019
Amounts expressed in US $000
OTHER COMPREHENSIVE INCOME
Note
2020
2019
TOTAL COMPREHENSIVE INCOME
2020
2019
Items net of tax that may be reclassified subsequently
to income:
35
Financial assets measured at FVOCI:
Gains on revaluation
Gains transferred to income
Net change in actuarial liabilities
Cash flow hedges
Retranslation of foreign currency operations
Other reserves
Items net of tax that will not be reclassified
subsequently to income:
35
Losses on revaluation of owner-occupied and owner-
managed property
(Losses) / gains on equity securities designated at FVOCI
Gains on defined benefit plans
97,266
(16,567)
(51,973)
(753)
(38,195)
(20)
(10,242)
(14,880)
(149)
3,474
(11,555)
168,707
(20,374)
(94,999)
(3,086)
(16,641)
(126)
33,481
(971)
18
11,198
10,245
OTHER COMPREHENSIVE (LOSS) / INCOME FROM
CONTINUING OPERATIONS
(21,797)
43,726
Net (loss) / income
Other comprehensive (loss) / income
TOTAL COMPREHENSIVE (LOSS) / INCOME FOR THE
YEAR
(15,130)
(21,797)
104,091
43,726
(36,927)
147,817
Total comprehensive (loss) / income is attributable to:
Common shareholders:
From continuing operations
From discontinued operation
Participating policyholders
Non-controlling interests
(3,045)
-
(3,045)
577
(34,459)
(36,927)
80,671
517
81,188
(2,655)
69,284
147,817
6
139
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Year ended December 31, 2020 and December 31, 2019
SAGICOR FINANCIAL COMPANY Ltd. (formerly 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
2020
Balance, December 31, 2019
1,477
762,015
Total comprehensive income from continuing operations
-
-
(9,023)
(2,779)
399,582
1,154,051
(266)
(3,045)
1,223
577
594,506
1,749,780
(34,459)
(36,927)
Transactions with holders of equity instruments:
Allotment of common shares
Repurchase of shares (note 21)
Movements in treasury shares
Changes in reserve for equity compensation benefits
Dividends declared (note 21)
Changes in ownership interest in subsidiaries
Acquisition/disposal of subsidiary and insurance business
Transfers and other movements
Balance, December 31, 2020
15
(29)
-
-
-
-
-
-
6,848
(15,367)
(6)
-
-
-
-
-
-
-
-
(3,921)
-
-
-
-
2,095
-
42
(33,243)
(70)
-
855
1,555
6,863
(13,301)
(6)
(3,879)
(33,243)
(70)
-
2,410
1,463
753,490
(14,868)
369,695
1,109,780
-
-
-
-
-
-
-
(193)
1,607
-
-
-
64
(13,664)
(251)
(108)
735
6,863
(13,301)
(6)
(3,815)
(46,907)
(321)
(108)
2,952
546,823
1,658,210
7
140
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Year ended December 31, 2020 and December 31, 2019
SAGICOR FINANCIAL COMPANY Ltd. (formerly 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
2019
Balance, December 31, 2018
3,061
300,665
(76,995)
374,138
Total comprehensive income from continuing operations
Total comprehensive income from discontinued operation
Transactions with holders of equity instruments:
Exchange of shares (note 1)
Repurchase of shares (note 1)
New share issue (note 1)
Movements in treasury shares
Allocated to warrant reserve
Changes in reserve for equity compensation benefits
Dividends declared (note 21)
Acquisition/disposal of subsidiary and insurance business
Transfers and other movements
Balance, December 31, 2019
-
-
(2,270)
(116)
798
4
-
-
-
-
-
-
-
2,270
(19,930)
478,818
192
-
-
-
-
-
28,030
52,641
-
-
-
-
-
20,062
9,187
-
-
517
-
-
-
-
-
(938)
(15,316)
-
10,693
(11,460)
600,869
80,671
517
-
(20,046)
479,616
196
20,062
8,249
(15,316)
-
(767)
4,078
(2,655)
530,514
1,135,461
69,284
147,300
-
-
-
-
-
-
-
-
-
(200)
1,223
-
-
-
-
-
-
24
517
-
(20,046)
479,616
196
20,062
8,273
(21,539)
(36,855)
17,070
(847)
17,070
(1,814)
594,506
1,749,780
1,477
762,015
(9,023)
399,582
1,154,051
8
141
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended December 31, 2020 and December 31, 2019
SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)
Amounts expressed in US $000
Note
2020
2019
Note
2020
2019
OPERATING ACTIVITIES
Income before taxes from continuing operations
27,602
Adjustments for non-cash items, interest and dividends
36.1
371,057
Interest and dividends received
Interest paid
Income taxes paid
329,337
(84,672)
(39,610)
163,284
172,204
318,564
(95,332)
(53,060)
Net change in investments and operating assets
Net change in operating liabilities
Net cash flows - operating activities
36.1
36.1
(876,462)
(582,684)
173,640
(99,108)
118,499
41,475
INVESTING ACTIVITIES
Property, plant and equipment, net
36.2
(14,993)
(7,493)
Associates and joint ventures
Dividends received from associates and joint ventures
Purchase of intangible assets
Changes in subsidiary holdings,
net of cash and cash equivalents
(5,951)
708
(3,840)
-
640
(4,738)
(320)
(32,779)
Net cash flows - investing activities
(24,396)
(44,370)
FINANCING ACTIVITIES
Allotment of common shares
Repurchase of common shares
Purchase of treasury shares
Redemption of preference shares
Shares issued to / (purchased from) non-controlling
interests
Notes and loans payable, net
Lease liability principal paid
Dividends paid to common shareholders
Dividends paid to preference shareholders
Dividends paid to non-controlling interests
Net cash flows - financing activities
36.3
36.4
-
(13,301)
(6)
(6)
474,906
(20,046)
(371)
-
455
(1,562)
(41,269)
(5,697)
(33,279)
(1)
(5,746)
(98,850)
31,695
(4,225)
(15,003)
-
(21,539)
443,855
Effects of exchange rate changes
(5,782)
(4,933)
NET CHANGE IN CASH AND CASH EQUIVALENTS -
CONTINUING OPERATIONS
Net change in cash and cash equivalents – discontinued
operation
(228,136)
436,027
-
17,756
Cash and cash equivalents, beginning of year
775,344
321,561
CASH AND CASH EQUIVALENTS, END OF YEAR
36.5
547,208
775,344
9
142
1 GENERAL INFORMATION
1 GENERAL INFORMATION (continued)
Sagicor Financial Company Ltd. (TSX: SFC, "Sagicor" or the “Company”) is a leading financial
services provider in the Caribbean, with over 180 years of history. SFC’s registered office is located at
Clarendon House, 2 Church Street, Hamilton, HM 11, Bermuda, with its principal office located at Cecil
F De Caires Building, Wildey, St. Michael, Barbados.
On November 27, 2018, Sagicor Financial Corporation Limited ("SFCL") entered into a definitive
arrangement agreement as amended on January 28, 2019 with Alignvest Acquisition II Corporation
(“Alignvest”), a special purpose acquisition company ("SPAC"), pursuant to which on December 5, 2019,
Alignvest acquired all of the issued and outstanding shares of SFCL by way of an Ontario court approved
plan of arrangement and a Bermuda court approved scheme of arrangement (the “Arrangement”). On
closing, Alignvest changed its name to Sagicor Financial Company Ltd., whose operations continue as
SFC, and owns 100% of the shares in the capital of SFCL.
As part of this transaction, subject to certain limitations, each of SFCL’s eligible previous shareholders
(excluding the Company’s management team and continuing directors, all of whom elected to roll 100%
of their equity into this transaction) had the option of tendering up to 10,000 shares for $1.75 of cash,
up to a total cash share purchase of $205,000 less certain other amounts, as per the Arrangement.
SFCL common shares not purchased for cash were exchanged for common shares of Sagicor on an
exchange ratio of one Sagicor common share for 4.328 of SFCL common shares (“Exchange Ratio”).
On closing of the transaction, 11,548,327 common shares of SFCL were tendered for purchase by the
previous shareholders of SFCL. Sagicor purchased 11,548,327 common shares of SFCL for total cash
consideration of $20,046 and the remaining 295,007,317 common shares of SFCL were exchanged for
67,992,191 common shares of Sagicor in accordance with the Arrangement.
On closing, the common shares and warrants of Sagicor were listed on the Toronto Stock Exchange
and are traded under the symbols “SFC” and “SFC.WT”, respectively. With a listing on the Toronto
Stock Exchange, SFCL’s common shares, formerly listed on the Barbados Stock Exchange, the
Trinidad and Tobago Stock Exchange and the London Stock Exchange, have ceased trading and are
being delisted from these exchanges.
While Alignvest is the legal acquirer of SFCL, SFCL has been identified as the acquirer for accounting
purposes. As Alignvest does not meet the definition of a business as defined in IFRS 3 - Business
Combinations (“IFRS 3”), the acquisition is not within the scope of IFRS 3 and is accounted for as a
share-based payment transaction in accordance with IFRS 2 – Share-based Payments (“IFRS 2”).
These consolidated financial statements represent the continuance of SFCL and reflect the identifiable
assets acquired and the liabilities assumed of Alignvest at fair value. Under IFRS 2, the transaction
was measured at the fair value of the common shares, escrowed shares and warrants deemed to have
been issued by SFCL, in order for the ownership interest in the combined entity to be the same as if the
transaction had taken the legal form of SFCL acquiring 100% of Alignvest. Any difference between the
fair value of the common shares, escrowed shares and warrants deemed to have been issued by SFCL
and the fair value of Alignvest’s identifiable net assets acquired and liabilities assumed represents a
listing expense.
As a result of this reverse asset acquisition, a listing expense of $18,777 has been recorded to reflect
the difference between the estimated fair value of the common shares, escrowed shares and warrants
deemed issued to the shareholders of Alignvest and the net fair value of the assets of Alignvest
acquired. Transaction-related expenses of $24,619 were expensed as incurred. Transaction-related
expenses were comprised of professional fees of $6,279, cash bonus and other contract benefits paid
to executives of $2,736, common shares issued to executives of $5,994, arranger’s fee of $8,585 and
other costs of $1,025.
10
143
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 1 GENERAL INFORMATION (continued)
1 GENERAL INFORMATION (continued)
Sagicor and its subsidiaries (“the Group”) operate across the Caribbean and in the United States of
America (USA). There was a discontinued operation in the United Kingdom. Details of 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,
Banking and investment management services,
and its principal operating companies are as follows:
•
•
•
•
Sagicor Life Inc (Barbados and Trinidad & Tobago),
Sagicor Life Jamaica Limited (Jamaica),
Sagicor Bank Jamaica Limited (Jamaica),
Sagicor Life Insurance Company (USA).
The Group also underwrites property and casualty insurance and provides hospitality 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.
These consolidated financial statements for the year ended December 31, 2020 have been approved
by the Board of Directors on March 30, 2021. Neither the Company’s owners nor others have the power
to amend the financial statements after issue.
The details of the listing expense and transaction-related expenses are as follows:
Fair Value of consideration transferred:
Common shares
Escrowed common shares
Warrants
Total fair value of consideration transferred
Fair value of net assets acquired and shares repurchased:
Cash
Cash for the repurchase of shares
Total fair value of net assets acquired and shares repurchased
Listing expense
Transaction-related expenses
Listing expense and other transaction costs
2019
448,293
25,328
20,062
493,683
454,860
20,046
474,906
18,777
24,619
43,396
The fair value of the consideration transferred to acquire Alignvest, under reverse takeover accounting,
was $493,683 calculated as 72,433,368 common shares at $6.19 per common share, 6,444,877
escrowed common shares with fair value of $3.93 per escrowed common share and 34,774,993
warrants with fair value of $0.58 per warrant.
The fair value per common share was based on the fair value of SFCL common shares.
The fair value of escrowed common shares was determined using a probability-weighted model with an
estimated fair value per common share of $6.19 resulting in total fair value of $25,328.
The fair value of warrants was determined based on the market closing price of $0.58 per warrant.
As a result of the closing of this transaction, 147,838,907 common shares of the Company were issued
and outstanding immediately after the closing. At December 31, 2020, 146,381,394 common shares
were outstanding.
11
144
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 2 ACCOUNTING POLICIES
2.1 Basis of preparation (continued)
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.
Amendments to existing IFRS and IAS effective January 1, 2020
The Group has adopted the amendments to IFRS and IAS set out in the following tables. None of these
amendments have a material effect on the Group’s financial statements.
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 the principles of the Canadian standards of
practice. As no specific guidance is provided by IFRS for computing actuarial liabilities, management
has judged that the Canadian standards of practice 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, financial assets carried at
fair value through other comprehensive income, financial asset and liabilities held at fair value through
income, discontinued operations, actuarial liabilities and associated reinsurance assets.
Standard
Description of amendment
IFRS 3 –
Definition of a Business
This amendment revises the definition of a business. According to
feedback received by the IASB, application of the current guidance is
commonly thought to be too complex, and it results in too many
transactions qualifying as business combinations.
IAS 1 and IAS 8 –
The Definition of Material
These amendments to IAS 1, ‘Presentation of financial statements’,
and IAS 8, ‘Accounting policies, changes in accounting estimates and
errors’, and consequential amendments to other IFRSs: i) use a
the
consistent definition of materiality
Conceptual Framework
the
explanation of the definition of material; and iii) incorporate some of the
guidance is IAS 1 about immaterial information.
IFRSs and
ii) clarify
for Financial Reporting;
throughout
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 Group’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.
IFRS 9, IAS 39 and IFRS 7 –
Interest Rate Benchmark
Reform
All amounts in these financial statements are shown in thousands of United States dollars, unless
otherwise stated.
These amendments provide certain reliefs in connection with interest
rate benchmark reform. The reliefs relate to hedge accounting and
have the effect that IBOR reform should not generally cause hedge
accounting to terminate. However, any hedge ineffectiveness should
continue to be recorded in the income statement. Given the pervasive
nature of hedges involving IBOR-based contracts, the reliefs will affect
companies in all industries.
12
145
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 2.1 Basis of preparation (continued)
2.2 Basis of consolidation
Amendments to existing IFRS and IAS effective January 1, 2020 (continued)
(a) Subsidiaries
Standard
Description of amendment
Conceptual Framework for
Financial Reporting
The Conceptual Framework was revised because important
issues were not addressed, and some indications were outdated
or unclear. This revised version includes, among other things, a
new chapter on valuation, guidance on the presentation of
financial performance and improved definitions of an asset and a
liability and guidance in support of those definitions.
The
Conceptual Framework helps entities to develop their accounting
method when no IFRS is applicable to a specific situation.
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
can affect those returns through its power over the entity. Subsidiaries are consolidated from the date
on which control is transferred to the Group, and subsidiaries 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.
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Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 2.2 Basis of consolidation (continued)
Non-controlling interest balances represent the equity in a subsidiary not attributable to Sagicor’s
interest.
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.
(b) Discontinued operation
2.2 Basis of consolidation (continued)
(d) Associates and joint ventures
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. Investments in companies are accounted for as associates in instances when
significant influence exists even though the shareholding may be less than 20%.
Investments in associate and joint venture companies are originally recorded at cost and include
intangible assets identified on acquisition.
Accounting policies of associates and joint ventures have been adjusted where necessary to ensure
consistency with the accounting policies adopted by the Group. Assets of certain associates include
significant proportions of investment property and financial instruments invested in investment property
which are carried at fair value in accordance with the valuation procedures outlined in note 2.5.
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.
The Group recognises in income its share of associate 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.
(c) Sale of subsidiaries
On the sale of or loss of control of a subsidiary, the Group derecognises 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 derecognised and reclassified balances.
The Group recognises in other comprehensive income, its share of post-acquisition other
comprehensive income. The Group recognises an impairment of its net investment in an associate or
a joint venture when there is objective evidence that the carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of the associate’s or joint venture’s fair value less costs
to sell and its value in use.
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Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 2.2 Basis of consolidation (continued)
(e) Pension and investment funds
2.3 Foreign currency translation
(a) Functional and presentational currency
Insurers have issued deposit administration and unit linked contracts in which the full return of the
assets supporting these contracts accrues 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 segregated pension funds, mutual funds and unit trusts. These funds are
segregated and investment returns on these funds accrue directly to unitholders. 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.
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.
The consolidated financial statements are presented in thousands of United States dollars, which is the
Group’s presentational currency.
(b) Reporting units
Income, other comprehensive income, movements in equity and cash flows are translated
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)
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. Exchange rates of the other principal operating currencies
to the United States dollar are set out in the following table.
2020 closing
2020 average
2019 closing
2019 average
Barbados dollar
Eastern Caribbean dollar
2.0000
2.7000
2.0000
2.7000
2.0000
2.7000
2.0000
2.7000
Jamaica dollar
142.4534
141.7506
132.5324
132.8772
Trinidad & Tobago dollar
6.7612
6.7462
6.7624
6.7510
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Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000
2.3 Foreign currency translation (continued)
2.5 Investment property
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 of the foreign entity and translated at the rate ruling on December 31.
(c) Transactions and balances
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 retranslation 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 retranslation 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 retranslation of the fair value of non-monetary items such as equities held as FVOCI are reported
as part of the fair value gain or loss in other comprehensive income.
2.4 Segments
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. Fair values are derived using the market value approach and the income
capitalisation approach, which reference market-based evidence, using comparable prices adjusted for
specific factors such as nature, location and condition of property.
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 in accordance with note 2.10(a).
2.6 Property, plant and equipment
Reportable operating segments have been defined in accordance with performance and resource
allocation decisions of the Group’s Chief Executive Officer.
Property, plant and equipment are recorded initially at cost. Subsequent expenditure is capitalised when
it will result in future economic benefits to the Group.
The
The
16
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Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000
2.6 Property, plant and equipment (continued)
Owner-occupied properties and owner-managed hotel properties are re-valued at least every three
years to their 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 properties include 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 the 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 certain property, plant and
equipment. Income from these activities is recognised in accordance with note 2.10(a) in accordance with
IFRS 16 - Leases.
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
Estimated useful life
Owner-occupied buildings
40 to 50 years
Owner-managed hotel buildings
40 to 50 years
Furnishings and leasehold improvements
2 to 10 years, or lease term
Computer and office equipment
1 to 10 years
Vehicles
Right-of-use assets
Lands are not depreciated.
4 to 5 years
1.5 to 12 years
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2.6 Property, plant and equipment (continued) An impairment loss is recognised for the amount by which an asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use. Gains or losses recognised in income on the disposal of property, plant and equipment are determined by comparing the net sale proceeds to the carrying value. 2.7 Intangible assets (a) GoodwillGoodwill (defined in note 2.2(a)) arising from an acquisition of a subsidiary or insurance business is allocated to appropriate cash generating units which are defined by the Group’s operating segments. Goodwill arising in a reportable operating segment is allocated to that segment. Goodwill arising in a Group entity, which is not within a reportable operating segment, is allocated to that entity’s own operations, or, if that entity is managed in conjunction with another Group entity, to their combined operations. Goodwill arising from an investment in an associate is included in the carrying value of the investment. Goodwill is tested annually for impairment and whenever there is an indication of impairment. Goodwill is carried at cost less accumulated impairment. An impairment loss is recognised for the amount by which the carrying amount of goodwill exceeds its recoverable amount. The recoverable amount is the higher of an operating segment's (or operation's) fair value less costs to sell and its value in use. On the disposal of a subsidiary or insurance business, the associated goodwill is derecognised and is included in the gain or loss on disposal. On the disposal of a subsidiary or insurance business forming part of a reportable operating segment, the proportion of goodwill disposed is the proportion of the fair value of the asset disposed to the total fair value of the operating segment. Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 2.9 Financial investments
(a) Classification of financial assets
The Group utilises a principles-based approach to the classification of financial assets. Debt
instruments, including hybrid contracts, are measured at fair value through profit or loss (“FVTPL”), fair
value through other comprehensive income (“FVOCI”) or amortised cost based on the nature of the
cash flows of these assets and the Group’s business model. Equity instruments are measured at
FVTPL, unless they are not held for trading purposes, in which case an irrevocable election can be
made on initial recognition to measure them at FVOCI with no subsequent reclassification to profit or
loss.
Financial assets are measured on initial recognition at fair value and are classified as and subsequently
measured either at amortised cost, at FVOCI or at FVTPL. Financial assets are recognised when the
Group becomes a party to the contractual provision of the instrument. Regular way purchases and sales
of financial assets are recognised on trade-date, the date on which the Group commits to purchase or
sell the asset.
(b)
Classification of debt instruments
Classification and subsequent measurement of debt instruments depend on:
•
•
the Group’s business model for managing the asset; and
the cash flow characteristics of the asset.
Based on these factors, the Group classifies its debt instruments into one of the following three
measurement categories.
Measured at amortised cost
Debt instruments that are held to collect the contractual cash flows and that contain contractual terms
that give rise on specified dates to cash flows that are solely payments of principal and interest, such
as most loans and advances to banks and customers and some debt securities, are measured at
amortised cost. In addition, most financial liabilities are measured at amortised cost. The carrying value
of these financial assets at initial recognition includes any directly attributable transactions costs.
Class of intangible asset
Asset
Estimated useful life
Customer
re
lationships
5
- 20
years
Customer-related
Broker relationships
Contract-based
Technology-based
Trade Names
Licences
Software
10 years
10 years
15 years
2
- 5
years
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151
2.7 Intangible assets (continued) (b)Other intangible assetsOther intangible assets identified on acquisition are recognised only if future economic benefits attributable to the asset will flow to the Group and if the fair value of the asset can be measured reliably. In addition, for the purposes of recognition, the intangible asset must be separable from the business being acquired or must arise from contractual or legal rights. Intangible assets acquired in a business combination are initially recognised at their fair value. Other intangible assets, which have been acquired directly, are recorded initially at cost. On acquisition, the useful life of the asset is estimated. If the estimated useful life is definite, then the cost of the asset is amortised over its life, and the asset is tested for impairment when there is evidence of same. If the estimated useful life is indefinite, the asset is tested annually for impairment. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use. The estimated useful lives of recognised intangible assets are as follows: 2.8 Real estate developed or held for resale 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. Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 2.9 Financial investments (continued)
Measured at fair value through other comprehensive income (FVOCI)
2.9 Financial investments (continued)
Solely payments of principal and interest (“SPPI”)
Debt instruments held for a business model that is achieved by both collecting contractual cash flows
and selling and that contain contractual terms that give rise on specified dates to cash flows that are
solely payments of principal and interest are measured at FVOCI. These comprise primarily debt
securities and money market funds.
Measured at fair value through profit and loss (FVTPL)
Where the business model is to hold assets to collect contractual cash flows or to collect contractual
cash flows and sell, the Group assesses whether the financial instruments’ cash flows represent solely
payments of principal and interest. In making this assessment, the Group considers whether the
contractual cash flows are consistent with a basic lending arrangement. Where the contractual terms
introduce exposure to risk or volatility that are inconsistent with a basic lending arrangement, the related
financial assets are classified and measured at FVTPL.
(c) Unit linked funds fair value model
The Group’s liabilities include unit linked funds which are components of insurance contracts issued or
unit linked investment contracts issued with terms that the full investment return earned on the backing
assets accrue to the contract-holders. Where these liabilities are accounted for at FVTPL, the financial
investments backing these liabilities are consequently classified as and measured at FVTPL. This is to
eliminate any accounting mismatch.
(d)
Impairment of financial assets measured at amortised cost and FVOCI
At initial recognition of a financial asset, allowance (or provision in the case of some loan commitments
and financial guarantees) is required for Expected Credit Losses (ECL) resulting from default events
that are possible within the next 12 months (or less, where the remaining life is less than 12 months)
(’12-month ECL’).
Debt instruments are classified in this category if they meet one or more of the criteria set out below
and are so designated irrevocably at inception:
•
•
the use of the designation removes or significantly reduces an accounting mismatch;
when the performance of a group of financial assets is evaluated on a fair value basis, in
accordance with a documented risk management or investment strategy;
when the debt instruments are held for trading and 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.
•
Business model assessment
Business models are determined at the level which best reflects how the Group manages portfolios of
assets to achieve business objectives. Judgement is used in determining business models, which is
supported by relevant, objective evidence including:
•
•
•
•
The nature of liabilities, if any, funding a portfolio of assets;
The nature of the market of the assets in the country of origination of a portfolio of assets;
How the Group intends to generate profits from holding a portfolio of assets;
The historical and future expectations of asset sales within a portfolio.
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Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 2.9 Financial investments (continued)
2.9 Financial investments (continued)
In the event of a significant increase in credit risk (SICR), an allowance (or provision) 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 are recognised are defined as ‘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 defined as being in default or
otherwise credit-impaired are in ‘Stage 3’. Purchased or originated credit-impaired financial assets
(“POCI”) are treated differently as set out below.
To determine whether the lifetime credit risk has increased significantly since initial recognition, the
Group considers reasonable and supportable information that is available, including information from
the past and forward-looking information. Factors, such as whether payments of principal and interest
are in default, an adverse change in credit rating of the borrower and adverse changes in the borrower’s
industry and economic environment, are considered in determining whether there has been a significant
increase in the credit risk of the borrower.
(e) Purchased or originated credit-impaired assets (POCI)
Financial assets that are purchased or originated at a deep discount that reflects the incurred credit
losses are considered to be POCI. These financial assets are credit-impaired on initial recognition. The
Group calculates the credit-adjusted effective interest rate, which is calculated based on the fair value
origination of the financial asset instead of its gross carrying amount and incorporates the impact of
expected credit losses in estimated future cash flows. The ECL of these assets is always measured on
a lifetime basis.
At each reporting date, the Group shall recognise in profit or loss the amount of the change in lifetime
expected credit losses as an impairment gain or loss. The Group will recognise favourable changes in
lifetime expected credit losses as an impairment gain, the gain occurs when the lifetime expected credit
losses are less than the amount of expected credit losses that were included in the estimated cash flows
on initial recognition.
(f)
Definition of default
The Group determines that a financial instrument is credit-impaired and in Stage 3 by considering
relevant objective evidence, primarily whether:
•
•
•
contractual payments of either principal or interest are past due for 90 days or more;
there are other indications that the borrower is unlikely to pay such as that a concession has been
granted to the borrower for economic or legal reasons relating to the borrower’s financial condition;
and
the financial asset is otherwise considered to be in default.
If such unlikeliness to pay is not identified at an earlier stage, it is deemed to occur when an exposure
is 90 days past due.
(g) Write-off
Financial assets (and the related impairment allowances) are normally written off, either partially or in
full, when there is no realistic prospect of recovery. Where loans are secured, this is generally after
receipt of any proceeds from the realisation of security. In circumstances where the net realisable value
of any collateral has been determined and there is no reasonable expectation of further recovery, write-
off may be earlier.
(h) The general approach to recognising and measuring ECL
The measurement of ECL reflects:
• An unbiased and probability-weighted amount that is determined by evaluating a range of possible
outcomes;
• The time value of money;
• Reasonable and supportable information that is available without undue cost or effort, at the
reporting date, about past events, current conditions and forecasts of future economic conditions.
20
153
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000
2.9 Financial investments (continued)
2.9 Financial investments (continued)
Measurement
Expected credit losses are calculated by multiplying three main components, being the probability of
default (“PD”), loss given default (“LGD”) and the exposure at default (“EAD”), discounted at the original
effective interest rate. Management has calculated these inputs based on the historical experience of
the portfolios adjusted for the current point in time. A simplified approach to calculating the ECL is
applied to contract and other receivables which do not contain a significant financing component.
Generally, these receivables are due within 12 months unless there are extenuating circumstances.
Under this approach, an estimate is made of the lifetime ECL on initial recognition (i.e. Stage 3). For
ECL provisions modelled on a collective basis, a grouping of exposures is performed on the basis of
shared risk characteristics, such that risk exposures within a group are homogeneous.
The PD, LGD and EAD models which support these determinations are reviewed regularly in light of
differences between loss estimates and actual loss experience; but given that IFRS 9 requirements
have only been applied since January 1, 2018, the historical period for such review is limited. Therefore,
the underlying models and their calibration, including how they react to forward-looking economic
conditions, remain subject to review and refinement. This is particularly relevant for lifetime PDs, which
have not been previously used in regulatory modelling, and for the incorporation of ‘downside scenarios’
which have not generally been subject to experience gained through stress testing. The exercise of
judgement in making estimations requires the use of assumptions which are highly subjective and
sensitive to the risk factors, and particularly to changes in economic and credit conditions across wide
geographical areas. Many of the factors have a high degree of interdependency and there is no single
factor to which loan impairment allowances are sensitive. Therefore, sensitivities are considered in
relation to key portfolios which are particularly sensitive to a few factors and the results should not be
further extrapolated.
The main difference between Stage 1 and Stage 2 expected credit losses is the respective PD horizon.
Stage 1 estimates will use a maximum of a 12-month PD while Stage 2 estimates will use a lifetime PD.
Stage 3 estimates will continue to leverage pre-January 1, 2018 processes for estimating losses on
impaired loans; however, these processes will be updated as experience develops, including the
requirement to consider multiple forward-looking scenarios. An expected credit loss estimate will be
produced for each individual exposure, including amounts which are subject to a more simplified model
for estimating expected credit losses.
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154
The measurement of expected credit losses for each stage and the assessment of significant increases
in credit risk must consider information about past events and current conditions as well as reasonable
and supportable forecasts of future events and economic conditions. The estimation and application of
forward-looking information will require significant judgment.
For a revolving commitment, the Group includes the current drawn balance plus any further amount that
is expected to be drawn up to the current contractual limit by the time of default, should it occur.
For defaulted financial assets, based on management’s assessment of the borrower, a specific provision
of expected lifetime losses which incorporates collateral recoveries, is calculated and recorded as the
ECL. The resulting ECL is the difference between the carrying amount and the present value of
expected cash flows discounted at the original effective interest rate.
Forward-looking information
The estimation and application of forward-looking information will require significant judgment. PD, LGD
and EAD inputs used to estimate Stage 1 and Stage 2 credit loss allowances are modelled based on
the macroeconomic variables (or changes in macroeconomic variables) that are most closely correlated
with credit losses in the relevant portfolio.
Each macroeconomic scenario used in the expected credit loss calculation will have forecasts of the
relevant macroeconomic variables – including, but not limited to, unemployment rates and gross
domestic product, for a three-year period, subsequently reverting to long-run averages. Our estimation
of expected credit losses in Stage 1 and Stage 2 will be a discounted probability-weighted estimate that
considers a minimum of three future macroeconomic scenarios. Our base case scenario will be based
on macroeconomic forecasts where available. Upside and downside scenarios will be set relative to
our base case scenario based on reasonably possible alternative macroeconomic conditions.
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000
2.9 Financial investments (continued)
Scenario design, including the identification of additional downside scenarios will occur on at least an
annual basis and more frequently if conditions warrant. Scenarios will be probability-weighted according
to our best estimate of their relative likelihood based on historical frequency and current trends and
conditions. Probability weights will be updated on a quarterly basis.
(i) Modification of loans
The Group sometimes renegotiates or otherwise modifies the contractual cash flows of loans to
customers and debt instruments. When this happens, the Group assesses whether the new terms are
substantially different from the original terms. The Group does this by considering, among others, the
following factors:
•
If the borrower is in financial difficulty, whether the modification merely reduces the contractual
cash flow to amounts the borrower is expected to be able to pay.
2.9 Financial investments (continued)
(k) Classification of equity instruments
The Group classifies and subsequently measures all equity investments at FVTPL, except where the
Group’s management has elected, at initial recognition, to irrevocably designate an equity investment
at FVOCI. The Group’s policy is to designate equity investments as FVOCI when those investments
are held for purposes other than to generate investment returns.
(l)
Embedded derivatives
The Group may hold debt securities and preferred equity securities which may contain embedded
derivatives. The embedded derivative of a financial investment is classified in the same manner as the
host contract.
• Whether any substantial new terms are introduced, such as a profit-share/equity-based return
(m) Presentation in the statements of income and other comprehensive income (OCI)
•
•
•
•
that substantially affects the risk profile of the loan.
Significant extension of the loan term when the borrower is not in financial difficulty.
Significant change in the interest rate.
Change in the currency in which the loan is denominated.
Insertion of collateral, other security or credit enhancements that significantly affect the credit
risk associated with the loan.
If the terms are substantially different, the Group derecognises the original financial investment and
recognises a new investment at fair value and recalculates the new effective interest rate for the
investment. The date of negotiation is consequently considered to the be the date of initial recognition
for impairment calculation purposes and the purpose of determining if there has been a significant
increase in credit risk.
(j)
Reclassified balances
The Group reclassifies debt securities when and only where its business model for managing those
investments changes. The reclassification takes place from the start of the first reporting period
following the change. Such changes are expected to be very infrequent.
Financial instruments measured at FVTPL
Realised changes in fair value, unrealised changes in fair value, interest income and dividend
income are included in other investment income.
Financial instruments at amortised cost
•
•
•
Interest income is included in interest income earned from financial assets measured at
amortised cost in the consolidated statement of income.
Credit impairment losses are included in the consolidated statement of income.
Gain or loss on derecognition of debt securities is presented in the consolidated statement
of income.
Financial instruments measured at FVOCI
•
•
•
•
Interest income is included in interest income earned from financial assets measured at
FVOCI in the consolidated statement of income.
Credit impairment losses are included in the consolidated statement of income.
Unrealised gains and losses arising from changes in fair value are presented in OCI.
On derecognition, the cumulative fair value gain or loss is transferred from OCI and is
presented in the consolidated statement of income.
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Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 2.9 Financial investments (continued)
2.10 Leases (continued)
Equity securities measured at FVOCI
•
•
•
Dividend income is included in other investment income.
Unrealised changes in fair value presented in OCI. Any impairment losses are included
with fair value changes.
On derecognition, the cumulative gain or loss in OCI remains in the fair value reserve
for FVOCI assets.
For a contract that contains a lease, the Group may account for the lease component separately from the
non-lease component. As a practical expedient, the Group elected, by class of underlying asset, not to
separate the non-lease and lease components, and instead account for the contract as a lease.
As of the date the asset is available for use by the Group (the commencement date), a right-of-use asset
and a corresponding lease liability are recognised.
The cost of the right-of-use asset comprises:
2.10 Leases
(a)
Leases held as lessor
The Group holds 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. Impairment of finance lease receivables is measured
in accordance with the requirements for amortised cost debt instruments.
(a)
(b)
(c)
(d)
the amount of the initial measurement of the lease liability;
any lease payments made at or before the commencement date, less any lease incentives
received;
any initial direct costs incurred by the Group; and
restoration costs.
The Group recognises the costs described in paragraph (d) as part of the cost of the right-of-use asset
when it incurs an obligation for those costs.
The Group holds operating leases primarily for the rental of investment property and certain owner-
occupied property. The Group recognises revenue from these activities on a straight-line basis or on
another systematic basis if that basis is more representative of the pattern of use of the underlying
asset.
Right-of-use assets are presented within property, plant and equipment and are subsequently measured
at cost less depreciation. Right-of-use assets are generally depreciated over the shorter of the asset's
useful life and the lease term on a straight-line basis. If the Group is reasonably certain to exercise a
purchase option, the right-of-use asset is depreciated over the underlying asset’s useful life.
(b)
Leases held as lessee
At the inception of a rental contract for office space or a contract for the use of an asset, the Group
assesses whether the contract contains a lease. A contract is, or contains, a lease if it conveys to the
Group the right to control the use of the office space or asset for a time period in exchange for
consideration. The Group has elected to use the exemption for lease periods with a term of 12 months
or less, or those leases for which the underlying asset has a low value, in which case the lease payments
are recognised in administrative expenses. Low value assets comprise IT equipment and small items
of office furniture.
At the commencement date, the Group measures the lease liability as the present value of the lease
payments that are not paid at that date. The lease payments are discounted using the interest rate
implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined,
which is generally the case for leases in the Group, the lessee’s incremental borrowing rate is used, being
the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of
similar value to the right-of-use asset in a similar economic environment with similar terms, security and
conditions.
23
156
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 2.10 Leases (continued)
2.11 Financial liabilities
At the commencement date, the lease payments included in the measurement of the lease liability
comprise the following payments for the right to use the underlying asset during the lease term that are
not paid at the commencement date:
During the ordinary course of business, the Group issues investment contracts or otherwise assumes
financial liabilities that expose the Group to financial risk.
(a)
(b)
(c)
fixed payments, less any lease incentives receivable;
amounts expected to be payable by the lessee under residual value guarantees;
payments of penalties for terminating the lease, if the lease term reflects the lessee exercising
an option to terminate the lease.
Extension and termination options are included in a number of property and equipment leases across the
Group. These terms are used to maximise operational flexibility in terms of managing contracts. The
extension and termination options need to be approved by the lessor. There are no variable lease
payments and there were no residual value guarantees on leases.
Lease payments are allocated between principal and finance cost. The Group recognises interest on the
lease liability in each accounting period during the lease term, which is the amount that produces a
constant periodic rate of interest on the remaining balance of the lease liability.
After the commencement date, the lease liability is measured by:
(a)
(b)
(c)
increasing the carrying amount to reflect interest on the lease liability;
reducing the carrying amount to reflect the principal portion of lease payments made; and
remeasuring the carrying amount to reflect reassessment or lease modifications, or to reflect
revised fixed lease payments.
Lease liabilities are included in lease liabilities in the statement of financial position. The associated
interest is included in finance costs in the statement of income. Leases give rise to lease liability principal
elements and interest elements in the statement of cash flows.
Classification
Financial liabilities are measured at initial recognition at fair value and are classified as and subsequently
measured either at amortised cost, or at fair value through profit and loss (FVTPL). Financial liabilities
are recognised when the Group becomes a party to the contractual provision of the instrument.
Financial liabilities are derecognised when they are extinguished (i.e. when the obligation specified in
the contract is discharged, cancelled or expires).
The financial liabilities described under the unit linked fair value model (note 2.9 (c)) are classified and
measured at FVTPL as the Group is obligated to provide investment returns to the unit holder in direct
proportion to the investment returns on a specific portfolio of assets, which are also carried at FVTPL.
Derivative financial liabilities are carried at FVTPL (note 2.12). All other financial liabilities are carried
at amortised cost. It is noted that the financial liabilities measured at FVTPL do not have a cumulative
own credit adjustment gain or loss.
The recognition and measurement of the Group’s principal types of financial liabilities are disclosed in
note 2.14(b) (vii) and in the following paragraphs.
(a) Securities sold for repurchase
Securities sold for repurchase 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 repledge the collateral. The difference between the sale and repurchase 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.
24
157
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 2.11 Financial liabilities (continued)
2.12 Derivative financial instruments and hedging activities
(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. Loan obligations undertaken for the purposes of providing funds for on-lending,
leasing or portfolio investments are classified as deposit and security liabilities.
(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.
(e) Presentation in the statement of income
For notes and loans payable measured at amortised cost, the associated interest is included in finance
costs.
For deposit and security liabilities measured at amortised cost, the associated interest expense is
included within interest costs.
For financial liabilities measured at FVTPL, the associated interest and fair value changes are included
within interest costs.
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.
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.
2.13 Offsetting financial instruments
Financial assets and financial 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.
25
158
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 2.14 Policy contracts
(a) Classification
The Group issues policy contracts that transfer insurance risk and/or financial risk from the policyholder.
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.
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.
2.14 Policy contracts (continued)
Certain 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;
for which the 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 2.21).
(b) Recognition and measurement
(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.
26
159
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 2.14 Policy contracts (continued)
2.14 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 unreported 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.
(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 2.15.
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.
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 2.15.
27
160
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 2.14 Policy contracts (continued)
2.14 Policy contracts (continued)
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.
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 which are credited to the investment accounts and expenses,
not included in the afore-mentioned 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.
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 2.15.
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.
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.
28
161
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 2.14 Policy contracts (continued)
(vii) Deposit administration and other investment contracts
2.14 Policy contracts (continued)
(d) Liability adequacy tests
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.
2.15 Actuarial liabilities
(a) Life insurance and annuity contracts
The determination of actuarial liabilities of long-term insurance contracts has been done using
approaches consistent with the principles of the Canadian standards of practice. 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.
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.
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 profit and loss (FVTPL) where the insurer is obligated to provide
investment returns to the pension scheme in direct proportion to the investment returns on
specified blocks of assets.
•
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.
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 for which 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 2.15.
29
162
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 2.15 Actuarial liabilities (continued)
2.15 Actuarial liabilities (continued)
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 profit and loss 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.
2.16 Presentation of current and non-current assets and liabilities
In note 41.5, 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.
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 financial investments, for which 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 changes in 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 FVOCI.
30
163
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 2.17 Employee benefits
(a) Pension benefits
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.
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.
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.
31
164
2.17 Employee benefits (continued)
(c) Profit-sharing and bonus plans
The Group recognises a liability and an expense for bonuses and profit-sharing, based on various profit
and other objectives of the Group 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.
If the equity instruments granted vest immediately and the individual is not required to complete a further
period of service before becoming entitled to those instruments, the services received are recognised
in full on grant date in the income statement for the period, with a corresponding increase in equity.
Where the equity instruments do not vest until the individual has completed a further period of service,
the services received are expensed in the income statement during the vesting period, with a
corresponding increase in the reserve for equity compensation benefits or in non-controlling interest.
Non-market vesting conditions are included in assumptions about the number of instruments that are
expected to vest. At each reporting financial statement date, the Group revises its estimates of the
number of instruments that are expected to vest based on the non-marketing vesting conditions and
adjusts the expense accordingly.
Amounts held in the reserve for equity compensation benefits are transferred to share capital or non-
controlling interest either on the distribution of share grants or on the exercise of share options.
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 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
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.
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 service. 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
Premium tax rates
Barbados
Jamaica
Trinidad and Tobago
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.
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.
.
32
165
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 2.18 Taxes (continued)
2.19 Other liabilities / Retirement benefit liabilities
Income tax rates
Life insurance and
non-registered annuities
Registered
annuities
Other lines of
business
Barbados
2% of profit before tax
2% of profit
before tax
2% of profit before
tax
Jamaica
25% of profit before tax
Nil
Trinidad and Tobago
15% (deductions granted only
in respect of expenses
pertaining to long-term
business investment income)
United States of
America
21% of net income
Nil
Nil
(i) Current income taxes
25% - 33.33 % of
profit before tax
30% of net income
21% of profit
before tax
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 they relate to the same entity. Deferred tax, related to fair value re-measurement of FVOCI
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.
Liabilities 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.
2.20 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.
On the declaration by the Company’s directors of common share dividends payable, the total value of
the dividend is recorded as an appropriation of retained earnings.
2.21 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.
33
166
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 2.21 Participating accounts (continued)
2.21 Participating accounts (continued)
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.
(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.
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.
2.22 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.
2.23 Premium / (discount) paid on repurchase of shares
The premium / (discount) paid on repurchase of shares is recorded directly in retained earnings.
2.24 Interest income and interest expense
Interest income (expense) is computed by applying the effective interest rate to the gross carrying
amount of a financial asset (liability), except for financial assets that are purchased, originated or
subsequently become credit-impaired. For credit-impaired financial assets, the effective interest rate is
applied to the net carrying amount of the financial asset (i.e. after deduction of the loss allowance).
Interest includes coupon interest and accrued discount and premium on financial instruments. Dividend
income is recorded when declared.
34
167
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 2.25 Fees and other revenue
The Group earns fee income from:
•
•
•
•
the management and administration of third-party investment funds, pension plans and
insurance benefit plans (managed funds or administrative service only (ASO) benefit
plans);
hotel revenue from room services, and food and beverage sales;
certain of its insurance and investment contracts;
the provision of corporate finance, stockbroking, trust and related services.
Other revenue includes:
•
•
•
•
commission income on insurance contracts;
hotel revenue from other services and sale of goods;
rental income from owner-occupied property;
foreign exchange gains / (losses).
Service contract revenue
Revenues from service contracts include management and administrative fees and hotel revenue from
guest reservations. These service contracts generally impose single-performance obligations, each
consisting of a series of similar related services to the customer. The Group’s performance obligations
within these service arrangements are generally satisfied over time as the customers simultaneously
receive and consume contracted benefits.
Revenue from service contracts with customers is recognised when or as the Group satisfies the
performance obligation. For obligations satisfied over time, revenue is recognised monthly or over the
applicable period. For performance obligations satisfied at a point in time, service contract revenue is
recognised at that point in time.
2.26 Cash flows
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,
• money market funds,
•
•
other liquid balances with maturities of three months or less from the acquisition date,
less bank overdrafts which are repayable on demand.
Cash equivalents are subject to an insignificant risk of change in value and exclude restricted cash.
35
168
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 2.27 Future accounting developments and reporting changes
2.27 Future accounting developments and reporting changes (continued)
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.
Amendments to IFRS 7, IFRS 4 and IFRS 16 – Interest Rate Benchmark Reform, Phase 2,
effective January 1, 2021
Subject / Comments
Amendment to IFRS 16 – Leases; COVID-19 related rent concessions, effective for annual
periods beginning on or after June 1, 2020
The Phase 2 amendments address issues that arise from the implementation of the reforms,
including the replacement of one benchmark with an alternative one.
Subject / Comments
This standard will have no material effect on the Group.
As a result of the coronavirus (COVID-19) pandemic, rent concessions have been granted to
lessees. Such concessions might take a variety of forms, including payment holidays and deferral
of lease payments. On May 28, 2020, the IASB published an amendment to IFRS 16 that
provides an optional practical expedient for lessees from assessing whether a rent concession
related to COVID-19 is a lease modification. Lessees can elect to account for such rent
concessions in the same way as they would if they were not lease modifications. In many cases,
this will result in accounting for the concession as variable lease payments in the period(s) in
which the event or condition that triggers the reduced payment occurs.
Amendments to IAS 1 – Liabilities as current or non-current, effective January 1, 2022
Subject / Comments
In January 2020, the IASB made amendments to IAS 1 ‘Presentation of financial statements’ to
clarify the criteria for classifying a liability as non-current. These are to be applied retroactively.
This standard has not yet been adopted and it will have no material effect on the Group.
The impact of this standard on the Group is currently being analysed.
Amendments to IFRS 17 and IFRS 4 – Insurance contracts; deferral of IFRS 9, effective
January 1, 2021!
Amendments to IFRS 3 – Business combinations, effective January 1, 2022
Subject / Comments
Subject / Comments
(((
These amendments defer the date of application of IFRS 17 by two years to January 1, 2023
and change the fixed date of the temporary exemption in IFRS 4 from applying IFRS 9 –
Financial Instruments, until January 1, 2023.
The effect of these standards on the Group follows in this note in the section, “IFRS 17 –
Insurance Contracts, effective January 1, 2023”.
((
These amendments update a reference in IFRS 3 to the Conceptual Framework for Financial
Reporting without changing the accounting requirements for business combinations.
This standard will have no material effect on the Group.
36
169
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 2.27 Future accounting developments and reporting chang es (continued)
2.27 Future accounting developments and reporting changes (continued)
Amendments to IAS 16 – Property, plant and equipment, effective January 1, 2022
IFRS 17 – Insurance Contracts, effective January 1, 2023 (continued)
Subject / Comments
Subject / Comments
These amendments prohibit a company from deducting from the cost of property, plant and
equipment, amounts received from selling items produced while the company is preparing the
asset for its intended use. Instead, a company will recognise such sales proceeds and related
cost in profit or loss.
This standard will have no material effect on the Group.
Amendments to IAS 37 – Provisions, contingent liabilities and contingent assets, effective
January 1, 2022
Subject / Comments
These amendments specify which costs a company includes when assessing whether a contract
will be loss-making.
This standard will have no material effect on the Group.
IFRS 17 – Insurance Contracts, effective January 1, 2023
Subject / Comments
IFRS 17 was issued in May 2017 as replacement for IFRS 4 - Insurance Contracts. A further
exposure draft (ED) was issued in June 2019 and final amendments were published in June 2020.
The amendments aim to help companies implement the standard and to make explanation of
financial performance easier. The standard 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.
•
•
•
It 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 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.
Sagicor has established a group-wide project for the implementation of this standard and has
allocated substantial resources to this exercise. Project activities involve the establishment of
various technical and oversight teams, and the evaluation and assessment of the Group’s
business. The Group is carrying out internal training programmes, workshops and assessments
of all areas affected by the standard as it works towards implementation. Project work is ongoing
in all areas.
(((
37
170
(((
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 2.27 Future accounting developments and reporting changes (continued)
Improvements
Annual
Standards
to
Description of amendment
IFRS 1 - First-time Adoption of
International Financial Reporting
Standards
To simplify the application of IFRS 1 by a subsidiary that
becomes a first-time adopter of IFRSs after its parent company
has already adopted them. The amendment relates to the
measurement of cumulative translation differences.
IFRS 9 - Financial Instruments
To clarify the fees a company includes in assessing the terms
of a new or modified financial liability to determine whether to
derecognise a financial liability.
Illustrative Examples
accompanying IFRS 16 Leases
IAS 41 - Agriculture
To remove the potential for confusion regarding lease
incentives by amending an Illustrative Example accompanying
IFRS 16.
To align the fair value measurement in IAS 41 with those in
other IFRSs.
The annual improvements are effective January 1, 2022 and have not yet been applied.
38
171
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000
3 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
3.1 Impairment of financial assets (continued)
The development of estimates and the exercise of judgment in applying accounting policies may have
a material impact on the Group’s reported assets, liabilities, income and other comprehensive income.
The items which may have the most effect on the Group’s financial statements are set out below.
3.1 Impairment of financial assets
In determining ECL (defined in note 2.9(d)), management is required to exercise judgement in defining
what is considered a significant increase in credit risk and in making assumptions and estimates to
incorporate relevant information about past events, current conditions and forecasts of economic
conditions. Further information about the judgements involved is included in note 2.9 under sections
'Measurement' and 'Forward-looking information'.
(a)
Establishing staging for debt securities and deposits
The Group’s internal credit rating model is a 10-point scale which allows for distinctions in risk
characteristics and is referenced to the rating scale of international credit rating agencies.
The scale is set out in the following table:
Category
Sagicor
Risk
Rating
t
l
u
a
f
e
d
-
n
o
N
Investment
grade
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
C
Substandard
Doubtful
D
C
C
10
Loss
c
d
C
DDD
DD
D
The Group uses its internal credit rating model to determine in which of the three stages an asset is to
be categorised for the purposes of ECL.
Once the asset has experienced a significant increase in credit risk, the investment will move from
Stage 1 to Stage 2. Sagicor has assumed that the credit risk of a financial instrument has not increased
significantly since initial recognition if the financial instrument is determined to have low credit risk at
the reporting date. A financial asset that is investment grade or has a Sagicor risk rating of 1-3 is
considered low credit risk.
39
172
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000
3.1 Impairment of financial assets (continued)
3.2 Fair value of securities not quoted in an active market
The fair value of securities not quoted in an active market may be determined using reputable pricing
sources (such as pricing agencies), indicative prices from bond/debt market makers or other valuation
techniques. Broker quotes as obtained from the pricing sources may be indicative and not executable
or binding. The Group exercises judgement on the quality of pricing sources used. Where no market
data is available, the Group may value positions using its own models, which are usually based on
valuation methods and techniques generally recognised as standard within the industry. The inputs into
these models are primarily discounted cash flows.
The models used to determine fair values are periodically reviewed by experienced personnel. The
models used for debt securities are based on net present value of estimated future cash flows, adjusted
as appropriate for liquidity, and credit and market risk factors.
3.3 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.
Stage 1 investments are rated (i) investment grade, or (ii) below investment grade at origination and
have not been downgraded more than 2 notches since origination. Stage 2 investments are assets
which (i) have been downgraded from investment grade to below investment grade, or (ii) are rated
below investment grade at origination and have been downgraded more than 2 notches since
origination. Stage 3 investments are assets in default.
(b) Establishing staging for other assets measured at amortised cost, finance lease receivables,
loan commitments and financial guarantee contracts
Exposures are considered to have resulted in a significant increase in credit risk and are moved to stage
2 when:
Qualitative test
•
accounts that meet the portfolio’s ‘high risk’ criteria and are subject to closer credit
monitoring.
Backstop criteria
•
accounts that are 30 calendar days or more past due. The 30 days past due criteria is a
backstop rather than a primary driver of moving exposures into stage 2.
(c)
Forward-looking information
When management determines the macro-economic factors that impact the portfolios of financial assets,
they first determine all readily available information within the relevant market. Portfolios of financial
assets are segregated based on product type, historical performance and homogenous country
exposures. There is often limited timely macro-economic data for Barbados, Eastern Caribbean, Trinidad
and Jamaica. Management assesses data sources from local government, International Monetary Fund
(IMF) and other reputable data sources. A regression analysis is performed to determine which factors
are most closely correlated with the credit losses for each portfolio. Where projections are available,
these are used to look into the future up to three years and subsequently the expected performance is
then used for the remaining life of the product. These projections are re-assessed on a quarterly basis.
(((
40
173
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000
3.4 Impairment of intangible assets
3.5 Valuation of actuarial liabilities (continued)
(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.
3.5 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 to which margins for adverse deviations are added.
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 and the distribution of the reserve
by policy, and other individual components in the actuarial liabilities.
Further details of the inputs used are set out in note 43.
(b) Best estimate reserve assumptions & provisions for adverse deviations
Actuarial liabilities include two major components: a best estimate reserve and a provision for adverse
deviations. The latter provision is established in recognition of the uncertainty in computing best estimate
reserves, to allow for possible deterioration in experience and to provide greater comfort that reserves are
adequate to pay future benefits.
For the respective reserve assumptions for mortality and morbidity, lapse, future investment yields,
operating expenses and taxes, best estimate reserve assumptions are determined where appropriate.
The assumption for operating expenses and taxes is in some instances split by universal life and unit
linked business.
Provisions for adverse deviations are established in accordance with the risk profiles of the business, and
are, as far as is practicable, standardised across geographical areas. Provisions are determined within a
specific range established by 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 reassessment.
41
174
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 3.6
Investment in associate
As at October 1, 2018, Sagicor Group Jamaica (SGJ) had a shareholding in Playa of 15%, which
increased to 16% on June 15, 2020 (see note 6.1). From an accounting perspective, IAS 28
(Investments in Associate and Joint Ventures) paragraph 5, 6 and 8 guidance was considered as follows:
Where an entity holds 20% or more of the voting power (directly or through subsidiaries) in an investee,
it will be presumed the investor has significant influence unless it can be clearly demonstrated that this
is not the case. If the holding is less than 20%, the entity will be presumed not to have significant
influence unless such influence can be clearly demonstrated. A substantial or majority ownership by
another investor does not necessarily preclude an entity from having significant influence.
The existence of significant influence by an entity is usually evidenced in one or more of the following
ways:
•
•
representation on the board of directors or equivalent governing body of the investee;
participation in the policy-making process, including participation in decisions about dividends
or other distributions;
material transactions between the entity and the investee;
interchange of managerial personnel; or
provision of essential technical information.
•
•
•
In assessing whether potential voting rights contribute to significant influence, the entity examines all
facts and circumstances (including the terms of exercise of the potential voting rights and any other
contractual arrangements whether considered individually or in combination) that affect potential rights,
except the intentions of management and the financial ability to exercise or convert those potential rights.
Management has one representative out of eight on the Board of Playa.
Management has previously concluded, given its participation in the policy-making decisions, significant
involvement in, and influence over strategic financial and operational decision-making of Playa, that it
has significant influence over Playa and as such was of the view that SGJ’s strategic investment in Playa
should be treated as an investment in associate in accordance with IAS 28, even though Sagicor owns
less than 20% of Playa’s shares. Subsequent to the year end, SGJ has sold a portion of its investment
as part of Playa’s secondary public offering and transferred the remaining shares to SFCL (see note 50).
Management concluded that the investment in Playa did not meet the definition of held for sale as at
December 31, 2020.
42
175
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 4 SEGMENTS
4 SEGMENTS (continued)
The management structure of the Group 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
up of senior management who advise the respective CEOs. The
management committees made
principal subsidiaries have a full management governance structure, a consequence of them 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 Group performance and of resource allocation needs. Summarisation of planning
results and prioritisation of resource allocation is done at the parent company level where
and
strategic decisions are taken.
In accordance with the relevant financial reporting standard, the Group has determined that there are
three principal subsidiary Groups 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
This group comprises Sagicor Life Inc, its branches and associates, and certain of its subsidiaries in
Barbados, Trinidad & Tobago, Eastern Caribbean, Dutch Caribbean, Bahamas and Central America.
The companies comprising this segment are set out in the following table.
43
176
.
Sagicor Life
Segment Companies
Principal Activities
Life and health insurance,
annuities and pension
administration services
Life and health insurance,
annuities and pension
administration services
Life and health insurance,
annuities and pension
administration services
Sagicor Life Inc
Sagicor Life
(Eastern Caribbean) Inc.(1)
Sagicor Life Aruba NV
Capital Life Insurance
Company Bahamas Limited
Country of
Incorporation
Effective
Shareholders’
Interest
Barbados
100%
St. Lucia
100%
Aruba
100%
Life insurance
The Bahamas
100%
100%
Sagicor Panamá, SA
Life and health insurance
Panamá
Nationwide Insurance
Company Limited
Sagicor International
Management Services Inc
Life insurance
Trinidad & Tobago
100%
Investment management
USA
100%
(1)
Sagicor Life (Eastern Caribbean) Inc became a subsidiary of Sagicor Financial Corporation
Limited on October 10, 2014 and a subsidiary of the Group on October 10, 2014. The
company commenced operations on May 31, 2019.
Associates
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%
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000
4 SEGMENTS (continued)
4 SEGMENTS (continued)
Associates
RGM Limited
Property ownership and
management
Trinidad & Tobago
Primo Holding Limited
Property investment
Barbados
33%
38%
(b) Sagicor Jamaica
This segment comprises the Sagicor Jamaica Group of companies, which conduct life, health, annuity,
property and casualty insurance business, pension administration services, banking and financial
services, hospitality and real estate investment services in Jamaica, Cayman Islands Costa Rica and
USA. 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
Sagicor Life of the
Cayman Islands Limited
Sagicor Investments
Cayman Ltd.
Sagicor Pooled
Investment Funds Limited
Life insurance
Investment services
Jamaica
49.11%
The Cayman
Islands
The Cayman
Islands
49.11%
49.11%
Pension fund management
Jamaica
49.11%
Employee Benefits
Administrator Limited
Sagicor Re Insurance
Limited
Pension administration
services
Property and casualty
insurance
Jamaica
49.11%
The Cayman
Islands
49.11%
Sagicor Insurance Brokers
Limited
Insurance brokerage
Jamaica
49.11%
Sagicor International
Administrators Limited
Group insurance
administration
Jamaica
49.11%
44
Sagicor Jamaica
Segment Companies (continued)
Principal Activities
Country of
Incorporation
Sagicor Insurance Managers
Limited
Captive insurance
management services
The Cayman
Islands
Effective
Shareholders’
Interest
49.11%
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
49.11%
LOJ Holdings Limited
Insurance holding
company
Jamaica
100%
Sagicor Securities Jamaica Limited
Securities trading
Jamaica
49.11%
Travel Cash Jamaica Limited
Microfinance
Jamaica
25.05%
Sagicor Real Estate X-Fund
Limited
X Fund Properties Limited
Investment in real
estate activities
Hospitality and real
estate investment
St. Lucia
14.39%
Jamaica
14.39%
X Fund Properties LLC
Hospitality
USA
14.39%
Jamziv MoBay Jamaica Portfolio
Limited
Holding Company
Jamaica
8.75%
Phoenix Equity Holdings Limited (1) Holding Company
Barbados
49.11%
Advantage General Insurance Co.
Limited (note 37)
Property and casualty
insurance
Jamaica
29.47%
Bailey Williams Limited (note 37)
Associate and joint venture
Real estate
development
Jamaica
34.38%
Sagicor Costa Rica SCR, S.A.
Life insurance
Costa Rica
24.56%
Playa Hotel & Resorts N.V. (note
6.1)
Hospitality
Netherlands
2.41%
.
177
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 4 SEGMENTS (continued)
(b) Sagicor Jamaica (continued)
(1)
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.
!"#
The company became a subsidiary of Sagicor Investments Jamaica Limited on July 19, 2019
and a subsidiary of the Group on July 19, 2019.
(c) Sagicor Life USA
This segment comprises Sagicor’s life insurance operations in the USA and comprises the following:
Sagicor Life USA
Segment Companies
Principal Activities
Country of
Incorporation
Effective
Shareholders’
Interest
Sagicor Life Insurance
Company
Sagicor USA Inc
Life insurance and annuities
USA - Texas
100%
Insurance holding company
USA - Delaware
100%
Sage Distribution, LLC
Life insurance and annuities
USA - Delaware
100%
Sage Partners, LLC
Life insurance and annuities
USA - Delaware
100%
Sagicor Financial Partners,
LLC
Life insurance and annuities
USA - Delaware
51%
45
178
Effective
Shareholders’
Interest
100%
100%
4 SEGMENTS (continued)
(d) Head office function and other operating companies
Head office and other Group
Companies
Principal Activities
Country of
Incorporation
Sagicor Financial Company Ltd.(1)
Group parent company
Bermuda
Sagicor Financial Corporation
Limited
Sagicor General Insurance
Inc (2)
Sagicor Finance Inc
Sagicor Investments Trinidad &
Tobago Limited(3)
Holding company
Bermuda
Property and casualty
insurance
Loan and lease
financing, and deposit-
taking
Barbados
99.30%
St. Lucia
70%
Investment management
Trinidad & Tobago
100%
Sagicor Asset Management Inc.
Investment management
Barbados
Sagicor Asset Management (Eastern
Caribbean) Limited
Investment management
Barbados
Sagicor Special Opportunity Funds(4)
Investment management
Barbados
Barbados Farms Limited
Sagicor Funds Incorporated
The Mutual Financial Services Inc
Farming and real estate
development
Barbados
Mutual fund holding
company
Financial services
holding company
Barbados
100%
Barbados
Sagicor Finance Limited
Group financing vehicle
The Cayman Islands
Sagicor Finance (2015) Limited
Group financing vehicle
The Cayman Islands
(1)
(2)
(3)
(4)
Sagicor Financial Company Ltd. formerly Alignvest Acquisition II Corporation effective December
5, 2019, became a member of the Group.
At December 31, 2019, the effective shareholders’ interest was 98%. Sagicor continues to acquire
shares of Sagicor General Insurance Inc with a view to achieving an ownership interest of 100%.
Sagicor Investments Trinidad & Tobago Limited, formerly Sagicor Asset Management (T&T) Limited.
Sagicor Special Opportunity Funds was formed during the year but is not yet operational.
100%
100%
100%
77%
73%
100%
100%
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 4 SEGMENTS (continued)
(d) Head office function and other operating companies
Head office and other Group
Companies
Principal Activities
Country of
Incorporation
Sagicor Reinsurance Bermuda
Ltd (1)
Reinsurance
Bermuda
1222948 B.C. Ltd. (2)
Corporate management
Canada
The Estates Group Holdings
Limited
The Estates (Senior Care
Services) Limited
The Estates (Senior Care
Properties) Limited
The Estates (Residential
Properties) Limited
The Estates (Management
Services) Limited (3)
Holding company
Barbados
Retirement Community
Barbados
100%
Retirement Community
Barbados
100%
Retirement Community
Barbados
100%
Retirement Community
Barbados
100%
Effective
Shareholders’
Interest
100%
100%
100%
Sagicor Reinsurance Bermuda became a subsidiary of Sagicor Financial Corporation Limited on
October 4, 2017 and a subsidiary of the Group on October 4, 2017. During the period ended June
30, 2020, SRBL executed a reinsurance arrangement with Sagicor Insurance Company (“SLIC”)
through a segregated account of SRBL (see note 39). Through this arrangement, SLIC transferred
the insurance risks associated with certain life products, and financial instruments supporting those
liabilities, to SRBL for a ceding commission. This ceding commission will be used to continue the
growth of business in the USA. At the year end, the financial statements reflect the consolidated
assets and reserves of each of the subsidiaries and the inter-entity balances have been eliminated.
1222948 B.C. Ltd. became a subsidiary of Sagicor Financial Corporation Limited on September 11,
2019.
The Estates (Management Services) Limited became a subsidiary of The Estates Group Holdings
Limited on October 22, 2019.
(1)
(2)
(3)
46
179
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 4.1 Statement of income by segment
2020
Net premium revenue
Gain on derecognition of amortised cost investments
Gain / (loss) on derecognition of assets carried at FVOCI
Interest income earned from financial assets measured at amortised cost and FVOCI
Other investment income
Credit impairment losses
Fees and other revenue
Inter-segment revenue
Total revenue, net
Net policy benefits
Net change in actuarial liabilities
Interest costs
Administrative expenses
Commissions and premium and asset taxes
Finance costs
Depreciation and amortisation
Inter-segment expenses
Total benefits and expenses
Loss arising on business combinations, acquisitions and divestitures
Loss on impairment of associates and joint ventures
Share of operating income / (loss) of associates and joint ventures
Segment income / (loss) before taxes
Income taxes
Segment net income / (loss) from continuing operations
Net loss attributable to non-controlling interests
Sagicor Life
Sagicor
Jamaica
Sagicor Life
USA
Head office
and other
Adjustments
Total
414,240
355,406
597,068
36,713
623
2,847
74,828
4,148
(7,450)
11,374
22,713
523,323
220,707
97,026
12,663
80,732
44,843
70
8,945
4,118
8,271
21,704
160,472
(14,266)
(12,083)
112,446
-
631,950
231,006
(26,298)
27,239
166,594
54,100
7,886
20,249
2,072
(5)
(4,204)
74,820
18,903
(4,002)
(3,639)
-
678,941
177,244
463,438
2,463
33,981
27,617
322
4,247
4,271
-
(178)
4,639
7,469
(462)
19,344
7,668
75,193
15,643
-
528
57,634
9,512
36,607
6,118
21,822
469,104
482,848
713,583
147,864
-
-
3,250
57,469
(8,386)
49,083
(1,262)
(31,804)
(38,207)
-
-
-
77,829
(34,642)
(40,034)
7,517
37,795
(27,125)
-
(12,726)
-
-
-
-
(72,671)
(1,426)
(74,097)
(158)
-
-
-
-
(110)
-
(549)
(30,381)
(31,040)
-
-
-
1,626
-
-
-
(32,283)
(30,657)
-
-
-
(383)
(403)
(786)
-
1,403,427
8,889
20,169
314,759
16,144
(23,997)
138,976
-
1,878,367
644,600
534,166
42,893
340,567
136,072
44,885
39,559
-
1,782,742
(1,262)
(31,804)
(34,957)
27,602
(42,732)
(15,130)
(12,884)
(3,045)
Total comprehensive income / (loss) attributable to shareholders - continuing operations
56,749
41,327
(25,664)
(74,337)
(1,120)
47
180
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 4.1 Statement of income by segment
2019
Net premium revenue
Gain on derecognition of amortised cost investments
Gain on derecognition of assets carried at FVOCI
Interest income earned from financial assets measured at amortised cost and FVOCI
Other investment income
Credit impairment losses
Fees and other revenue
Inter-segment revenue
Total revenue, net
Net policy benefits
Net change in actuarial liabilities
Interest costs
Administrative expenses
Commissions and premium and asset taxes
Finance costs
Depreciation and amortisation
Listing expense and other transaction costs
Inter-segment expenses
Total benefits and expenses
Loss arising on business combinations, acquisitions and divestitures
Share of operating income of associates and joint ventures
Segment income / (loss) before taxes
Income taxes
Segment net income / (loss) from continuing operations
Net income / (loss) attributable to non-controlling interests
Total comprehensive income / (loss) attributable to shareholders - continuing operations
48
Sagicor Life
Sagicor
Jamaica
Sagicor Life
USA
Head office
and other
Adjustments
Total
409,161
455
6,158
74,164
10,845
1,434
11,027
19,965
533,209
221,331
94,082
15,951
77,908
48,273
57
7,394
-
5,025
470,021
(379)
3,980
66,789
(7,868)
58,921
-
68,734
350,054
13,285
21,299
160,322
52,146
(6,089)
144,293
-
735,310
219,056
59,270
30,611
180,410
50,704
7,806
20,385
-
2,456
570,698
-
(633)
163,979
(40,426)
123,553
62,184
74,568
444,697
(30)
2,497
70,201
46,923
(415)
(2,355)
-
561,518
115,237
325,930
7,121
35,611
26,253
518
4,730
-
1,311
516,711
-
-
44,807
(9,410)
35,397
-
37,632
(790)
-
3,327
2,470
193
17,152
41,692
101,676
21,925
-
509
36,934
9,485
35,252
2,997
43,396
19,281
169,779
-
-
(68,103)
(2,170)
(70,273)
(654)
-
-
-
-
(584)
-
(2,146)
(61,657)
(64,387)
-
5,501
-
2,373
-
-
-
-
1,241,544
12,920
29,954
308,014
111,800
(4,877)
167,971
-
1,867,326
577,549
484,783
54,192
333,236
134,715
43,633
35,506
43,396
(28,073)
(20,199)
-
1,707,010
-
-
(44,188)
164
(44,024)
-
(379)
3,347
163,284
(59,710)
103,574
61,530
80,671
181
48,259
(67,680)
(43,210)
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000
4.2 Variations in segment income
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) Credit impairment losses - financial investments
The determination of ECL involves judgement in establishing various assumptions based on economic
conditions and historical trends. Changes in assumptions will impact the ECL allowances recorded in
the income statement.
Significant changes in borrowers classified as Stage 3 will be triggered by changes affecting individual
borrowers or groups of borrowers, leading to significant variations in losses recorded in the income
statement.
(ii) Fair value gains / (losses) of financial investments
4.2 Variations in segment income (continued)
(iii) Gains on acquisitions and 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 recognised 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. As acquisitions and disposals occur infrequently and with no
consistent trend, the gain or loss recorded in the income statement may vary significantly from year to
year.
(iv) Foreign exchange gains and losses
Movements in foreign exchange rates may generate significant exchange gains or losses when the
foreign currency denominated monetary assets and liabilities are retranslated to the relevant functional
currency at the date of the financial statements.
Significant gains and losses may be triggered by changes in market prices of assets carried at fair value.
(v) Movements in actuarial liabilities arising from changes in assumptions
For FVOCI investments, management may be able to time the disposal of such investments and
consequently, impact the quantum of the realised gain or loss recognised in the statement of income.
For FVTPL investments, management may also able to time the disposal of such investments.
However, since the majority of these assets fund unit linked liabilities, the impact to Group net income
is mitigated by any increased return due to the holders of the unit linked liabilities.
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. As
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.
(vi)
Impairment of investments in associates and joint ventures
Losses on impairment of investments in associates and joint ventures may result when impairment
assessments indicate that impairment of investments in associates and joint ventures has occurred. An
impairment assessment is performed when an investment’s value, based on quoted market prices, is
lower than its carrying value recorded by the Group, or when conditions impacting the associate or joint
venture suggest that the Group’s investment in associate or joint venture may be impaired.
49
182
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 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
Inc
Sagicor
Jamaica
Sagicor Life
USA
Head Office
and Other
Total
Sagicor Life
Inc
Sagicor
Jamaica
Sagicor Life
USA
Head Office
and Other
Total
2020
2019
Credit impairment losses
(7,450)
(12,083)
(4,002)
Gain / (loss) on derecognition of assets
carried at FVOCI
2,847
21,704
(4,204)
Foreign exchange gains / (losses)
(410)
1,296
Gains / (losses) on acquisitions /
divestitures
Loss on impairment of investment in
associates and joint ventures
Decrease / (increase) in actuarial
liabilities from changes in
assumptions
-
-
(2,761)
(31,804)
-
-
-
30,133
43,807
(83,858)
(462)
(178)
3,192
1,499
-
-
(23,997)
1,434
(6,089)
(415)
20,169
4,078
(1,262)
(31,804)
6,158
21,299
2,497
(3,261)
3,647
(379)
-
-
-
-
-
-
(9,918)
(23,457)
15,341
(94,291)
193
-
(4,877)
29,954
(1,491)
(1,105)
-
-
-
(379)
-
(102,407)
50
183
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000
4.3 Other comprehensive income
4.3 Other comprehensive income (continued)
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 FVOCI. 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, but off-
setting, 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
retranslation 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.
Variations in other comprehensive income by segment
Sagicor Life
Sagicor Jamaica
Sagicor Life
USA
5,536
2,421
(235)
3,204
28,630
(22,513)
545
6,624
44,399
(5,236)
(37,703)
516
66,127
(14,510)
(17,889)
4,304
46,841
(49,158)
-
-
73,026
(57,976)
-
-
Head
office
and
other
490
-
(57)
(246)
924
-
407
270
Adjustments
Total
-
-
(200)
-
-
-
296
-
97,266
(51,973)
(38,195)
3,474
168,707
(94,999)
(16,641)
11,198
2020
Unrealised investment gains
Changes in actuarial liabilities
Retranslation of foreign currency operations
Gains / (losses) on defined benefit plans
2019
Unrealised investment gains
Changes in actuarial liabilities
Retranslation of foreign currency operations
Gains on defined benefit plans
51
184
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 4.4 Statement of financial position by segment
2020
Financial investments
Other external assets
Inter-segment assets
Total assets
Policy liabilities
Other external liabilities
Inter-segment liabilities
Total liabilities
Net assets
Net assets attributable to non-controlling interests
2019
Financial investments
Other external assets
Inter-segment assets
Total assets
Policy liabilities
Other external liabilities
Inter-segment liabilities
Total liabilities
Net assets
Net assets attributable to non-controlling interests
52
Sagicor Life
Sagicor Jamaica
Sagicor Life USA
Head office
and other
Adjustments
Total
1,551,028
337,603
390,589
2,279,220
1,477,944
82,757
126,407
1,687,108
592,112
-
1,438,618
341,370
335,784
2,115,772
1,379,761
77,259
120,000
1,577,020
538,752
-
2,714,543
730,018
10,572
3,455,133
824,538
1,690,379
12,943
2,527,860
927,273
530,284
2,670,339
795,798
15,903
3,482,040
865,914
1,673,057
6,097
2,545,068
936,972
577,429
2,556,319
767,817
58,950
3,383,086
2,507,838
452,582
152,797
3,113,217
269,869
-
2,040,771
735,747
65,224
2,841,742
1,997,405
437,936
110,835
2,546,176
295,566
-
416,679
192,306
185,232
794,217
72,661
499,404
353,196
925,261
(131,044)
16,539
535,916
170,312
141,760
847,988
72,873
474,886
321,739
869,498
(21,510)
17,077
-
-
(645,343)
(645,343)
-
-
(645,343)
(645,343)
-
-
-
-
(558,671)
(558,671)
-
-
(558,671)
(558,671)
-
-
7,238,569
2,027,744
-
9,266,313
4,882,981
2,725,122
-
7,608,103
1,658,210
546,823
6,685,644
2,043,227
-
8,728,871
4,315,953
2,663,138
-
6,979,091
1,749,780
594,506
185
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000
4.5 Segment cash flows
4.6 Products and services
(a) Additions to non-current assets by segment
Total external revenues relating to the Group’s products and services are summarised as follows:
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:
Sagicor Life
Sagicor Jamaica
Sagicor Life USA
Head office and other
2020
2019
8,139
16,933
14,829
2,792
42,693
5,771
23,697
1,753
1,342
32,563
(b) Summarised cash flows of the Sagicor Jamaica segment
Set out below are the summarised cash flows of the Sagicor Jamaica segment which has material non-
controlling interests.
Net cash flows:
Operating activities
Investing activities
Financing activities
Effects of exchange rate changes
Net change in cash and cash equivalents for the year
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
2020
2019
184,274
(8,552)
(39,223)
(4,930)
131,569
129,822
261,391
70,626
(37,024)
(26,704)
(1,812)
5,086
124,736
129,822
2020
2019
Life, health and annuity insurance contracts issued to individuals
1,270,678
1,214,656
Life, health and annuity insurance and pension administration
contracts issued to groups
Property and casualty insurance
304,785
317,892
82,276
61,960
Banking, investment management and other financial services
171,192
192,246
Hospitality services
Unallocated revenues
4.7 Geographical areas
14,251
35,185
41,693
38,879
1,878,367
1,867,326
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, associates and intangible
assets. Total external revenues and non-current assets by geographical area are summarised below.
Barbados
Jamaica
Trinidad & Tobago
Other Caribbean
USA
External revenue
Non-current assets
2020
2019
2020
2019
185,631
576,118
255,861
164,800
695,957
178,959
657,191
239,463
191,084
600,629
171,889
111,902
66,999
28,476
179,905
141,973
69,382
27,291
227,261
304,318
1,878,367
1,867,326
606,527
722,869
53
186
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 4.8 Revenues from fees recognised
5 INVESTMENT PROPERTY
The following table discloses revenue from fees recognised by reportable segment.
Year ended December 31, 2020
Fees recognised
- at a point
in time
- over
time
Total
Sagicor Life
Sagicor Jamaica
Sagicor USA
Head office and other
-
40,680
148
-
8,159
50,086
-
2,976
8,159
90,766
148
2,976
40,828
61,221
102,049
Year ended December 31, 2019
Fees recognised
- at a point
in time
- over
time
Total
Sagicor Life
Sagicor Jamaica
Sagicor USA
Head office and other
-
7,909
7,909
57,164
74,933
132,097
224
-
-
2,968
224
2,968
57,388
85,810
143,198
The movement in investment property for the year is as follows:
Balance, beginning of year
Additions at cost
Amounts assumed on acquisition (note 37)
Disposals
Fair value changes recorded in net investment income
Effects of exchange rate changes
Balance, end of year
2020
2019
2018
95,577
93,494
80,816
266
-
(15,256)
(598)
(1,694)
78,295
82
5,530
(2,238)
(566)
(725)
50
16,444
(2,613)
(1,090)
12
95,577
93,494
Investment property includes $8,646 (2019 - $9,516) which represents the Group’s proportionate
interest in joint operations summarised in the following table.
Percentage
ownership
recognised
50%
Country
Description of property
Barbados
Freehold lands
Freehold office buildings
25% - 33%
Trinidad & Tobago
Freehold office building
60%
Pension Funds managed by the Group own the remaining 50% interest in freehold lands in Barbados,
and a 33% interest in a freehold office building in Barbados.
54
187
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000
6 ASSOCIATES AND JOINT VENTURES
6.1 Interests in Associates and Joint Ventures
Name of Entity
RGM Limited
FamGuard Corporation Limited (1)
Primo Holding Limited
Sagicor Costa Rica SCR, S.A.
Playa Hotels and Resorts N.V. (2)
Country of Incorporation
Trinidad & Tobago
Bahamas
Barbados
Costa Rica
United States
% interest recognised
2020
33%
20%
38%
50%
16%
2019
33%
20%
38%
50%
15%
Nature of
relationship
Measurement
Method
Carrying Amount
2020
2019
Associate
Associate
Associate
Joint Venture
Associate
Equity Method
Equity Method
Equity Method
Equity Method
Equity Method
26,092
17,837
312
4,795
116,755
165,791
25,315
16,703
318
3,293
184,929
230,558
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 $8.40 per share
was $16,800 (2019 – $15,000).
On October 1, 2018, Sagicor Group Jamaica (SGJ) obtained control over Sagicor Real Estate X-Fund Limited, which in turn controlled a shareholding of 15% in Playa Hotels and Resorts NV (Playa). The
management of SGJ Jamaica has one representative (out of eight) on the Board of Playa. The management of SGJ has concluded that, given its participation in the policy-making decisions of Playa, SGJ
has significant influence over Playa’s financial and operating results even though SGJ controls less than 20% of Playa.
On June 12, 2020, in addition to entering into certain financing transactions to support its ongoing operations, Playa sold ordinary shares which resulted in a 0.6% dilution of Sagicor Group Jamaica Limited’s
15.4% shareholding, and ultimately the Sagicor Group’s ownership interest of 15.4%, in Playa. On June 15, 2020, Sagicor Financial Corporation Limited, the intermediate parent company of SGJ, acquired
further shares of Playa. This represented an increase of 1.1% in the Group’s shareholding, bringing the Group’s total shareholding in Playa to 15.9%. See note 37.1.
Following the transactions, the effective interest in Playa attributable to the shareholders of Sagicor Financial Company Ltd. is 2.41%, representing 1.11% due to the acquisition of additional shares, in addition
to the effective interest of 1.30% (2019 - 1.31%).
As at December 31, the book value of Playa Hotel and Resorts was $116,755 (2019 - $184,929). At this date, the proportionate share of market value of Playa, calculated based on quoted prices by the
National Association of Securities Dealers Automated Quotation (NASDAQ), was $118,378 (2019 - $166,282).
Subsequent to year end, SGJ disposed of its interest in Playa (see note 50).
(1)
(2)
55
188
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 6.1 Interests in Associates and Joint Ventures (continued)
The reconciliation of carrying amounts for the year of the investment in associates and joint ventures is as follows:
RGM Limited
FamGuard Corporation
Limited
Primo Holding
Limited
Sagicor Costa Rica
SCR, S.A.
Playa Hotels and
Resort N.V.
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
Investment, beginning of year
25,315
23,497
16,703
15,332
318
324
3,293
2,596
184,929
194,383
Additions
Negative goodwill arising on acquisition
Dividends received
Share of income / (loss)
Loss on impairment of investment in
associates and joint ventures
Share of amortisation or impairment of
intangible assets which were identified
on acquisition
Share of income taxes
Share of OCI
Disposal of interest
Effects of exchange rate changes
-
-
(148)
1,441
-
-
-
-
-
2,290
-
-
(515)
(531)
-
-
(1)
-
-
59
-
-
(560)
1,815
-
(10)
-
(111)
-
-
-
-
(640)
1,696
-
(10)
-
325
-
-
-
-
-
(6)
-
-
-
-
-
-
-
-
-
(6)
-
-
-
-
-
-
-
-
-
-
-
-
5,951
1,499
-
-
-
-
2,193
110
(40,400)
(743)
-
-
-
-
-
-
(31,804)
-
-
-
-
-
(453)
-
(238)
686
-
(99)
(2,840)
(3,112)
2,532
(8,802)
-
91
Investment, end of year
26,092
25,315
17,837
16,703
312
318
4,795
3,293
116,755
184,929
56
189
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 6.1 Interests in Associates and Joint Ventures (continued)
The reconciliation of the share of net assets based on the summarised financial information to carrying amounts of the investment in associates and joint ventures is as follows:
RGM Limited
FamGuard Corporation
Limited
Primo Holding
Limited
Sagicor Costa Rica
SCR, S.A.
Playa Hotels and
Resort N.V.
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
Net Assets
% Interest
Share of net assets
Goodwill arising from investment in
associate
Goodwill arising from associate’s
investment
Movement in treasury shares
Fair value adjustment on consolidation
Preference shares
Investment, end of year
78,276
75,945
33%
33%
26,092
25,315
93,992
20%
18,799
88,270
20%
17,654
823
38%
312
838
38%
318
9,591
50%
6,587
560,864
803,214
50%
16%
15%
4,795
3,293
89,664
123,111
-
-
-
-
-
-
-
-
-
-
26,092
25,315
38
49
-
-
-
-
-
-
(1,000)
17,837
(1,000)
16,703
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
47,511
77,416
(12,402)
(11,989)
(4,976)
(3,042)
-
(535)
(3,074)
-
312
318
4,795
3,293
116,755
184,929
6.2 Impairment
Interest in FamGuard Corporation Limited.
An impairment assessment of FamGuard Corporation Limited was performed at the end of the year as its value based on quoted market prices is lower than its carrying value recorded by the Group.
In conducting the impairment assessment, management determined a recoverable value for Famguard, using the value in use method. To determine the value in use, management used an actuarial embedded value
technique which incorporates appropriate discount rates and solvency capital requirements to determine the present value of future distributable profits. Management’s value in use calculations did not identify any
impairment.
57
190
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 6.2 Impairment (continued)
Interest in Playa Hotels and Resorts N.V.
Following the emergence of COVID-19 coronavirus, which was declared a global pandemic by the World Health organisation on March 11, 2020, the Group considered that travel restrictions, the impact on tour and
holiday bookings and cancellations have resulted in a downturn in revenues and profits, thereby negatively impacting the carrying value of this asset.
Assessments of the carrying value of this investment have been performed at each quarter end. A recoverable value was determined using the value-in-use method which is a discounted cash flow technique that
utilises a significant amount of judgement in estimating key variables such as earnings before interest, taxes, depreciation and amortisation (EBITDA), terminal growth rates and a discount factor. Value-in-use
calculations are very sensitive to changes in these estimates. In arriving at its estimates for EBITDA, management also considered the impact of the uncertainty surrounding the COVID-19 coronavirus and its impact on the
tourism sector going forward. As a result of this exercise, the investment was written down by US$31.8 million as at the year-end date.
As part of its impairment assessment, management performed the following sensitivity analyses, using reasonably possible changes in EBITDA, terminal growth rates and discount factors. The sensitivity analyses were done
individually, while holding all other variables constant. In practice, this is unlikely to occur as changes in one variable can impact the others.
Variable
Change in Estimate
EBITDA
EBITDA
5% reduction
15 – 20% reduction
Terminal Growth
Rates
Terminal Growth
Rates
Discount factor
Discount factor
0.5% reduction
0.5% increase
0.25% percentage point reduction
0.25% percentage point increase
6.3 Commitments and contingent liabilities
Indicator of
additional
Impairment
Estimate of additional
Impairment
Yes
Yes
Yes
No
No
Yes
US$16.8 million
US$55.0 million –
US$74.3 million
US$10.2 million
N/A
N/A
US$5.9 million
Other commitments at the year-end if called are $304 (2019 – $764) and contingent liabilities exist of $50 (2019 – Nil).
58
191
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 6.4 Summarised Financial Information
Summarised financial information from the financial statements of associates and joint ventures is set out in the three tables which follow.
ASSETS
Property, plant and equipment
Financial investments
Cash resources
Other investments and assets
Total assets
LIABILITIES
Policy liabilities
Notes and loans payable
Other liabilities
Total liabilities
RGM Limited
FamGuard Corporation
Limited
Primo Holding Limited
Sagicor Costa Rica SCR,
S.A.
Playa Hotels and
Resorts N.V.
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
751
-
6,132
122,309
129,192
461
-
4,727
124,235
129,423
36,911
288,970
18,832
15,531
39,086
261,221
20,415
20,354
360,244
341,076
-
-
-
-
-
-
1,000
1,000
1,000
1,000
452
14,987
3,979
12,352
31,770
600
1,722,434
1,917,329
11,705
926
15,636
-
171,957
221,872
-
20,717
243,603
28,867
2,116,263
2,181,649
-
-
-
-
254,553
240,005
-
-
50,916
50,916
53,478
53,478
11,699
12,801
266,252
252,806
-
-
177
177
-
-
162
162
9,249
5,800
7,130
13,600
6,007
2,673
-
-
1,244,728
1,061,620
310,671
316,815
22,179
22,280
1,555,399
1,378,435
Net assets
78,276
75,945
93,992
88,270
823
838
9,591
6,587
560,864
803,214
59
192
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 6.4 Summarised Financial Information (continued)
RGM Limited
FamGuard Corporation
Limited
Primo Holding Limited
Sagicor Costa Rica SCR,
S.A.
2020
2019
2020
2019
2020
2019
2020
2019
Playa Hotels and
Resorts N.V.
2020
2019
10,651
5,351
5,300
8,287
5,518
2,769
33,814
11,286
22,528
40,769
12,801
27,968
6,132
4,727
18,832
20,415
2,415
2,319
549
-
-
44
(44)
-
-
-
43
(43)
22,539
17,084
5,455
17,943
16,834
1,109
254,265
246,835
7,430
144,311
273,715
(129,404)
-
-
3,979
926
146,151
20,717
1,908
1,059
111,604
77,752
118,541
45,565
121,136
47,960
326,430
254,966
300,307
240,005
1,000
133
1,000
119
9,231
5,095
10,924
5,446
1,861,998
1,308,564
2,037,338
1,104,720
45,565
47,960
254,553
238,840
-
-
5,093
5,446
1,179,222
983,867
WORKING CAPITAL
Current assets
Current liabilities
Net current assets / (liabilities)
Cash and cash equivalents included
in current assets
Current financial liabilities (excluding
trade and other payables and
provisions) included in current
liabilities
NON-CURRENT ASSETS /
LIABILITIES
Non-current assets
Non-current liabilities
Non-current financial liabilities
(excluding trade and other payables
and provisions) included in non-
current liabilities
60
193
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 6.4 Summarised Financial Information (continued)
RGM Limited
FamGuard Corporation
Limited
Primo Holding Limited
Sagicor Costa Rica SCR,
S.A.
Playa Hotels and Resort
N.V.
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
REVENUE
Net premium revenue
Hotel revenue
Net investment and other income
Total revenue
BENEFITS AND EXPENSES
Benefits
Hotel expenses
Finance costs
Depreciation and amortisation
Other expenses
Total benefits and expenses
INCOME BEFORE TAXES FROM
CONTINUING OPERATIONS
Income taxes
NET INCOME FOR THE YEAR
-
-
25,607
25,607
-
-
3,808
233
17,276
21,317
-
-
26,209
26,209
-
-
3,975
243
14,705
18,923
99,506
-
26,353
125,859
100,427
-
31,887
132,314
76,586
-
-
2,269
36,296
85,040
-
-
1,592
38,307
115,151
124,939
4,290
7,286
10,708
7,375
(1,544)
2,746
(1,593)
5,693
-
-
10,708
7,375
Other comprehensive income
-
-
(1,102)
Total comprehensive income
2,746
5,693
9,606
276
7,651
Interest income
Interest expense
-
-
13,475
13,071
3,808
3,975
-
-
-
-
-
-
-
-
-
-
16
16
(16)
-
(16)
-
(16)
-
-
-
-
-
-
-
-
-
-
16
16
(16)
-
(16)
-
(16)
-
-
22,567
-
1,956
24,523
5,229
-
396
133
12,957
18,715
17,702
-
217
17,919
8,294
-
428
88
8,765
17,575
-
346,499
-
346,499
-
635,510
-
635,510
-
509,896
81,625
92
261
591,874
-
610,333
44,020
102
3,093
657,548
5,808
344
(245,375)
(22,038)
(1,424)
4,384
(1,410)
2,974
713
-
(125)
627
219
(244,748)
17,194
(4,844)
1,371
1,590
586
-
(6,321)
(30,551)
(251,069)
(35,395)
-
-
-
-
61
194
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 7 PROPERTY, PLANT AND EQUIPMENT
Owner-
occupied
properties
Owner -
managed hotel
properties
2020
Office
furnishings,
equipment &
vehicles
Right-of-use
assets
Total
2019
Owner-
occupied
properties
Owner-
managed
hotel
properties
Office
furnishings,
equipment &
vehicles
Right-of-use
assets
Total
Net book value, beginning of year
110,172
96,608
53,721
29,369
289,870
104,629
98,974
58,685
-
262,288
Recognised on adoption of IFRS 16
Additions at cost
Additions arising from acquisitions
Transfer to intangible assets (note 8)
Other transfers
Disposals and divestures
Fair value changes recorded in OCI
Depreciation charge
Effects of exchange rate changes
Net book value, end of year
Represented by:
Cost or valuation
Accumulated depreciation
-
270
-
-
-
-
1,818
(2,206)
(1,316)
108,738
111,073
(2,335)
108,738
-
176
-
-
-
-
(18,963)
(2,386)
589
76,024
85,957
(9,933)
76,024
-
-
-
17,984
14,206
32,636
-
(3,388)
-
-
-
(81)
(1,907)
(4,879)
-
(14,379)
(1,175)
50,856
-
(6,150)
(1,514)
-
(3,388)
(81)
(6,786)
(17,145)
(25,121)
(3,416)
-
906
7,411
-
1,375
(6,180)
3,580
(1,009)
(540)
-
145
-
-
-
-
545
-
12,965
1,252
(3,031)
(1,183)
(192)
-
23,853
14,350
-
-
-
(2,247)
-
(2,506)
(13,922)
(6,644)
23,853
28,366
8,663
(3,031)
192
(8,619)
4,125
(24,081)
(1,886)
30,951
266,569
110,172
(550)
96,608
(853)
53,721
57
29,369
289,870
161,705
42,582
401,317
112,465
104,120
165,285
36,024
417,894
(110,849)
(11,631)
(134,748)
50,856
30,951
266,569
(2,293)
110,172
(7,512)
96,608
(111,564)
(6,655)
(128,024)
53,721
29,369
289,870
Owner-occupied properties consist mainly of commercial offices but include lands of $35,245 (2019 – 35,636) utilised largely in farming operations.
Owner-occupied properties, equipment & vehicles include operating leases held as lessor.
62
195
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 8 INTANGIBLE ASSETS
8.1 Analysis of intangible assets and changes for the year
2020
Goodwill
Customer &
broker
relationships
Trade Names Software
Total
Goodwill
2019
Trade
Names
Customer &
broker
relationships
Net book value, beginning of year
63,325
16,331
3,320
23,888
106,864
56,455
13,199
2,590
-
-
-
-
(2,118)
(1,041)
13,172
3,840
3,840
3,388
3,388
-
(2)
163
(2)
(9,191)
(14,428)
-
-
-
-
(119)
(231)
(580)
(3,953)
95,872
2,970
21,343
-
-
7,795
-
-
(925)
63,325
-
-
5,599
-
(2,006)
(461)
16,331
-
-
933
-
(127)
(76)
3,320
694
-
(9,282)
(361)
23,888
36,874
6,532
89,320
194,113
63,325
(23,702)
(3,562)
(67,977)
(98,241)
-
13,172
2,970
21,343
95,872
63,325
39,505
(23,174)
16,331
7,021
85,309
(3,701)
(61,421)
3,320
23,888
Software
Total
25,068
4,738
97,312
4,738
3,031
3,031
15,021
-
(11,415)
(1,823)
106,864
195,160
(88,296)
106,864
Additions at cost
Transfer from property, plant and equipment
(note 7)
Identified on acquisition (note 37):
Advantage General Insurance Company Ltd
Subsidiary acquisitions and disposals
Amortisation/impairment charges
Effects of exchange rate changes
Net book value, end of year
Represented by:
Cost or valuation
Accumulated depreciation and impairments
-
-
163
-
(3,000)
(2,101)
58,387
61,387
(3,000)
58,387
63
196
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 8.2 Impairment of intangible assets
8.2 Impairment of intangible assets (continued)
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 where the fair value less costs of disposal 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 where 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.
(i) Years ended December 31, 2020 & 2019
An actuarial appraisal value technique was adopted to test goodwill impairment. The principal
assumptions included the following:
•
•
•
•
•
Discount rates of 10% (2019, 10%) for individual life and annuity in force business;
New individual life and annuity business was included for the seven-year period 2021 to
2027, (seven year period 2020 to 2026);
Annual growth rate for new individual life and annuity business were 8.0% - 51.0% for 2021
and 4.0% - 10.0 % from 2022 to 2027 (2019 - 10.0% - 47.0% for the year 2020 and 3.0% to
11.0% from 2021 to 2026);
Discount rates of 14% (2019, 14%) for new individual life and annuity business;
Required Minimum Continuing Capital and Surplus Ratio (MCCSR) of 175% (2019 – 175%).
The Group obtains independent professional advice in order to select the relevant discount factors,
residual growth rates and earnings multiples.
Sensitivity
The carrying values of goodwill and the impairment test factors used are considered in the following
sections.
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.
(a) Sagicor Life operating segment
Sagicor Life Inc Segment
MCCSR target ratio
Carrying value of goodwill
26,554
26,552
Low
Mid
High
8%
10%
12%
12%
14%
16%
2020
2019
Discount rate
Inforce
New business
Low
150%
361,006
179,869
45,025
Mid
175%
353,634
167,736
29,783
High
200%
346,085
155,311
14,206
64
197
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 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
29,152
31,092
Carrying value of goodwill
2020
2019
2020
2019
2,681
5,681
The fair value less costs of disposal methodology was adopted to test goodwill impairment in both years.
The after-tax multiple used for the segment 11.0 (2019 – 11.2) was derived from a pre-tax factor of 8.1
(2019 – 8.4) using an iterative method.
The value in use methodology has been used to test goodwill impairment in both years. The pre-tax
discount factor was 18.9% (2019 – 18.0%) which was derived from an after-tax factor of 15.0% (2019
– 14.0%) using an iterative method. The residual growth rate was 2.0% (2019 – 2.5%).
Sensitivity
The possible impairment of goodwill is sensitive to changes in earnings multiples and after-tax earnings.
This is illustrated in the following table.
During the year, goodwill of US$3.0 million has been impaired relating to Sagicor General Insurance
Inc. This amount is included within Depreciation and amortisation in the consolidated statement of
income.
Sensitivity
2020 test
Scenario 1
Scenario 2
Scenario 3
The possible impairment of goodwill is sensitive to changes in the after-tax discount factor and residual
growth rate. This is illustrated in the following table.
After-tax earnings multiples
Reduction in forecast earnings
11.0
n/a
9.4
10%
Excess of recoverable amount (of 49.11% interest)
195,741
93,847
6.6
10%
n/a
Impairment (of 49.11% interest)
Nil
Nil
(44,405)
After-tax discount factor
Residual growth rate
Excess of recoverable amount
Impairment
2020 test
Scenario 1
Scenario 2
Scenario 3
15.0
2.0
1,473
Nil
14.5
2.0
2,793
Nil
16.5
1.5
Nil
(2,028)
65
198
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 9 FINANCIAL INVESTMENTS
9.1 Analysis of financial investments
9.1 Analysis of financial investments (continued)
2020
2019
Non-derivative investments at FVTPL
Carrying
value
Fair
value
Carrying
value
Fair
value
Investments at FVOCI:
Debt securities and money market funds
3,611,917
3,611,917
3,673,421
3,673,421
Equity securities
1,054
1,054
1,291
1,291
3,612,971
3,612,971
3,674,712
3,674,712
Investments at FVTPL:
Debt securities
Equity securities
348,874
348,874
243,107
243,107
659,519
659,519
370,173
370,173
Derivative financial instruments
37,188
37,188
36,891
36,891
Mortgage loans
26,065
26,065
28,933
28,933
1,071,646
1,071,646
679,104
679,104
Investments at amortised cost:
2020
Equity securities
Debt securities
Mortgage loans
2019
Equity securities
Debt securities
Mortgage loans
Debt securities (note 41.5 (d))
1,269,486
1,490,099
1,148,739
1,361,973
Debt securities:
FVTPL
mandatory
designation
FVTPL
designation
by election
Total
580,919
201,797
78,600
659,519
147,077
348,874
34
26,031
26,065
782,750
251,708
1,034,458
286,764
115,104
-
83,409
128,003
28,933
401,868
240,345
370,173
243,107
28,933
642,213
2020
2019
393,214
390,938
362,547
362,341
Government and government-guaranteed debt securities
2,084,812
1,849,154
Mortgage loans
Policy loans
Finance loans
151,038
177,813
151,533
181,902
Collateralised mortgage obligations
555,384
560,543
595,307
602,512
Corporate debt securities
Securities purchased for resale
57,110
57,110
10,904
10,904
Money market funds and other securities
Deposits
127,720
127,720
62,798
62,798
Total financial investments
7,238,569
7,488,840
6,685,644
6,936,246
Exchange-traded funds included in equity securities
2,553,952
2,804,223
2,331,828
2,582,430
Included in financial investments are:
Debt securities issued by associates
Mutual funds managed by the Group
66
545,411
572,128
2,433,389
2,072,446
166,665
571,539
5,230,277
5,065,267
301,732
24,135
175,704
23,290
25,278
217,170
199
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 9.2 Financial investments repledged
9.3 Collateral assets
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. Of the assets pledged as security, the following represents the total for those assets
pledged for which the transferee has the right by contract or custom to sell or repledge the collateral.
Financial investments repledged
Balance sheet presentation
Financial investments
Financial investments repledged
Analysis of financial investments repledged
2020
611,730
2019
604,886
6,626,839
6,080,758
611,730
604,886
7,238,569
6,685,644
Debt and equity securities include $2,806 (2019 - $20,644) as collateral for loans payable and other funding
instruments.
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 $17,261
(2019 - $16,114), and mortgages and mortgage backed securities having a total market value of $365,714
(2019 - $391,141).
9.4 Financial investments held under the unit linked fair value model
Financial investments include the following amounts for which the full income and capital returns accrue to
the holders of unit linked insurance and investment contracts. These investments are measured at FVTPL
and amortised cost for mortgages.
2020
2019
157,187
186,069
53,417
396,673
154,111
225,276
58,154
437,541
2020
2019
Pledged
value
Pledged
value
Debt securities
Equity securities
Mortgage loans
Investments at FVOCI:
Debt securities and money market funds
610,684
602,288
Investments at amortised cost :
Debt securities
Securities purchased for resale
Deposits
Financial investments repledged
67
200
632
37
377
1,046
611,730
2,188
37
373
2,598
604,886
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000
10 REINSURANCE ASSETS
12 MISCELLANEOUS ASSETS AND RECEIVABLES
Reinsurers’ share of:
Actuarial liabilities (note 13.1)
Policy benefits payable (note 14.2)
Provision for unearned premiums (note 14.3) (i)
Other items
(i) Amount is expected to be realised within one year.
11 INCOME TAX ASSETS
Deferred income tax assets (note 33)
Income and withholding taxes recoverable
2020
2019
639,797
661,811
34,708
26,860
14,374
28,700
24,828
8,898
715,739
724,237
2020
2019
7,050
19,280
26,330
6,494
20,100
26,594
Income and withholding taxes recoverable are expected to be recovered within one year of
the financial statements’ date.
Net defined benefit assets (note 31)
Real estate developed or held for resale
Prepaid and deferred expenses (i)
Premiums receivable
Legal claim (note 20)
Service contract receivables
Finance leases
Other assets and accounts receivable
Amounts due from managed funds included in receivables
Amounts expected to be realised within one year included in
real estate developed or held for resale
(i) Amounts are expected to be realised within one year.
2020
16,728
46,456
37,055
59,780
1,126
-
822
77,571
239,538
2,938
21,502
2019
9,040
28,571
33,583
57,584
1,073
1,411
768
76,029
208,059
4,537
8,153
68
201
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000
13 ACTUARIAL LIABILITIES
13.1 Analysis of actuarial liabilities
Contracts issued to individuals:
Gross liability
Reinsurers’ share
2020
2019
2020
2019
13.2 Movement in actuarial liabilities
Gross liability
Reinsurers’ share
2020
2019
2020
2019
Balance, beginning of year
3,604,653
3,024,464
661,811
653,722
Changes in actuarial liabilities:
Recorded in income (note 25)
512,140
492,875
(22,026)
8,092
Life insurance - participating policies
192,866
194,551
76
66
Recorded in OCI
3,160,834
2,590,528
626,361
647,417
Derecognised on divestiture
Life insurance and annuity
- non-participating policies
Health insurance
Unit linked funds
Reinsurance contracts held
40,767
32,585
8,741
12,511
192
236
253,229
288,504
-
-
-
-
Contracts issued to groups:
Life insurance
Annuities
Health insurance
3,656,437
3,118,679
626,629
647,719
27,541
28,862
104
107
436,590
428,050
12,900
13,837
32,133
29,062
164
148
496.264
485,974
13,168
14,092
Total actuarial liabilities
4,152,701
3,604,653
639,797
661,811
The following notes are in respect of the foregoing table:
•
•
•
Life insurance includes coverage for disability and critical illness.
Actuarial liabilities include $80,331 (2019 - $77,391) 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.
69
202
Other movements
Effect of exchange rate changes
(28,074)
(14,966)
65,039
110,409
-
(8,292)
(1,057)
163
-
-
5
7
-
(2)
-
(1)
Balance, end of year
4,152,701
3,604,653
639,797
661,811
Analysis of changes in actuarial liabilities
Arising from increments and
decrements of inforce policies and
from the issuance of new policies
Arising from changes in assumptions
for mortality, lapse, expenses, partial
withdrawal, universal life premium
persistency, investment yields and
asset default
Other changes:
Actuarial modelling refinements and
improvements
Changes in margins for adverse
deviations
Arising from fair value changes of
Segregated Funds
Other items
Total
589,905
453,393
(23,881)
2,719
9,918
102,407
187
1,093
5,221
(1,560)
1,664
-
2,714
(15,471)
55,891
(12,394)
(9,561)
-
-
4
577,179
603,284
(22,026)
-
-
-
4,280
8,092
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 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.
Any changes in actuarial standards and practice are also incorporated in the current valuation.
(b) Assumptions for mortality and morbidity
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 over time, 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.
The ultimate rate of return is the assumed rate that will ultimately be earned on long-term government
bonds. It is established for each geographic area and is summarised in the following table.
Mortality rates are related to the incidence of death in the insured population. Morbidity rates are related
to the incidence of sickness and disability in the insured population.
Ultimate rate of return
2020
2019
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 reflecting insurer and industry experience.
Barbados
Jamaica
Trinidad & Tobago
Other Caribbean
USA
7.50%
5.50%
5.00%
7.50%
5.50%
5.00%
4.50% - 7.50%
4.50% - 7.50%
4.00% - 5.50%
3.90% - 5.40%
(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.
(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.
70
203
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 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 result in provisions for adverse deviations being included in the actuarial
liabilities as set out in the following table.
Provisions for adverse deviations
2020
2019
Mortality and morbidity
Lapse
Investment yields and asset default
Operating expenses and taxes
Other
97,305
90,733
69,887
10,495
14,949
95,203
76,390
65,971
10,019
13,889
283,369
261,472
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 significant claim settlements are anticipated after one
year from the date of the financial statements.
71
204
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 14 OTHER POLICY LIABILITIES
14.1 Analysis of other policy liabilities
Dividends on deposit and other policy balances
Policy benefits payable
Provision for unearned premiums
14.2 Policy benefits payable
2020
2019
60,236
174,375
58,065
292,676
61,518
166,350
59,092
286,960
Analysis of policy benefits payable:
Life insurance and annuity benefits
Health claims
Property and casualty claims
Gross liability
Reinsurers’ share
2020
2019
2020
2019
111,231
4,260
58,884
97,364
5,252
63,734
174,375
166,350
17,415
6,251
11,042
34,708
16,916
2,846
8,938
28,700
14.2 Policy benefits payable (continued)
Gross liability
Reinsurers’ share
2020
2019
2020
2019
Movement for the year:
Balance, beginning of year
166,350
140,163
28,700
39,085
Subsidiary and insurance portfolio
acquisitions
Policy benefits incurred
Policy benefits paid
(1,771)
27,090
-
351
761,510
682,891
118,824
107,425
(748,079)
(683,339)
(112,420)
(117,894)
Effect of exchange rate changes
(3,635)
(455)
(396)
Balance, end of year
174,375
166,350
34,708
(267)
28,700
14.3 Provision for unearned premiums
Gross liability
Reinsurers’ share
2020
2019
2020
2019
Analysis of the provision:
Property and casualty insurance
56,119
56,986
26,860
24,828
Health insurance
1,946
58,065
2,106
59,092
-
-
26,860
24,828
The provision for unearned premiums is expected to mature within a year of the financial
statements’ date.
72
205
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000
14.3 Provision for unearned premiums (continued)
16 NOTES AND LOANS PAYABLE
Gross liability
Reinsurers’ share
The following table presents the carrying values and estimated fair values of notes and loans payable.
2020
2019
2020
2019
Amounts in US $000
2020
2019
Movement for the year:
Balance, beginning of year
59,092
44,435
24,828
14,727
Carrying
value
Fair
value
Carrying
value
Fair
Value
Subsidiary and insurance portfolio
acquisitions
Premiums written
Premium revenue
-
22,278
-
7,650
Liabilities at amortised cost:
8.875% senior notes due 2022 (a)
315,938
324,704
318,227
330,197
128,027
97,235
65,917
45,844
5.10% unsecured bond due 2020 (b)
(127,661)
(104,980)
(63,210)
(43,446)
5.95% unsecured bond due 2020 (c)
-
-
-
-
33,700
42,904
34,256
44,826
Effect of exchange rate changes
Balance, end of year
(1,393)
58,065
124
(675)
53
59,092
26,860
24,828
5.50% unsecured bond due 2022 (c)
31,957
32,790
6.25% unsecured bond due 2022 (c) & (d)
27,000
28,530
-
-
15 INVESTMENT CONTRACT LIABILITIES
Liabilities at amortised cost:
Deposit administration liabilities
Other investment contracts
Liabilities at FVTPL:
Unit linked deposit administration
liabilities
2020
2019
Carrying
value
Fair
value
Carrying
Value
Fair
value
117,046
166,116
117,046
113,767
113,767
169,002
148,188
149,928
283,162
286,048
261,955
263,695
154,442
154,442
162,385
162,385
437,604
440,490
424,340
426,080
73
206
-
-
17,257
15,845
77,034
14,436
5.00% notes due 2020 (e)
6.75% notes due 2024 (e)
Mortgage loans (g)
-
-
16,857
15,434
16,275
16,589
59,607
60,767
75,019
Bank loans and other funding instruments (f)
21,686
21,686
14,436
(a)
Valuation of Call Option Embedded Derivative
471,622
484,752
517,732
533,851
As at December 31, 2020, the Group had US$318 million principal amount of senior
unsecured notes (the “Notes”). The Notes are due August 11, 2022 and bear interest at an
annual rate of 8.875%. Pursuant to the terms of the Notes, the Group may redeem the Notes
under the scenario as summarised below and described in more detail herein:
Optional Redemption with an Applicable Premium - At any time on or after August 11, 2019,
the Group may redeem the Notes in whole or in part at specified redemption prices, plus
accrued and unpaid interest, if any, on the Notes redeemed, to the applicable date of
redemption.
The Group has estimated the fair value of this embedded derivative at US$5.9 million as at
December 31 (2019 - US$2.8 million).
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 16 NOTES AND LOANS PAYABLE (continued)
16 NOTES AND LOANS PAYABLE (continued)
(b) On September 18 and 26, 2019, Sagicor Financial Corporation Limited issued US$30.6
million and US$3.4 million notes respectively, carrying an annual rate of 5.10%. The notes
matured October 26, 2020.
(c) On September 26, 2019, Sagicor Financial Corporation Limited issued a Jamaican $ bond
in the amount of J$5,731,140,000 carrying an annual interest rate of 5.95% per annum. The
bond matured October 26, 2020.
On October 27, 2020, Sagicor Financial Corporation Limited refinanced the above facility
with the issue of a bond in two Tranches, Tranche A up to J$5,737,140,000 and Tranche B
up to US$31,807,000, carrying annual interest rates of 6.25% and 5.50% respectively.
Interest is payable quarterly commencing January 27, 2021. The Tranches mature on April
26, 2022, with an option for further extension.
(g) Mortgage Loans
Issuer / mortgagor
2020
2019
4.90% USD mortgage notes due 2025(1)
X Fund Properties LLC
45,822
45,741
4.75% USD mortgage notes due 2021(1)
Sagicor X-Fund Real Estate
Limited
2,188
2,112
5.00% USD mortgage notes due 2020
X Fund Properties Limited
8.75% JMD mortgage notes due 2020
X Fund Properties Limited
9.00% JMD mortgage notes due 2048(1)
X Fund Properties Limited
8.00% JMD mortgage notes due 2021(1)
X Fund Properties Limited
10.00% JMD mortgage notes due 2026(1)
X Fund Properties Limited
3.26%/ 3.61% mortgage notes due 2026(1) X Fund Properties Limited
-
-
3,356
3,134
3,220
934
953
4,255
10,136
3,598
3,548
3,511
996
1,122
59,607
75,019
(d) At December 31, 2020, Sagicor Investments Jamaica Limited held an investment of US$13.5
Development loan (2)
X Fund Properties Limited
million in Tranche A above.
(e) On August 16, 2019, Sagicor Investments Jamaica Limited issued J$4.4 billion notes in two
Tranches, Tranche A J$2.22 billion and Tranche B J$2.18 billion, carrying annual rates of
5.00% and 6.75% respectively. Tranche A matured on September 16, 2020 and Tranche B
has a maturity date of August 16, 2024.
(f)
Bank loans and other funding instruments include the following:
(i)
(ii)
On May 24, 2019, Sagicor General Insurance Inc entered into a US$12 million
loan agreement. The interest rate is 3.50% per annum and the loan matures on
July 31, 2024.
On October 1, 2020, The Estates (Residential Properties) Limited issued
cumulative preference shares in the amount of US$9 million. Dividends accrue
at a rate of 6.75% per annum and are payable semi-annually. The preference
shares are redeemable on September 30, 2027.
(1)
(2)
These notes have a breach of loan covenant which has been disclosed in note 46.3.
This note is interest-free with annual forgiveness of debt over ten years, if certain conditions
are met.
X Fund Properties LLC
The 4.90% USD mortgage note is secured by the investment in hotel property. Interest on the mortgage
note is paid monthly through to maturity, upon which the outstanding principal is due and payable. The
Group may prepay the mortgage note prior to the maturity date only in conjunction with the sale of a
property or as a result of casualty or condemnation. The note is payable on October 6, 2025 and attracts
a fixed rate interest of 4.90%.
74
207
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000
16 NOTES AND LOANS PAYABLE (continued)
Sagicor X-Fund Real Estate Limited
17 DEPOSIT AND SECURITY LIABILITIES
This mortgage note was issued in three tranches (A,B,C). Tranches A and B have matured while Tranche
C, which attracts interest of 4.75%, has a maturity date of May 2021 with an option for further extension.
This loan was originally secured by a debenture over units in the Sigma Real Estate Portfolio. This has
been substituted for shares in Jamziv MoBay Jamaica Portfolio Limited which holds shares of Playa Hotel
and Resorts N.V.
X Fund Properties Limited
Liabilities at amortised cost:
Other funding instruments
Customer deposits
Securities sold for repurchase
Bank overdrafts
These mortgage notes are secured by:
•
•
a charge over Jamziv MoBay Jamaica Portfolio Limited allocated to X Fund Properties Limited,
a charge over the assets and undertakings of X Fund Properties Limited.
Liabilities at FVTPL:
Structured products
Derivative financial instruments (note 41.9)
2020
2019
Carrying
value
Fair
value
Carrying
value
Fair
value
388,523
861,652
575,604
980
387,206
867,317
575,604
418,047
418,932
808,119
811,715
512,857
512,857
980
6,646
6,646
1,826,759
1,831,107
1,745,669
1,750,150
-
-
-
-
-
-
6,756
264
7,020
6,756
264
7,020
1,826,759
1,831,107
1,752,689
1,757,170
Movement for the year to December 31,
Balance, beginning of year
Valuation of call option embedded derivative
Additions:
Gross principal
less Expenses
Repayments:
Principal
Interest
Finance leases reclassified to lease liabilities
Amortisation during the year
Accrued Interest
Effects of exchange rate changes
Balance, end of the year
75
208
2020
517,732
(3,082)
68,660
(415)
68,245
(109,514)
(37,414)
(146,928)
-
3,588
38,838
(6,771)
471,622
2019
490,275
(2,831)
197,114
(967)
196,147
(164,452)
(37,871)
(202,323)
(4,255)
2,974
38,282
(537)
517,732
Other funding instruments consist of loans from banks and other financial institutions and include
balances of $348,559 (2019 - $375,219) due to the Federal Home Loan Bank of Dallas (FHLB). The
Group participates in the FHLB programme 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 capitalise
on current market trends.
Collateral for other funding instruments and securities sold under agreements to resell is set out in note
9.2.
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 18 O
THER LIABILITIES / RETIREMENT BENEFIT LIABILITIES
20 ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
2020
2019
66,342
59,597
Suspense and other amounts due
200
198
Amounts due to reinsurers
66,542
59,795
Legal claim (i)
Other accounts payable and accrued liabilities
2020
2019
44,078
28,461
1,126
181,797
255,462
46,257
17,993
1,073
175,010
240,333
Net defined benefit liabilities (note 31)
Other provisions
19 INCOME TAX LIABILITIES
Deferred income tax liabilities (note 33)
Income taxes payable
2020
2019
48,873
16,255
65,128
51,198
5,691
56,889
Income taxes payable are expected to be settled within a year of the financial statements’ date.
(i) 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 (“the Bank”), (formerly RBC Royal Bank
Jamaica Limited). This claim pre
dated the acquisition of the Bank by Sagicor Group Jamaica
Limited, and pre-dated the acquisition of control of the Bank by RBTT from Finsac Limited (“Finsac”)
in 2001.
-
By virtue of the Share Sale Agreement 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.
Sagicor appealed the Supreme Court decision and judgment was delivered on July 31, 2018, which
ruled that the award previously made to the Claimant be reduced with costs to the Claimant, subject
to an accounting exercise to determine the apportionment of costs between the parties. This
reduced award took into account lower interest rates, applying simple interest rather than
compounding interest. The issue of costs remains to be determined by the courts following a
subsequent application to amend the judgment which was delivered in January 2019. The amount
previously awarded to the Claimant has been recorded as payable to the claimant, plus accrued
interest, and a corresponding receivable from Finsac/Government of Jamaica has been recorded
(note 12).
On July 1, 2019, the Claimant filed an application for conditional leave to appeal to the Privy Council
on the issue of costs, with final leave being granted on October 26, 2020.
76
209
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000
21 COMMON SHARES
The authorised share capital of the Company is US$200,000,000 divided into 10,000,000,000 common shares of US$0.01 each and 10,000,000,000 preference shares of US$0.01 each.
The common shares issued are as follows:
Number in 000’s
2020
Share
capital
Share premium
Total
Number in 000’s
2019
Share
capital
Share premium
Total
Issued and fully paid:
Balance, beginning of year
Exchange of shares (note 1)
Repurchase of shares (note 1)
Allotments arising from:
Common shares
New share issue (note 1)
Balance, end of year
Treasury shares:
147,839
-
(2,974)
144,865
1,516
-
1,478
-
(29)
1,449
15
-
762,290
763,768
-
-
(15,367)
(15,396)
746,923
748,372
6,848
6,863
-
-
146,381
1,464
753,771
755,235
Shares held for LTI and ESOP, end of year (note 30.1)
Shares repurchased but not cancelled
(50)
(1)
(1)
-
(275)
(6)
(276)
(6)
306,556
(227,016)
(11,548)
67,992
-
79,847
147,839
(50)
-
3,066
(2,270)
(116)
680
-
798
1,478
(1)
-
301,132
304,198
2,270
-
(19,930)
(20,046)
283,472
284,152
-
-
478,818
479,616
762,290
763,768
(275)
(276)
-
-
Total
146,330
1,463
753,490
754,953
147,789
1,477
762,015
763,492
21.1 Share buyback programme
During the year, the board of directors of SFC authorised a share buyback programme that allows the Company to repurchase its common shares (the “NCIB Shares”). The Toronto Stock Exchange (the “TSX”)
accepted the Company’s notice of intention to make a normal course issuer bid (“NCIB”) through which the Company may purchase the NCIB Shares during the 12-month period commencing June 22, 2020
and ending June 21, 2021. The Company was initially authorised to repurchase up to 3,000,000 of its common shares under the programme, however, the NCIB was subsequently amended to increase the
number of shares that may be repurchased to 8,000,000 common shares. Under the NCIB, purchases may be made on the open market through the facilities of the TSX and/or alternative Canadian trading
systems at the market price at the time of acquisition, as well as by other means as may be permitted by TSX rules and applicable securities laws.
77
210
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 21 COMMON SHARES (continued)
21.1 Share buyback programme (continued)
During the year, the Company repurchased 2,942,500 shares, at a total cost of US$13.1 million, which were subsequently cancelled. Share capital and share premium in equity have been reduced by the cost of the shares
repurchased and commission paid on the transactions. The discount arising on the repurchase of shares has been recorded directly in retained earnings.
The cost of shares totalling US$0.006 million, which were repurchased at the year end date but not cancelled, has been reflected in treasury shares.
21.2 Common share dividends
Common share dividends declared, paid and proposed are set out in the following table.
2020
2019
Per share
Total
Per share
Total
Dividends declared and paid during the year:
Three-month period ended:
– March 31
– June 30
– September 30
– December 31
Total
5.625¢
5.625¢
5.625¢
5.625¢
8,353
8,387
8,262
8,241
33,243
-
2.5¢
-
2.5¢
-
7,658
-
7,658
15,316
78
211
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 22 RESERVES
Fair value reserves
Owner-occupied
and owner-
managed
property
FVOCI
assets
Actuarial
liabilities
Cash flow
hedges
Currency
translation
reserves
Warrant
reserve(1)
Other
reserves
Total
reserves
2020
Balance, December 31, 2019
Total comprehensive income from continuing operations
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
25,151
(1,753)
94,270
68,375
(78,707)
(49,877)
(270)
(4)
(124,421)
(19,518)
-
-
(509)
-
-
46
-
-
-
-
-
-
-
-
-
Balance, December 31, 2020
22,889
162,691
(128,584)
(274)
(143,939)
20,062
20,062
54,892
(9,023)
(2,779)
(2)
-
-
-
-
6,978
6,978
(10,899)
(10,899)
1,318
52,287
855
(14,868)
(1) The Group has 34,774,993 (2019 - 34,774,993) warrants outstanding which have an exercise price of CDN $11.50 per share. These warrants expire on December 5, 2024. The warrants are listed on the Toronto
Stock Exchange.
79
212
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 22 RESERVES (continued)
2019
Balance, December 31, 2018
Total comprehensive income from continuing operations
Transactions with holders of equity instruments:
Allocated to warrant reserve
Allocated to reserve for equity compensation benefits
Eliminated from reserve for equity compensation benefits
Transfers to retained earnings and other movements
Balance, December 31, 2019
Fair value reserves
Owner-
occupied and
owner-managed
property
FVOCI
assets
Actuarial
liabilities
Cash flow
hedges
Currency
translation
reserves
Warrant
reserve
Other
reserves
Total
reserves
23,163
1,514
-
-
474
25,151
(27,525)
9,362
-
(116,953)
117,758
(83,392)
(270)
(7,569)
-
-
-
-
-
-
4,037
(4,677)
-
-
-
-
-
-
-
101
-
-
20,062
-
-
-
34,958
(11)
-
12,998
(3,811)
10,758
(76,995)
28,030
20,062
12,998
(3,811)
10,693
94,270
(78,707)
(270)
(124,421)
20,062
54,892
(9,023)
80
213
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 23 PARTICIPATING ACCOUNTS
24 PREMIUM REVENUE
The movements in the participating accounts during the year and the amounts in the financial
statements relating to participating accounts were as follows:
Gross premium
Ceded to reinsurers
2020
2019
2020
2019
Closed participating
account
Open participating
account
Life insurance
470,363
460,623
30,094
29,992
2020
2019
2020
2019
Annuity
Health insurance
736,620
592,400
176,622
179,101
Property and casualty insurance
118,347
91,128
1,501,952
1,323,252
25 POLICY BENEFITS AND CHANGE IN ACTUARIAL LIABILITIES
132
5,089
63,210
98,525
283
5,974
45,459
81,708
Gross benefit
Ceded to reinsurers
2020
2019
2020
2019
Life insurance benefits
Annuity benefits
Health insurance claims
263,130
324,994
236,624
270,376
133,185
140,748
Property and casualty claims
35,735
29,017
24,440
77,391
3,115
7,498
13,523
78,864
4,834
1,995
Total policy benefits
757,044
676,765
112,444
99,216
Change in actuarial liabilities (note 13.2)
512,140
492,875
(22,026)
8,092
Total policy benefits and change in
actuarial liabilities
1,269,184
1,169,640
90,418
107,308
Movement for the year:
Balance, beginning of year
Total comprehensive income / (loss)
Return of transfer to support profit
distribution, to shareholders
Balance, end of year
Financial statement amounts:
Assets
Liabilities
Revenues
Benefits
Expenses
Income taxes
902
(613)
-
289
63,075
62,786
4,589
4,599
264
54
2,774
(1,872)
321
1,190
1,304
(783)
-
(193)
(200)
902
1,318
321
65,913
65,011
7,004
7,523
511
84
152,294
151,907
150,976
151,586
16,023
12,999
1,178
159
19,751
18,798
1,522
254
The Group no longer sells participating policies in the Eastern Caribbean. As a result, the size of the
participating policyholders fund in this region has been decreasing annually and has reached a size
where it is no longer beneficial to the policyholders to continue to maintain a separate fund.
Consequently, the participating policies in the Eastern Caribbean were converted to non-participating
policies on May 31, 2019 with the level of participating benefits in the form of bonuses and or dividends
being guaranteed at conversion.
81
214
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 26 NET INVESTMENT INCOME
26 NET INVESTMENT INCOME (continued)
Investment income:
Interest income (amortised cost assets):
Debt securities
Mortgage loans
Policy loans
Finance loans
Securities purchased for resale
Deposits, cash and other items
Interest income (FVOCI assets):
2020
2019
83,907
21,052
10,881
61,171
804
951
81,695
20,458
10,519
60,941
542
1,320
178,766
175,475
Debt securities and money market funds
135,993
132,539
Interest income earned from financial assets measured
at amortised cost and FVOCI
314,759
308,014
2020
2019
Interest income earned from financial assets measured at
amortised cost and FVOCI
314,759
308,014
Fair value changes and interest income (FVTPL assets):
Debt securities
Equity securities
Mortgage loans
Derivative financial instruments
Other items
Investment income
Other income on financial investments
Investment property – rental income
Investment property – (realised losses) / gains
Investment property – unrealised losses
Other investment income / (expense)
Investment expenses:
Direct operating expenses of investment property that generated
rental income
Other direct investment expenses
Other investment income
16,636
(9,229)
553
10,759
2
25,319
49,298
2,524
35,701
27
18,721
112,869
477
5,406
(2,987)
(598)
1,724
4,022
4,060
2,539
6,599
16,144
253
8,406
27
(566)
(259)
7,861
6,319
2,611
8,930
111,800
Net investment income
330,903
419,814
82
215
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 27 FEES AND OTHER REVENUE
2020
Service contract revenue
Fee income – assets under administration
Commission income on reinsurance contracts
Other fees and commission income
Finance lease income
Foreign exchange gains
Hotel revenue
Other operating and miscellaneous income
2019
Service contract revenue
Fee income – assets under administration
Commission income on reinsurance contracts
Other fees and commission income
Finance lease income
Foreign exchange losses
Hotel revenue
Other operating and miscellaneous income
83
216
Fees Recognised
at a point in time
over time
Other Revenue
Total
26,008
-
-
11,585
-
-
3,076
159
40,828
39,856
-
-
9,349
-
-
7,970
213
57,388
43,889
2,976
4
2,188
-
-
12,164
-
61,221
50,461
2,968
-
3,595
-
-
28,786
-
85,810
-
-
15,647
10,792
75
4,078
1,885
4,450
36,927
-
-
7,932
8,876
62
(1,105)
2,938
6,070
24,773
69,897
2,976
15,651
24,565
75
4,078
17,125
4,609
138,976
90,317
2,968
7,932
21,820
62
(1,105)
39,694
6,283
167,971
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 28 INTEREST AND FINANCE COSTS
28.2 Finance costs
28.1 Interest costs
Interest expense (amortised cost liabilities):
Investment contracts
Other funding instruments
Customer deposits
Securities sold for repurchase
Insurance contracts and other items
Fair value changes and interest expense (FVTPL liabilities)
Total interest costs
84
2020
2019
8.875% senior notes due 2022
8.25% convertible redeemable preference shares due 2020
8,464
3,511
9,767
12,449
1,604
35,795
7,098
42,893
7,950
9,934
10,168
13,814
1,966
43,832
10,360
54,192
4.85% notes due 2019
5.50% unsecured bond due 2022
6.25% unsecured bond due 2022
5.10% unsecured bond due 2020
5.95% unsecured bond due 2020
5.00% notes due 2020
6.75% notes due 2024
Mortgage Loans
Lease liabilities(1)
Bank loans & other funding instruments
2020
30,740
-
-
333
311
1,744
2,385
556
1,041
5,020
2,184
571
2019
30,297
428
2,324
-
-
604
794
316
419
5,180
2,423
848
44,885
43,633
(1) Interest expense arising from lease liabilities is recognised from 2019 in conformity with IFRS 16.
29 EMPLOYEE COSTS
Included in administrative expenses, commissions and related compensation are the following:
Administrative and hotel staff salaries, directors’ fees
and short-term benefits
Social security and defined contribution retirement costs
Equity-settled compensation benefits (note 30.1 to 30.2)
Defined benefit expense (note 31 (b))
2020
2019
145,860
137,432
11,852
9,375
12,491
10,409
15,142
7,707
179,578
170,690
217
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 30 EQUITY COMPENSATION BENEFITS
30.1 Sagicor Financial Company Ltd. (continued)
30.1 Sagicor Financial Company Ltd.
(a)
LTI plan (2005) – restricted share grants
Effective December 31, 2005, SFCL introduced the LTI plan and the ESOP. A total of 26,555,274
common shares of SFCL (or 10% of shares then in issue) has been set aside for the purposes of the
long-term incentive (LTI) plan and the Employee Share Ownership Plan (ESOP).
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.
In 2017, the shareholders of SFCL approved the increase in the number of SFCL’s shares reserved for
the LTI and ESOP from 26,555,274 common shares to 40,400,000 common shares.
The movement in restricted share grants during the year is as follows:
On December 5, 2019, concurrent with the closing of the transaction between Alignvest Acquisition II
Corporation (“Alignvest”) and Sagicor Financial Corporation Limited (“SFCL”), restricted share grants,
share options and ESOP awards were exchanged for grants, options and awards in SFC using the
Exchange Ratio as defined in note 1. 3,680,687 restricted share grants were exchanged for 850,276
restricted share grants and 2,297,517 ESOP awards were exchanged for 526,831 ESOP awards in SFC
(the "Replacement Grants"). 20,250,604 options were exchanged for 4,678,152 options to purchase
common shares of Sagicor Financial Company Ltd. (the “Replacement Options”). The Replacement
Options provide an optionee the ability to purchase common shares of Sagicor Financial Company Ltd.
at a price per share linked to the award year (as adjusted by the exchange ratio), and the terms and
conditions of the Replacement Options have remained the same as the initial terms and conditions. The
terms of the Replacement Grants remain unchanged. Since these modifications did not increase the
total fair value of the Replacement Options or the Replacement Grants, the Group continues to account
for the cost of compensation services received as consideration for the equity instruments granted as if
the replacement had not occurred.
The fair value of stock options granted is estimated at the date of grant using the Black-Scholes option
pricing model as disclosed in section (b) below.
2020
2019
Number of
grants
‘000
Weighted
average
price
Number of
grants
‘000
Weighted
average
price
Balance, beginning of year
Grants issued
Grants vested
Grants lapsed/forfeited
Balance, end of year
856
779
(910)
(24)
701
US$4.50
US$4.74
US$4.94
US$4.98
US$5.02
656
US$4.50
1,056
US$6.28
(779)
US$5.54
(77)
856
US$4.07
US$4.50
85
218
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 30.1 Sagicor Financial Company Ltd. (continued)
(a)
LTI plan – restricted share grants (continued)
30.1 Sagicor Financial Company Ltd. (continued)
(b) LTI plan – share options (continued)
Grants issued may be satisfied out of new shares issued by Sagicor Financial Company Ltd. or by
shares acquired in the market. The shares acquired in the market and/or distributed during the year
were as follows:
The movement in share options for the year and details of the share options and assumptions used in
determining their pricing are as follows:
2020
2019
Number
in 000’s
$000
Number
in 000’s
$000
2020
2019
Number of
options
‘000
Weighted
average
exercise
price
Number of
options
‘000
Weighted
average
exercise
price
Balance, beginning of year and end
of year
40
206
40
206
Balance, beginning of year
4,673
US$4.85
During 2019, a cash settlement was made in lieu of share issue.
(b) LTI plan – share options
No 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 SFCL shares at the time that the option was
granted. From 2009, options have been granted at the fair market price of SFCL 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.
Options granted
Options exercised
Options lapsed/forfeited
Balance, end of year
-
-
(2,615)
US$5.09
(37)
US$4.72
2,021
US$4.61
Exercisable at the end of the year
931
US$4.46
3,814
1,782
-
(923)
4,673
2,568
US$5.24
US$4.42
US$3.90
US$5.50
US$4.85
US$5.06
Share price at grant date
US$3.72 - 10.82
US$3.72 – 10.82
Fair value of options at grant date
US$0.67 - 2.99
Expected volatility
Expected life
Expected dividend yield
Risk-free interest rate
18.6% - 35.8%
7.0 years
2.6% - 4.7%
4.5% - 6.8%
US$0.67 – 2.99
18.3% - 35.8%
7.0 years
2.6% - 4.7%
4.5% - 6.8%
The expected volatility of options is based on statistical analysis of monthly share prices over the 7 years
prior to grant date.
86
219
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000
30.1 Sagicor Financial Company Ltd. (continued)
30.1 Sagicor Financial Company Ltd. (continued)
LTI plan (2019) – restricted share grants
(c) ESOP
On December 5, 2019, also concurrent with the closing of the transaction between Alignvest Acquisition
II Corporation and Sagicor Financial Corporation Limited, the Company introduced a replacement award
for years 2020, 2021 and 2022 under a Sagicor Financial Company Ltd. equity-based plan, in lieu of
the foregoing award of restricted share units of the LTI plan introduced for certain executives in
December 31, 2005.
Under the plan, certain executives are awarded a number of restrictive share units of Sagicor Financial
Company Ltd. which will vest in accordance with the conditions noted below:
(a) Subject to the executives’ continued employment on the first, second and third anniversary
dates of the vesting commencement date;
(b) Subject to the Company achieving its return on equity target for the relevant year, as laid out
in the Company’s strategic plan or executive award agreement approved by the Company.
From 2006, SFCL approved awards under the ESOP in respect of permanent administrative employees
and sales agents of SFCL and certain subsidiaries. The ESOP is administered by the Company and
the amount awarded is used to acquire Sagicor Financial Company Ltd. shares. Shares vest over a
four-year period in equal tranches, and are issued as they vest. The shares acquired by the Company
during the year were as follows:
2020
2019
Number
in 000’s
$000
Number
in 000’s
Balance, beginning of year
Shares acquired
Shares distributed
Balance, end of year
10
-
-
10
70
-
-
70
63
53
(106)
10
$000
266
371
(567)
70
(c) Subject to the shares of the Company trading above Canadian $12.00 per share for 20 out
of any 30-day consecutive trading days prior to December 31, 2024.
As at December 31, 2020, 545,000 shares have been granted under this plan and are subject to vesting
conditions.
30.2 Sagicor Group Jamaica Limited
(a)
Long-term incentive plan
The movement in restricted share grants during the year is as follows:
2020
2019
Number of
grants
‘000
Weighted
average
price
Number of
grants
‘000
Weighted
average
price
Balance, beginning of year
Grants issued
Grants vested
Balance, end of year
-
545
(350)
195
-
US$5.92
US$5.92
US$5.92
-
-
-
-
-
-
-
-
Sagicor Group Jamaica Limited 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 instalments beginning the first
December 31 following the grant date and for the next three December 31 dates thereafter (25% per
year).
87
220
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000
30.2 Sagicor Group Jamaica Limited (continued)
(a)
Long-term incentive plan (continued)
30.2 Sagicor Group Jamaica Limited (continued)
(b) Employee share purchase plan
Options are not exercisable after the expiration of 7 years from the date of grant. The number of stock
options in each stock option award is calculated based on the LTI opportunity via stock options
(percentage of applicable salary) divided by the Black-Scholes value of a stock option of Sagicor Group
Jamaica Limited stock on March 31 of the measurement year. The exercise price of the options is the
closing bid price on March 31 of the measurement year.
Details of the share options outstanding are set out in the following table. J$ represents Jamaica dollars.
2020
2019
Number of
options
‘000
Weighted
average
exercise
price
Number of
options
‘000
Weighted
average
exercise
price
9,600
3,430
J$23.44
J$39.99
(1,689)
J$13.97
(307)
J$37.08
11,034
J$29.58
14,614
3,375
(7,174)
(1,215)
9,600
J$13.60
J$36.45
J$12.00
J$25.52
J$23.44
Balance, beginning of year
Options granted
Options exercised
Options lapsed/forfeited
Balance, end of year
Exercisable at the end of the year
6,636
J$25.79
5,742
J$18.98
Further details of share options and the assumptions used in determining their pricing are as follows:
2020
2019
Fair value of options outstanding
J$47,995,000
J$30,190,000
Share price at grant date
Exercise price
J$7.11 - 39.99
J$7.11 – 36.45
J$7.11 - 39.99
J$7.11 – 36.45
Standard deviation of expected share price returns
31.0%
27.0%
Remaining contractual term
Risk-free interest rate
0.25 – 7 years
0.25 - 7 years
4.43%
4.60%
The expected volatility is based on statistical analysis of daily share prices over seven years.
88
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 $688 (2019 – $2,017).
221
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000
31 EMPLOYEE RETIREMENT BENEFITS
31 EMPLOYEE RETIREMENT BENEFITS (continued)
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 (f) of this note relate only to defined benefit plans.
(a) Amounts recognised in the statement of financial position
Present value of funded pension obligations
Fair value of retirement plan assets
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
2020
2019
290,443
316,471
(306,255)
(326,582)
(15,812)
(10,111)
39,258
26,168
49,614
25,335
41,007
66,342
(16,728)
49,614
37,453
23,215
50,557
60,944
(1,347)
59,597
(9,040)
50,557
Pension plans have purchased annuities from insurers in the Group to pay benefits to plan retirees.
These obligations which amount to $37,962 (2019 - $36,490) are included in actuarial liabilities in the
statement of financial position and are included as retirement plan assets in this note.
89
222
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 31 EMPLOYEE RETIREMENT BENEFITS (continued)
(b) Movements in balances
2020
2019
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
23,215
353,924
(326,582)
50,557
21,784
327,372
(285,172)
63,984
Current service cost
Interest expense / (income)
Past service cost and gains / losses on settlements
(177)
1,530
84
7,553
21,730
4,416
9
(22,654)
-
7,385
606
4,500
Net expense recognised in income
1,437
33,699
(22,645)
12,491
(3,948)
8,057
(15,755)
(26,112)
-
-
-
-
2,185
28,402
2,629
(17,518)
10,347
2,629
767
767
667
1,472
-
2,139
(1,052)
(239)
-
-
6,067
18,962
-
25,029
(6,658)
8,595
-
(1,295)
-
(19,336)
(125)
(19,461)
(316)
(12,512)
25
201
6,734
1,098
(125)
7,707
(8,026)
(4,156)
25
(1,094)
4,109
(41,867)
33,983
(3,775)
(1,291)
642
(12,602)
(13,251)
-
-
(954)
-
(1,639)
(2,593)
-
7,443
(18,638)
9,711
(14,571)
(16,055)
(9,951)
(7,443)
18,638
(7,160)
14,905
8,989
(9,951)
-
(954)
2,551
(1,305)
(9,659)
-
-
(813)
2,233
(837)
583
-
6,980
(14,846)
15,774
(7,027)
881
(10,007)
(10,007)
(6,980)
14,794
(14,131)
6,977
(9,347)
-
(865)
3,876
(887)
(7,883)
Net liability / (asset), end of year
26,168
329,701
(306,255)
49,614
23,215
353,924
(326,582)
50,557
90
223
(Gains) / losses from changes in assumptions
(Gains) / losses from changes in experience
Return on plan assets excluding interest income
Change in asset ceiling excluding interest expense /
(income)
Net (gains) / losses recognised in other
comprehensive income
Contributions made by the Group
Contributions made by employees and retirees
Benefits paid
Other items
Effect of exchange rate movements
Other movements
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000
31 EMPLOYEE RETIREMENT BENEFITS (continued)
(c) Retirement plan assets
Equity unit linked pension funds under Group management:
Sagicor Equity Fund (Barbados)
Sagicor Bonds Fund (Barbados)
Sagicor Eastern Caribbean Fund (St. Lucia)
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
2020
2019
(39,719)
(21,398)
(8,929)
(61,267)
(26,616)
(17,454)
(26,008)
(1,336)
(10,912)
(213,639)
(92,616)
(306,255)
(39,155)
(21,706)
(3,624)
(80,993)
(33,196)
(21,443)
(25,290)
(1,865)
(10,212)
(237,484)
(89,098)
(326,582)
The equity unit linked pension funds are funds domiciled in Barbados and Jamaica. Annual reports of
these funds are available to the public.
91
224
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 31 EMPLOYEE RETIREMENT BENEFITS (continued)
31 EMPLOYEE RETIREMENT BENEFITS (continued)
(d) Significant actuarial assumptions
The significant actuarial assumptions for the principal geographic areas were as follows:
2020
Pension plans
2019
Jamaica
Trinidad
Barbados &
Eastern
Caribbean
Jamaica
Trinidad
Discount rate - local currency benefits
7.75%
Pension plans
Discount rate - local currency benefits
Discount rate - US$ indexed benefits
Expected return on plan assets
Future promotional salary increases
Future inflationary salary increases
Future pension increases
Future increases in National
Insurance Scheme Ceilings
Mortality table
Termination of active members
Early retirement
92
Barbados &
Eastern
Caribbean
7.75%
n/a
7.75%
0.00%
2.00%
2.00%
9.00%
5.00%
9.00%
9.00%
9.00%
0.50%
3.50%
n/a
American 1994
Group Annuitant
Mortality (GAM
94) table with 5-
year improvement
UP94 with
projection scale
AA
3% - 18.40% up to
age 30, reducing
to 1% – 7.2% at
age 50, 0% at age
51
2% - 5.8% up to
age 30, to 3.8% -
5.8% at age 50,
2.7% - 3.8% at
age 51
100% at the
earliest possible
age to receive
unreduced
benefits
n/a
5.50%
n/a
5.50%
0.00%
2.00%
0.00%
4.00%
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
Discount rate - US$ indexed benefits
Expected return on plan assets
Future promotional salary increases
Future inflationary salary increases
Future pension increases
Future increases in National
Insurance Scheme Ceilings
n/a
7.75%
0.00%
2.00%
2.00%
3.50%
7.50%
5.00%
7.00%
9.00%
9.00%
0.50%
n/a
5.00%
n/a
5.00%
0.00%
2.00%
0.00%
4.00%
Mortality table
Termination of active members
Early retirement
American 1994
Group Annuitant
Mortality (GAM
94) table with 5-
year improvement
UP94 with
projection scale
AA
3% - 18.40% up to
age 30, reducing
to 1% – 7.2% at
age 50, 0% at age
51
2% - 5.8% up to
age 30, 3.8% -
5.8% at age 50,
2.7% - 3.8% at
age 51
n/a
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
225
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 31 EMPLOYEE RETIREMENT BENEFITS (continued)
31 EMPLOYEE RETIREMENT BENEFITS (continued)
2020
2019
(e) Sensitivity of actuarial assumptions (continued)
Group medical and life plans
Barbados
Jamaica
Barbados
Jamaica
Long-term increase in health costs
4.25%
7.00%
4.25%
5.00%
2019
Jamaica
Trinidad
Barbados &
Eastern
Caribbean
(e) Sensitivity of actuarial assumptions
The sensitivity of the pension retirement benefit obligations to individual changes in actuarial
assumptions is summarised below:
Base pension obligation
91,216
210,451
14,804
Change in absolute assumption
Increase / (decrease) in pension obligations
Decrease discount rate by 1.0%
8,226
14,563
1,482
December 31, 2020
Increase discount rate by 1.0%
(6,525)
(10,987)
(1,026)
Decrease salary growth rate by 0.5%
Increase salary growth rate by 0.5%
Increase average life expectancy by 1 year
(561)
563
1,302
(2,306)
2,474
994
Decrease average life expectancy by 1 year
(1,968)
(1,035)
(238)
288
461
(188)
Barbados &
Eastern
Caribbean
Jamaica
Trinidad
Base pension obligation
96,217
178,979
15,247
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
8,211
(6,713)
(515)
608
2,405
Decrease average life expectancy by 1 year
(3,171)
9,311
1,226
(7,175)
(1,423)
1,636
635
(649)
(870)
(194)
179
390
(190)
93
226
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000
31 EMPLOYEE RETIREMENT BENEFITS (continued)
31 EMPLOYEE RETIREMENT BENEFITS (continued)
(e) Sensitivity of actuarial assumptions (continued)
(e) Sensitivity of actuarial assumptions (continued)
The sensitivity of the medical and life benefits obligations to individual changes in actuarial assumptions
is summarised below:
The sensitivity of the medical and life benefits obligations to individual changes in actuarial assumptions
is summarised below:
December 31, 2020
Jamaica
December 31, 2019
Jamaica
Base medical and life obligation
26,018
Base medical and life obligation
23,215
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
4,631
(3,664)
(85)
103
823
(823)
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
4,037
(3,189)
(115)
123
671
(678)
(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.
For the 2021 financial year, the total Group contributions to its defined benefits pension plans are
estimated to be $14,779.
94
227
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 32 INCOME TAXES
32 INCOME TAXES (continued)
Group companies are taxed according to the taxation rules of the countries where the operations are
carried out. The principal rates of taxation are summarised in note 2.18(c). The income tax expense is
set out in the following table.
Income tax on the total income subject to taxation differs from the theoretical amount that would arise
as follows:
Current tax:
Current tax on profits for the year
Adjustments to current tax of prior periods
Total current tax expense
Deferred tax:
(Increase) / decrease in deferred tax assets (note 33)
Increase / (decrease) in deferred tax liabilities (note 33)
Total deferred tax expense
2020
2019
51,549
1,007
52,556
(1,884)
(8,455)
(10,339)
37,968
(654)
37,314
7,879
13,986
21,865
2020
2019
Income before income tax expense
27,602
163,284
Taxation at the applicable rates on income subject to tax
22,185
60,546
Adjustments to current tax for items not subject to or allowed
for tax
11,995
(10,888)
Other current tax adjustments
Adjustments for current tax of prior periods
Movement in unrecognised deferred tax assets
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 of a tax asset
Tax on distribution of profits from policyholder funds
(1,179)
1,578
3,957
(22)
862
-
12
3,344
42,732
(193)
(587)
5,330
(20)
1,505
229
42
3,746
59,710
Share of tax of associated companies
Total tax expense
515
531
42,732
59,710
Other taxes
In addition to the above, the income tax on items in other comprehensive income is set out in note 35.
95
228
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 33 DEFERRED INCOME TAXES
33 DEFERRED INCOME TAXES (continued)
The analysis and movement for the year of deferred tax asset balances are set out in the following table.
Unrecognised tax losses and potential deferred income tax assets are as follows:
Defined
benefit
liabilities
Unrealised
losses on
financial
investments
Unused tax
losses
Other items
Total
Expiry period for
unrecognised tax losses:
2020
2021
2022
2023
2024
2025
2026
2027
No specified expiry date
2020
2019
-
19,882
71,162
87,255
55,900
63,723
59,167
63,620
-
24,763
19,882
71,162
87,442
60,566
64,077
79,220
-
559
Total unrecognised tax losses
420,709
407,671
Potential deferred income tax assets
10,546
25,442
2020
Balance, beginning of year
5,213
(1,587)
695
2,173
6,494
(Charged)/credited to:
Income
Other comprehensive income
Effect of exchange rate changes
353
(284)
(372)
(822)
(443)
122
Balance, end of year
4,910
(2,730)
(581)
-
(36)
78
2,934
(150)
(165)
4,792
Balance to be recovered within one year
2019
1,884
(877)
(451)
7,050
(1,618)
Balance, beginning of year
6,207
10,700
7,105
3,571
27,583
(Charged)/credited to:
Income
Other comprehensive income
Amounts assumed on acquisition
Effect of exchange rate changes
Balance, end of year
Balance to be recovered within one year
116
(868)
-
(242)
5,213
15
(6,122)
(1,888)
(11,869)
-
(433)
(1,587)
-
-
(288)
695
609
1
(120)
2,173
(7,879)
(12,128)
1
(1,083)
6,494
(464)
96
229
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 33 DEFERRED INCOME TAXES (continued)
The analysis and movement for the year of deferred tax liability balances are set out in the following table.
Accelerated tax
depreciation
Policy liabilities
taxable in the
future
Defined benefit
assets
Accrued
interest
Unrealised
gains on
financial
investments
Off-settable tax
assets relating to
unused tax losses
and other items
Other Items
Total
3,721
39,282
(17)
1,501
27,243
(22,134)
1,602
51,198
2,150
(4,271)
2,041
267
3,908
(6,076)
(13,067)
-
-
20,139
167
20
-
(16)
154
(131)
-
-
(17)
1,353
1,345
21,314
-
(538)
49,364
(1,349)
(4,561)
-
-
-
225
-
172
(23,483)
(2,562)
(8,455)
4,221
2,041
(132)
48,873
6,338
3,106
48,046
325
1,128
1,302
(25,451)
502
28,958
259
113
134
109
6,647
(15,411)
-
-
3,721
39,282
(822)
1,184
(705)
1
(17)
177
-
195
1
1,309
23,859
759
14
3,317
-
-
-
3,099
(2,091)
34
58
1,501
27,243
(22,134)
1,602
13,986
7,654
417
183
51,198
13,274
2020
Balance, beginning of year
Charged/(credited) to:
Income
Other comprehensive income
Amounts assumed on acquisition
Effect of exchange rate changes
Balance, end of year
Balance to be settled within one year
2019
Balance, beginning of year
Charged/(credited) to:
Income
Other comprehensive income
Amounts assumed on acquisition
Effect of exchange rate changes
Balance, end of year
Balance to be settled within one year
97
230
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000
34 EARNINGS PER COMMON SHARE
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 share warrants. In computing
diluted earnings per share, the weighted average number of common shares is adjusted by the dilutive
impacts of the afore-mentioned share grants and options.
2020
2019
(Loss) / income attributable to common shareholders
(3,605)
44,498
Weighted average number of shares in issue
(in thousands)
LTI restricted share grants and share options (in thousands)
ESOP shares (in thousands)
Share warrants (in thousands)
Adjusted weighted average number of shares in issue
(in thousands)
Basic earnings per common share
Attributable to continuing operations
Attributable to discontinued operation
Fully diluted earnings per common share
Attributable to continuing operations
Attributable to discontinued operation
147,830
76,452
1,570
545
-
1,724
541
2,572
149,945
81,289
(2.4)¢
(2.4)¢
0.0¢
(2.4)¢
(2.4)¢
0.0¢
58.2¢
57.5¢
0.7¢
54.7¢
54.1¢
0.6¢
Basic earnings per share and fully diluted earnings per share computed on the loss for the year are
equal, as the LTI restricted share grants and share options, ESOP share grants and share warrants,
are considered to be antidilutive and have been excluded from the computation of fully diluted earnings
per share. This treatment is in accordance with IAS 33 – Earnings Per Share.
98
231
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000
35 OTHER COMPREHENSIVE INCOME (OCI)
Analysis of OCI:
2020
After tax OCI is attributable to
2019
After tax OCI is attributable to
OCI tax
impact
Shareholders
Participating
policyholders
Non-
controlling
interests
Total after
tax OCI
OCI tax
impact
Shareholders
Participating
policyholders
Non-
controlling
interests
Total after
tax OCI
Items that may be reclassified
subsequently to income:
FVOCI assets:
Gains / (losses) arising on revaluation
(21,036)
(Gains) / losses transferred to income
Net change in actuarial liabilities
Cash flow hedges
Retranslation of foreign currency
operations
Other
Items that will not be reclassified
subsequently to income:
Gains / (losses) arising on revaluation of
owner-occupied and owner-managed
property
Gains / (losses) on equity securities
designated at FVOCI
Defined benefit plan gains / (losses)
Total OCI movements
Allocated to equity reserves
Allocated to retained earnings
99
232
(1,398)
22,661
97,266
(36,329)
130,440
4,828
33,439
(982)
13,066
-
-
-
(8,952)
76,003
(7,555)
(49,877)
(4)
(19,518)
(2)
(953)
4,155
(1,753)
-
(301)
3,854
(5,098)
(73)
3,339
1,513
560
(2,779)
3,339
560
15
569
-
(9,027)
(2,665)
(749)
(16,567)
(51,973)
(753)
32
(18,709)
(38,195)
-
(18)
(20)
(782)
(8,507)
(10,242)
2,716
15,410
-
-
-
(18,203)
(18,203)
(12,691)
(83,392)
(270)
(7,569)
(11)
26,507
26,507
-
-
-
-
(13,127)
(14,880)
474
1,514
(76)
135
(149)
3,474
(13,068)
(11,555)
-
9
(2,053)
(1,579)
8,660
10,183
(1,253)
(4,223)
-
(70)
-
(718)
(718)
-
-
-
-
(782)
(21,575)
(21,797)
(19,782)
36,690
(718)
28,030
8,660
36,690
(6,430)
(7,384)
(2,816)
168,707
(20,374)
(94,999)
(3,086)
(9,002)
(16,641)
(115)
7,692
7,692
(126)
33,481
33,481
(2,485)
(971)
9
2,538
62
7,754
18
11,198
10,245
43,726
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 36 CASH FLOWS
36.1 Operating activities
Adjustments for non-cash items, interest and
dividends:
Income from financial investments
(364,788)
(464,010)
2020
2019
Loss arising on business combinations, acquisitions and
divestitures
Loss on impairment of investment in associates and joint
ventures
Net increase in actuarial liabilities
Interest costs and finance costs
Credit impairment losses
Depreciation and amortisation
Provision for unearned premiums
Other items
Net change in investments and operating assets:
Investment property
Debt securities
Equity securities
Mortgage loans
Policy loans
Finance loans
Securities purchased for resale
Deposits
Other assets and receivables
100
1,262
31,804
379
-
534,166
484,783
87,778
23,997
39,559
(2,326)
19,605
97,825
4,877
35,506
4,532
8,312
371,057
172,204
12,003
(482,157)
(331,990)
(35,181)
715
6,592
(5,203)
3,060
1,253
(379,645)
(55,711)
(8,023)
(3,782)
(114,788)
6,772
9,808
(44,301)
(38,568)
(876,462)
(582,684)
36.1 Operating activities (continued)
The gross changes in investment property, debt securities and equity securities are as follows:
Investment property:
Purchases
Disposal proceeds
Debt securities:
Purchases
Disposal proceeds
Equity securities:
Purchases
Disposal proceeds
Net change in operating liabilities:
Insurance liabilities
Investment contract liabilities
Other funding instruments
Deposits
Securities sold for repurchase
Other liabilities and payables
2020
2019
(266)
12,269
12,003
(82)
1,335
1,253
(2,336,535)
1,854,378
(482,157)
(3,025,432)
2,645,787
(379,645)
(442,491)
110,501
(331,990)
18,520
16,784
(36,236)
79,425
69,972
25,175
173,640
(200,101)
144,390
(55,711)
(9,660)
36,643
(11,480)
43,841
97,583
(38,428)
118,499
233
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 36.2 Investing activities
Property, plant and equipment:
Purchases
Disposal proceeds
36.3 Financing activities
Notes and loans payable:
Proceeds
Repayments
36.4 Lease liability payments
Principal paid
Interest paid
36.5 Cash and cash equivalents
Cash
Call deposits and other liquid balances
Bank overdrafts
101
234
2020
2019
(18,430)
(14,016)
3,437
(14,993)
6,523
(7,493)
2020
2019
68,245
196,147
(109,514)
(164,452)
(41,269)
31,695
2020
(5,697)
(2,124)
(7,821)
2020
359,972
188,216
(980)
547,208
2019
(4,225)
(1,316)
(5,541)
2019
273,072
508,918
(6,646)
775,344
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 37
CHANGE S IN SUBSIDIARY AND ASSOCIATE HOLDINGS
37.1 Playa Hotels & Resorts N.V. (continued)
37.1 Playa Hotels & Resorts N.V.
(ii) Acquisition of 1.1% holding in associate:
The Group compared its share of the net identifiable assets and liabilities of Playa, at fair value, to the
purchase price paid. The resulting negative goodwill has been recorded in these financial statements.
.
Share of net assets acquired
7,465
Purchase consideration
Negative goodwill arising on acquisition
(5,966)
1,499
Negative goodwill arose as Playa’s shares have been trading below the company’s book value per share in
response to depressed share prices which occurred as the hotel industry has been severely impacted by
the effects of COVID-19 coronavirus on tour and hotel bookings, given widespread travel restrictions and
cancellations.
On June 12, 2020, in addition to entering into certain financing transactions to support its
ongoing operations, Playa sold 4,878,049 ordinary shares at a price of $20 million which resulted
in a 0.6% dilution of Sagicor Group Jamaica Limited’s 15.4% shareholding, and ultimately the
Sagicor Group’s ownership interest of 15.4%, in Playa.
On June 15, 2020, Sagicor Financial Corporation Limited, the intermediate parent company of
SGJ, acquired a further 1,500,000 shares of Playa by a series of purchases, at a weighted
average price of $3.9676 per share, for a total of $5,966.4 including commissions paid. This
represented an increase of 1.1% in the Group’s shareholding, bringing the Group’s total
shareholding in Playa to 15.9%.
The transactions gave rise to a net loss of $2,753 on dilution of the shareholding (deemed
disposal), and negative goodwill of $1,499 on the acquisition of additional shares, as follows:
(i) Deemed disposal of 0.6% holding in associate:
The Group’s share of the carrying value of the investment in Playa on its balance sheet as at
June 30, 2020 was compared to its share of the proceeds of $20 million received by Playa and
adjusted for recycling of net unrealised foreign exchange gains and unrealised interest rate swap
losses in OCI to income.
Group’s share of proceeds received by Playa on issuance of shares
2,963
Share of carrying value of investment in Playa as an associate on
the balance sheet of SGJ as at June 30, 2020
Net unrealised gains recycled to income
Loss on deemed disposal of 0.6% holding in associate
(6,075)
(3,112)
359
(2,753)
102
235
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000
37.2 Advantage General Insurance Company Limited (AGI)
37.2 Advantage General Insurance Company Limited (AGI) (continued)
Effective September 30, 2019, the Group acquired 60% of the share capital of Advantage General
Insurance Company Limited.
Goodwill arising on acquisition has been recognised as follows:
During the year, certain purchase price adjustments were made which impacted the determination of
the final goodwill identified on acquisition. Details of the net assets acquired, purchase consideration
and goodwill are as follows:
– December 31, 2019 (note 8)
– December 31, 2020 (note 8)
Effect of exchange rate changes
7,795
163
10
7,968
The acquiree’s net income and total revenue are as follows:
For the year ended December 31, 2019
Consolidated from October 1, 2019 to December 31, 2019
43,222
10,973
4,364
1,076
Total Revenue
Net Income
2020
Final
Fair Value
2019
Provisional
Fair Value
5,530
8,663
7,226
62,811
7,793
3,027
8,916
1,847
5,530
8,663
7,226
62,811
7,793
3,027
8,916
1,847
(47,478)
(49,367)
(5,945)
(1,514)
(2,593)
(9,597)
38,686
23,210
31,178
7,968
(5,945)
(1,515)
(416)
(9,597)
38,973
23,383
31,178
7,795
Net assets acquired:
Investment property (note 5)
Property, plant and equipment (note 7)
Intangible assets
Financial investments
Reinsurance assets
Income tax assets
Miscellaneous assets and receivables
Cash resources
Other policy liabilities
Deposit and security liabilities
Other liabilities / Retirement benefit liabilities
Income tax liabilities
Accounts payable and accrued liabilities
Total net assets
Share of net assets acquired
Purchase consideration
Goodwill arising on acquisition
103
236
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 37.3 Bailey Williams Limited
37.4 Disposal of insurance portfolios
On November 30, 2019, Sagicor Life Jamaica Limited purchased 70% of the issued share capital
of Bailey Williams Limited. The transaction was accounted for an asset purchase, as at the time
of the acquisition, Bailey Williams was not a business, as defined by IFRS 3. In accounting for the
asset purchase, the purchase consideration for the shares was allocated among the identifiable
assets in proportion to their relative fair values. There was no fair valuation of the identifiable
assets which were recognised on acquisition. As stipulated by IFRS 3 for asset acquisitions, no
goodwill or negative goodwill was recognised. Non-controlling interest in the transaction was
determined by reference to the non-controlling interest’s proportionate share of the value of the
assets recognised. This was a related party transaction.
Details of the net assets acquired and the purchase consideration, determined on a provisional
basis, were as follows:
2019
Net assets acquired:
Income tax assets
Land developed for resale
Cash resources
Deposit and security liabilities
Accounts payable and accrued liabilities
Total net assets
Purchase consideration
Non-controlling interest
1
5,329
7
(352)
(49)
4,936
3,455
1,481
4,936
On April 8, 2019, the Group disposed of its insurance portfolios in the territories of Anguilla, Montserrat
and St Maarten. The disposal was concluded by contractual agreement and transferred assets to the
purchaser in exchange for the assumption of the insurance liabilities by the purchaser. The Group
recorded a loss on the sale of these branches of $379.
The net loss recorded by the Group in its consolidated statement of income for the period to sale in
2019 is as follows:
Total net loss
Loss attributable to shareholders
St Maarten
Anguilla
Montserrat
Period to
April 8, 2019
(589)
(589)
(364)
(61)
(164)
(589)
104
237
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 38 DISCONTINUED OPERATION
On July 29, 2013, SFCL 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 SFCL 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.
Movement in Price Adjustments
Balance receivable, beginning of year
Payment received
Net currency movements
Receivable end of year
2019
(17,239)
17,756
(517)
-
The price adjustments were subject to a limit based on the terms of the agreement. These results were
subject to further underwriting, investment and foreign currency adjustments constrained by the limit as
the experience develops.
The net gain recognised in the statement of income is as follows:
Net gain and total comprehensive gain
2019
517
38 DISCONTINUED OPERATION (continued)
Cash Flows
Net Cash flows - Operating Activities
2019
17,756
On February 12, 2019, Sagicor Financial Corporation Limited completed a review of the consideration,
related to the price adjustments to December 31, 2018, and entered into a Deed of Release with
AmTrust to close this exposure. The final settlement amount of £13.5 million was received on February
26, 2019.
39 CONTINGENT LIABILITIES AND COMMITMENTS
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:
2020
2019
Customer guarantees and letters of credit (1)
35,155
34,769
(1) There are equal and offsetting claims against customers in the event of a call on the above
commitments for customer guarantees and letters of credit.
(a) Legal proceedings
The Group 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.
105
238
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 39 CONTINGENT LIABILITIES AND COMMITMENTS (continued)
39 CONTINGENT LIABILITIES AND COMMITMENTS (continued)
(a) Legal proceedings (continued)
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 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.
(ii) Suit has been filed by an independent contractor against one of the Group’s subsidiaries for
breach of contract arising from alleged contractual agreement. The Claimant alleges that the
company failed to pursue initiatives contemplated by the contract with a third party and that by
not doing so, it caused the Claimant company significant losses which they have estimated at
over US$300,000. 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 favourable outcome.
(b) Tax assessments
The Group is also subject to tax assessments during the normal course of business. Adequate
provision has been made for all assessments received to date and for tax liabilities accruing in
accordance with management’s understanding of tax regulations. Potential tax assessments may be
received by the Group which are in addition to accrued tax liabilities. No provisions have been made
in these financial statements for such potential tax assessments.
(c) Commitment
Effective June 25, 2020, the Group entered into a letter of credit arrangement with a facility up to the
amount of US $40 million, whereby an irrevocable standby letter of credit was issued on behalf of
Sagicor Reinsurance Bermuda Ltd (SRBL) in favour of Sagicor Life Insurance Company (SLIC), USA,
in support of a coinsurance agreement between the two parties (note 4(d)). The letter of credit facility
is guaranteed by Sagicor Financial Corporation Limited and SRBL. It is due to expire on June 26,
2021 and is deemed to be automatically extended for one-year periods, subject to notice of the
intention to terminate the facility being given sixty days prior to an expiration date.
The Group is required to comply with the following covenant in respect of the facility:
COVENANT
Cash Collateralisation
Event -
(Under this requirement,
the Group must fully
collateralise the facility if
the noted conditions are
breached.)
Event of Default
DESCRIPTION
The Group must maintain an aggregate MCCSR of at least
175% at the end of any fiscal quarter.
The Group must maintain a Fixed Charge Coverage Ratio, at
the end of any fiscal quarter, of an excess of 2.00 to 1.00.
The ratio of Consolidated Total Indebtedness to Consolidated
Total Capitalisation, at the end of any fiscal quarter, must not
exceed 0.35 to 1.00.
The credit rating of the Group must not fall below a specific
predetermined level.
The aggregate amount of unrestricted cash and cash
equivalents held with the Bank, at any time, should not be less
than US$25 million.
Upon an Event of Default, the Bank may declare the
Obligations due and payable.
106
239
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 40 FAIR VALUE OF PROPERTY
40 FAIR VALUE OF PROPERTY (continued)
Investment property, owner-occupied property and owner-managed hotel 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.
For Level 3 investment property, reasonable changes in fair value would affect net income. For
Level 3 owner-occupied properties and owner-managed hotel properties, reasonable changes in
fair value would affect other comprehensive income. The movements for the year in investment
property, owner-occupied properties and owner-managed hotel properties are set out in notes 5
and 7.
41 FINANCIAL 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.
Disclosures in this note, notes 42 and 43, exclude amounts of the discontinued operation.
Some tracts of land are currently used for farming operations or are undeveloped 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 unadjusted 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 are as follows:
2020
Investment property
Owner-occupied properties
Owner-managed hotel properties
2019
Investment property
Owner-occupied properties
Owner-managed hotel properties
Level 1
Level 2
Level 3
Total
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
78,295
78,295
108,738
108,738
76,024
76,024
263,057
263,057
95,577
95,577
110,172
110,172
96,608
96,608
302,357
302,357
107
240
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000
41.1 Credit risk
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 associated primarily with financial
investments and reinsurance assets.
41.1 Credit risk (continued)
Renegotiated assets
Credit risk from financial investments is minimised through:
• holding a diversified portfolio of investments;
• purchasing quality securities;
• advancing loans only after careful assessment of the borrower and obtaining collateral;
• placing deposits with financial institutions with a strong capital base;
• placing limits on the amount of exposure in relation to any one borrower;
• obtaining collateral and guarantees from borrowers.
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.
For mortgage loans, the collateral is real estate property, and the approved loan limit is 75% to 95% of
collateral value. For finance loans, the collateral often comprises a vehicle or other form of security and
the approved loan limit is 50% to 100% of the collateral value. Unsecured finance loans are only granted
when the initial amount is less than $4,900.
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.
Rating of financial assets
The Group’s credit rating model (note 3.1) applies a rating scale to three categories of exposures:
• Investment portfolios, comprising debt securities and money market funds, deposits, securities
purchased for resale, and cash;
• Lending portfolios, comprising mortgage, policy and finance loans;
• 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).
For lending portfolios, the three default ratings of 8, 9 and 10 are utilised, while for investment portfolios
and reinsurance assets, one default rating of 8 is utilised.
The Group may foreclose on overdue mortgage loans and finance loans by repossessing the pledged
asset. The Group will seek to dispose of the pledged asset by sale. In some instances, the Group may
provide re-financing to a new purchaser on customary terms.
In sections 41.2, 41.3 and 41.4, we set out for the Group its credit risk exposures and credit
impairments.
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.
108
241
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 41.2 Credit risk exposure
The total credit risk exposures of the Group by operating segment is as follows:
2020
2019
Sagicor
Life
Sagicor
Jamaica
Sagicor
USA
Head
office &
other
Total
Sagicor
Life
Sagicor
Jamaica
Sagicor
USA
Head
office &
other
Total
Investment portfolios
Lending portfolios
Cash
Reinsurance assets
Receivables
1,165,431
1,776,123
2,148,295
129,754
5,219,603
1,045,244
1,697,643
1,770,475
513,997
5,027,359
365,869
660,707
99,761
15,933
1,142,270
368,576
94,111
227,188
59,245
59,066
439,610
5,547
34,759
12,052
63,261
665,221
6,059
688,879
23,312
17,145
138,477
88,905
6,968
39,480
681,736
189,433
4,752
74,598
82,652
40,236
17,685
42,894
679,605
8,084
6,546
15,473
1,150,649
361,468
699,409
136,097
Total financial statement exposures
1,665,717
2,739,331
2,995,834
227,957
7,628,839
1,549,173
2,648,162
2,579,514
598,133
7,374,982
Lending commitments
Customer guarantees and letters of credit
Total off financial statement exposures
21,897
42,875
-
21,897
35,155
78,030
-
-
-
-
-
-
64,772
35,155
99,927
24,314
-
24,314
54,392
34,769
89,161
-
-
-
-
-
-
78,706
34,769
113,475
Total
1,687,614
2,817,361
2,995,834
227,957
7,728,766
1,573,487
2,737,323
2,579,514
598,133
7,488,457
109
242
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 41.2 Credit risk exposure (continued)
The principal individual credit exposures of the Group are as follows:
Gov’t of Jamaica debt securities
Gov’t of Trinidad & Tobago debt securities
Gov’t of Barbados debt securities
(note 41.4 (c)) & (d))
Federal National Mortgage Association (USA)
debt securities
Guggenheim Partners reinsurance asset
(note 41.4 (a))
Heritage Life Insurance reinsurance asset
(note 41.4 (b))
Sagicor
Risk
Rating
5
3
5
1
2
3
2020
2019
1,152,509
1,069,946
383,122
237,384
259,461
234,261
170,406
153,395
438,900
458,483
142,979
150,726
41.2 Credit risk exposure (continued)
For assets measured at FVOCI or amortised cost, credit risk exposure is the gross carrying amount.
For assets measured at FVTPL, the Group’s credit risk exposure is the carrying amount. The
components of investment and lending portfolios by accounting classification are summarised below.
Investment portfolios:
Debt securities and money market funds at FVOCI
3,408,773
3,558,991
2020
2019
Debt securities at amortised cost
Securities purchased for resale
Deposits at amortised cost
Debt securities at FVTPL
Lending portfolios:
Mortgage loans at amortised cost
Finance loans at amortised cost
Policy loans at amortised cost
Mortgage loans at FVTPL
1,275,567
1,151,247
57,110
129,279
348,874
10,904
63,110
243,107
5,219,603
5,027,359
396,822
568,047
151,336
26,065
364,439
605,547
151,730
28,933
1,142,270
1,150,649
110
243
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000
41.2 Credit risk exposure (continued)
Credit risk exposure – financial investments subject to impairment
Financial assets carried at amortised cost or FVOCI are subject to credit impairment losses which are recognised in the statement of income. The following tables analyse the credit risk exposure of financial
investments as at December 31 for which an ECL allowance is recognised.
Debt securities and money market funds – FVOCI
Debt securities and money market funds – FVOCI Debt securities
– FVOCI
2020
ECL Staging
2019
ECL Staging
Stage 1
12-month
ECL
Stage 2
lifetime
ECL
Stage 3
lifetime
ECL
POCI
Total
Stage 1
12-month
ECL
Stage 2
lifetime
ECL
Stage 3
lifetime
ECL
POCI
Total
December 31:
Credit grade:
Investment
2,433,495
9,882
-
-
2,443,377
2,780,003
4,085
Non-investment
774,601
154,191
4,071
28,572
961,435
678,149
66,421
Watch
Default
Unrated
-
-
75
-
-
-
-
45
45
3,841
-
-
-
3,841
75
-
-
-
189
-
-
Gross carrying amount
3,208,171
164,073
7,912
28,617
3,408,773
3,458,152
70,695
Loss allowance
Carrying amount
(2,572)
(8,465)
(6,176)
-
(17,213)
(2,484)
(5,734)
3,205,599
155,608
1,736
28,617
3,391,560
3,455,668
64,961
-
-
-
-
-
-
1
1
-
2,784,088
30,144
774,714
-
-
-
189
-
-
30,144
3,558,991
-
(8,217)
30,144
3,550,774
111
244
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 41.2 Credit risk exposure – financial investments subject to impairment (continued)
Debt securities – amortised cost
Debt securities – amortised cost
2020
ECL Staging
2019
ECL Staging
Stage 1
12-month
ECL
Stage 2
lifetime
ECL
Stage 3
lifetime
ECL
POCI
Total
Stage 1
12-month
ECL
Stage 2
lifetime
ECL
Stage 3
lifetime
ECL
POCI
Total
346,233
-
717,611
5,269
-
-
-
346,233
172,192
895,072
1,700
23,071
2,592
4,972
32,335
-
575
-
-
1,334
-
-
18
1,334
593
1,066,119
28,340
3,926
177,182
1,275,567
(2,378)
(1,887)
(1,402)
(414)
(6,081)
1,063,741
26,453
2,524
176,768
1,269,486
236,049
751,032
670
-
573
-
3,218
1,337
-
-
988,324
4,555
(1,378)
(759)
986,946
3,796
-
-
-
-
-
-
-
-
-
236,049
152,799
907,049
5,547
7,554
-
22
-
595
158,368
1,151,247
(371)
(2,508)
157,997
1,148,739
December 31:
Credit grade:
Investment
Non-investment
Watch
Default
Unrated
Gross carrying amount
Loss allowance
Carrying amount
112
245
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 41.2 Credit risk exposure – financial investments subject to impairment (continued)
Mortgage loans – amortised cost
Mortgage loans – amortised cost
2020
ECL Staging
2019
ECL Staging
Stage 1
12-month
ECL
Stage 2
lifetime
ECL
Stage 3
lifetime
ECL
POCI
Total
Stage 1
12-month
ECL
Stage 2
lifetime
ECL
Stage 3
lifetime
ECL
POCI
Total
December 31:
Credit grade:
Investment
189,346
30,349
2,436
Non-investment
116,728
9,543
15,052
Watch
Default
41
-
2,929
17,007
-
13,391
Gross carrying amount
306,115
42,821
47,886
Loss allowance
Carrying amount
(1,261)
(556)
(1,791)
304,854
42,265
46,095
-
-
-
-
-
-
-
222,131
210,652
19,929
388
141,323
89,906
17,710
2,563
19,977
13,391
89
-
1,127
12,400
-
9,675
396,822
300,647
38,766
25,026
(3,608)
(611)
(339)
(942)
393,214
300,036
38,427
24,084
-
-
-
-
-
-
-
230,969
110,179
13,616
9,675
364,439
(1,892)
362,547
113
246
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 41.2 Credit risk exposure – financial investments subject to impairment (continued)
Policy loans – amortised cost
Policy loans – amortised cost
2020
ECL Staging
2019
ECL Staging
Stage 1
12-month
ECL
Stage 2
lifetime
ECL
Stage 3
lifetime
ECL
POCI
Total
Stage 1
12-month
ECL
Stage 2
lifetime
ECL
Stage 3
lifetime
ECL
POCI
Total
144,287
7,049
151,336
(298)
151,038
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
144,287
144,556
7,049
7,174
151,336
151,730
(298)
(197)
151,038
151,533
-
-
-
-
-
-
-
-
-
-
-
--
-
-
-
144,556
7,174
151,730
(197)
151,533
December 31:
Credit grade:
Investment
Non-investment
Gross carrying amount
Loss allowance
Carrying amount
114
247
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 41.2 Credit risk exposure – financial investments subject to impairment (continued)
Finance loans – amortised cost
Finance loans – amortised cost
2020
ECL Staging
2019
ECL Staging
Stage 1
12-month
ECL
Stage 2
lifetime
ECL
Stage 3
lifetime
ECL
POCI
Total
Stage 1
12-month
ECL
Stage 2
lifetime
ECL
Stage 3
lifetime
ECL
POCI
Total
258
-
523,336
26,388
258
1,444
-
549,724
578,412
10,927
7,099
-
-
-
10,966
7,099
10,966
-
-
2,048
-
12,716
568,047
579,856
12,975
12,716
(12,663)
(3,757)
(729)
(5,754)
555,384
576,099
12,246
6,962
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,444
589,339
2,048
12,716
605,547
(10,240)
595,307
December 31:
Credit grade:
Investment
Non-investment
Watch
Default
Gross carrying amount
523,594
33,487
10,966
Loss allowance
Carrying amount
(5,208)
(903)
(6,552)
518,386
32,584
4,414
115
248
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 41.2 Credit risk exposure – financial investments subject to impairment (continued)
Securities purchases for resale – amortised cost
Securities purchases for resale – amortised cost
2020
ECL Staging
2019
ECL Staging
Stage 1
12-month
ECL
Stage 2
lifetime
ECL
Stage 3
lifetime
ECL
POCI
Total
Stage 1
12-month
ECL
Stage 2
lifetime
ECL
Stage 3
lifetime
ECL
POCI
Total
57,110
57,110
-
57,110
-
-
-
-
-
-
-
-
-
-
-
-
57,110
10,904
57,110
10,904
-
-
57,110
10,904
-
-
-
-
-
-
-
-
-
-
-
-
10,904
10,904
-
10,904
December 31:
Credit grade:
Non-investment
Gross carrying amount
Loss allowance
Carrying amount
116
249
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 41.2 Credit risk exposure – financial investments subject to impairment (continued)
Deposits – amortised cost
Deposits – amortised cost
2020
ECL Staging
2019
ECL Staging
Stage 1
12-month
ECL
Stage 2
lifetime
ECL
Stage 3
lifetime
ECL
POCI
Total
Stage 1
12-month
ECL
Stage 2
lifetime
ECL
Stage 3
lifetime
ECL
POCI
Total
December 31:
Credit grade:
Investment
Non-investment
Watch
Unrated
35,702
81,217
-
249
428
11,246
437
-
Gross carrying amount
117,784
11,495
Loss allowance
Carrying amount
(288)
(1,271)
117,496
10,224
-
-
-
-
-
-
-
-
-
-
-
-
-
-
35,702
81,466
11,674
437
35,977
25,367
716
433
129,279
62,493
(1,559)
(261)
127,720
62,232
-
246
371
-
617
(51)
566
-
-
-
-
-
-
-
-
-
-
-
-
-
-
35,977
25,613
1,087
433
63,110
(312)
62,798
117
250
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 41.3 Credit impairment losses – financial investments subject to impairment
The allowance for ECL is recognised in each reporting period and is impacted by a variety
of factors, as described below:
•
•
•
•
•
Transfers between stages due to financial instruments experiencing significant
increases (or decreases) of credit risk or becoming credit-impaired during the
period;
Additional allowances for new financial instruments recognised during the
period, as well as releases for financial instruments derecognised in the period;
Impact on the measurement of ECL due to inputs used in the calculation,
including the effect of ‘step-up’ (or ‘step down’) between 12-month and lifetime
ECL;
Impacts on the measurement of ECL due to changes made to models and
assumptions; and
Foreign exchange retranslations for assets denominated in foreign currencies
and other movements.
118
251
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000
41.3 Credit impairment losses – financial investments subject to impairment (continued)
LOSS ALLOWANCES
Debt securities and money market funds – FVOCI
Debt securities and money market funds – FVOCI
2020
ECL Staging
2019
ECL Staging
Stage 1
12-month
ECL
Stage 2
lifetime
ECL
Stage 3
lifetime
ECL
POCI
Total
Stage 1
12-month
ECL
Stage 2
lifetime
ECL
Stage 3
lifetime
ECL
POCI
Total
Loss allowance, beginning of year
2,484
5,733
Transfers:
Stage 1 to Stage 2
Stage 2 to Stage 1
Stage 2 to Stage 3
-
-
-
(1,002)
1,002
-
-
-
(1,525)
1,525
Securities originated or purchased
1,981
Securities fully derecognised
(577)
(2,614)
Write-offs
-
-
-
-
-
Changes in ECL inputs, models and / or
assumptions
(227)
5,871
4,665
Effect of exchange rate changes
(87)
(2)
(14)
Loss allowance, end of year
2,572
8,465
6,176
Credit impairment (loss) recorded in income
119
252
-
-
-
-
-
-
-
-
-
-
8,217
1,646
8,011
19,555
-
-
-
(70)
2
-
1,981
1,695
70
(2)
-
-
-
-
-
-
(3,191)
(609)
(3,481)
(19,257)
-
(9)
-
-
10,309
(138)
1,251
(15)
(103)
17,213
(9,367)
(33)
(116)
(283)
2,484
5,733
-
-
-
-
-
-
-
-
-
-
-
29,212
-
-
-
1,695
(23,347)
(9)
1,098
(432)
8,217
(3,626)
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000
41.3 Credit impairment losses – financial investments subject to impairment (continued)
LOSS ALLOWANCES
Debt securities – amortised cost
Debt securities – amortised cost
2020
ECL Staging
2019
ECL Staging
Stage 1
12-month
ECL
Stage 2
lifetime
ECL
Stage 3
lifetime
ECL
POCI
Total
Stage 1
12-month
ECL
Stage 2
lifetime
ECL
Stage 3
lifetime
ECL
POCI
Total
Loss allowance, beginning of year
1,378
759
371
2,508
1,855
1,228
161
612
3,856
Transfers:
Stage 1 to Stage 2
Stage 1 to Stage 3
Stage 2 to Stage 3
Securities originated or purchased
Securities fully derecognised
Changes in ECL inputs, models and / or
assumptions
-
-
-
(326)
-
-
621
(229)
326
-
(663)
663
-
(2)
-
-
948
1,466
739
Effect of exchange rate changes
(14)
1
-
Loss allowance, end of year
2,378
1,887
1,402
414
6,081
Credit impairment (loss) / loss reduction
recorded in income
(3,585)
-
-
-
1
(3)
45
-
-
-
-
622
(234)
3,198
(13)
(12)
(108)
-
323
(152)
(505)
(23)
1,378
12
-
-
-
-
108
-
-
(51)
(270)
(429)
(1)
759
1
-
-
-
-
-
-
4
-
-
-
323
(469)
(245)
(1,178)
-
371
(24)
2,508
1,815
120
253
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000
41.3 Credit impairment losses – financial investments subject to impairment (continued)
LOSS ALLOWANCES
Mortgage loans – amortised cost
Mortgage loans – amortised cost
2020
ECL Staging
2019
ECL Staging
Stage 1
12-month
ECL
Stage 2
lifetime
ECL
Stage 3
lifetime
ECL
POCI
Total
Stage 1
12-month
ECL
Stage 2
lifetime
ECL
Stage 3
lifetime
ECL
POCI
Total
Loss allowance, beginning of year
611
339
942
Transfers:
Stage 1 to Stage 2
Stage 1 to Stage 3
Stage 2 to Stage 1
Stage 2 to Stage 3
Stage 3 to Stage 2
Stage 3 to Stage 1
Loans originated or purchased
Loans fully derecognised
Changes in ECL inputs, models and / or
assumptions
(104)
(103)
83
-
-
123
514
(23)
104
-
(83)
(135)
-
103
-
135
1,019
(1,019)
-
-
(9)
(123)
-
(236)
165
(658)
1,988
Effect of exchange rate changes
(5)
(21)
1
Loss allowance, end of year
1,261
556
1,791
Credit impairment (loss) recorded in income
-
-
-
-
-
-
-
-
-
-
-
-
1,892
625
283
1,472
-
-
-
-
-
-
514
(268)
1,495
(25)
3,608
(1,785)
(193)
(314)
97
-
-
145
580
50
(377)
(2)
611
193
-
(97)
(20)
46
-
-
(112)
48
(2)
339
-
314
-
20
(46)
(145)
-
(525)
(115)
(33)
942
-
-
-
-
-
-
-
-
-
-
-
-
2,380
-
-
-
-
-
-
580
(587)
(444)
(37)
1,892
(219)
121
254
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 41.3 Credit impairment losses – financial investments subject to impairment (continued)
LOSS ALLOWANCES
Policy loans – amortised cost
Policy loans – amortised cost
2020
ECL Staging
Stage 1
12-month
ECL
Stage 2
lifetime
ECL
Stage 3
lifetime
ECL
197
105
(4)
298
-
-
-
-
-
-
-
-
2019
ECL Staging
Stage 1
12-month
ECL
Stage 2
lifetime
ECL
Stage 3
lifetime
ECL
110
91
(4)
197
-
-
-
-
-
-
-
-
POCI
Total
-
-
-
-
197
105
(4)
298
(116)
POCI
Total
-
-
-
-
110
91
(4)
197
(92)
Loss allowance, beginning of year
Changes in ECL inputs, models and / or
assumptions
Effect of exchange rate changes
Loss allowance, end of year
Credit impairment (loss) recorded in income
122
255
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 41.3 Credit impairment losses – financial investments subject to impairment (continued)
LOSS ALLOWANCES
Finance loans – amortised cost
Finance loans – amortised cost
2020
ECL Staging
2019
ECL Staging
Stage 1
12-month
ECL
Stage 2
lifetime
ECL
Stage 3
lifetime
ECL
POCI
Total
Stage 1
12-month
ECL
Stage 2
lifetime
ECL
Stage 3
lifetime
ECL
POCI
Total
Loss allowance, beginning of year
3,757
729
5,754
Transfers:
Stage 1 to Stage 2
Stage 1 to Stage 3
Stage 2 to Stage 1
Stage 2 to Stage 3
Stage 3 to Stage 1
Loans originated or purchased
(379)
(722)
147
-
45
1,818
379
-
(147)
(103)
-
-
-
722
103
(45)
-
Loans fully derecognised
(640)
(217)
(1,761)
Changes in ECL inputs, models and / or
assumptions
Effect of exchange rate changes
Loss allowance, end of year
Credit impairment (loss) recorded in income
1,380
283
2,013
(198)
5,208
(21)
903
(234)
6,552
-
-
-
-
-
-
-
-
-
-
-
10,240
4,441
1,196
7,731
-
-
-
-
-
1,818
(2,618)
(299)
(530)
343
-
41
2,240
(862)
3,676
(1,470)
(453)
12,663
(7,896)
(147)
3,757
299
-
(343)
(76)
-
-
-
530
-
76
(41)
-
(374)
(2,698)
70
(43)
729
428
(272)
5,754
-
-
-
-
-
-
-
-
-
-
-
13,368
-
-
-
-
-
2,240
(3,934)
(972)
(462)
10,240
(2,865)
123
256
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000
41.3 Credit impairment losses – financial investments subject to impairment (continued)
LOSS ALLOWANCES
Deposits – amortised cost
Deposits – amortised cost
2020
ECL Staging
Stage 1
12-month
ECL
Stage 2
lifetime
ECL
Stage 3
lifetime
ECL
POCI
Total
2019
ECL Staging
Stage 1
12-month
ECL
Stage 2
lifetime
ECL
Stage 3
lifetime
ECL
Loss allowance, beginning of year
261
51
Transfers:
Stage 1 to Stage 2
Deposits originated or purchased
Deposits fully derecognised
Changes in ECL inputs, models and / or
assumptions
(103)
265
(140)
103
-
-
5
1,117
Loss allowance, end of year
288
1,271
Credit impairment (loss) / loss reduction recorded
in income
-
-
-
-
-
-
-
-
-
-
-
-
312
355
64
(51)
121
(224)
60
261
51
-
(65)
1
51
-
265
(140)
1,122
1,559
(1,248)
-
-
-
-
-
-
POCI
Total
-
-
-
-
-
-
419
-
121
(289)
61
312
110
124
257
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000
41.3 Credit impairment losses – financial investments subject to impairment (continued)
41.3 Credit impairment losses – financial investments subject to impairment (continued)
(a) Economic variable assumptions
(a) Economic variable assumptions (continued)
During 2019, updates were made to the regression models. With the exception of the utility and
energy sector, the macroeconomic indicators for all sectors were updated to produce regressions
which are better fitted to explain the relationship between the respective default rates and the
macroeconomic variables.
The GBP USD and NZD USD currency pairs were introduced to enhance the explanation of the
default rates in the respective sectors. This was considered critical since currency risk and
sovereign risk vary among currency pairs and currency shocks can result in major losses for
companies and impact their ability to satisfy their debt and consequently result in defaults.
In addition to the currency pairs, it is noted that market indices such as the S&P 500 Financial
Index and the Dow Jones Industrial Average Index have demonstrated a stronger correlation to
the performance of our investments in the financial and industrial sectors.
The inclusion of the additional variables in the model has improved its robustness.
A comparison of the sensitivity analyses using the old and updated models produced, especially
for the financial sector, a more reliable and supportable fit between the default rate and the
macroeconomic variables.
Sagicor has selected seven economic factors which provide the overall macroeconomic environment in
considering forward-looking information for base, upside and downside forecasts. These are as follows:
As of December 31, 2020
As of December 31, 2019
2021
2022
2023
2020
2021
2022
2.0%
4.5%
-0.2%
5.2%
7.8%
2.6%
3.7%
3.3%
1.5%
4.2%
6.3%
2.6%
2.8%
2.4%
1.5%
3.8%
5.7%
2.6%
1.6%
2.2%
1.2%
3.4%
5.0%
2.5%
1.8%
2.5%
1.4%
3.6%
5.3%
2.7%
1.9%
2.5%
1.3%
3.6%
5.3%
2.7%
$4.82
$9.39
$2.02
$4.67
$9.39
$1.96
$4.58
$9.39
$1.92
$5.62
$9.47
$3.45
$5.32
$9.47
$3.27
$5.19
$9.47
$3.19
GDP Growth (USA)
Base
Upside
Downside
World GDP
Base
Upside
Downside
WTI Oil Prices/10
Base
Upside
Downside
DOW Jones
Industrial
Average Index EPS
Base
Upside
Downside
$1,505.82 $1,739.89 $1,739.89 $1,733.64
$2,237.09 $2,584.83 $2,584.83 $2,450.69
$882.91 $1,020.16 $1,020.16 $1,045.02
$1,885.49
$1,885.49
$2,665.34
$2,665.34
$1,136.56
$1,136.56
125
258
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 41.3 Credit impairment losses – fi
nancial investments subject to imp
airment (c
)
ontinued
41.3 Credit impairment losses – financial investments subject to impairment (continued)
(b) Economic variable assumptions (co ntinued)
(a) Economic variable assumptions (continued)
As of December 31, 2020
As of December 31, 2019
2021
2022
2023
2020
2021
2022
$33.11
$38.95
$38.95
$38.46
$41.44
$41.44
$49.96
$58.77
$58.77
$54.31
$58.52
$58.52
$21.71
$25.54
$25.54
$25.42
$27.39
$27.39
$1.37
$1.49
$1.25
$1.37
$1.55
$1.20
$1.38
$1.61
$1.15
$1.31
$1.43
$1.18
$1.32
$1.49
$1.15
$1.32
$1.54
$1.11
$0.72
$0.79
$0.64
$0.72
$0.83
$0.61
$0.72
$0.85
$0.58
$0.65
$0.70
$0.59
$0.65
$0.73
$0.57
$0.65
$0.75
$0.74
S&P 500 Financial
Index - EPS
Base
Upside
Downside
GBP/USD
Base
Upside
Downside
NZD/USD
Base
Upside
Downside
Sagicor's lending operations in Barbados, Trinidad, and Jamaica have limited readily available
information regarding economic forecasts. Management has examined the information within the market
and selected economic drivers that have the best correlation to the portfolio's performance. Economic
state is assigned to reflect the driver's impact on ECL.
As of December 31, 2020
Barbados
Unemployment rate
GDP growth
Trinidad & Tobago
Unemployment rate
GDP growth
Jamaica
Interest rate
Expected state for the next 12 months
Base
Upside
Downside
Base
Upside
Downside
Expected state for the next 12 months
Base
Upside
Downside
Base
Upside
Downside
Expected state for the next 12 months
Base
Upside
Downside
Unemployment rate
Base
Upside
Downside
Scenario
Negative
Stable
Super Negative
Negative
Stable
Super Negative
Scenario
Negative
Stable
Super Negative
Negative
Stable
Super Negative
Scenario
Stable
Positive
Stable
Negative
Stable
Super Negative
126
259
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000
41.3 Credit impairment losses – financial investments subject to impairment (continued)
41.3 Credit impairment losses – financial investments subject to impairment (continued)
(a) Economic variable assumptions (continued)
(b) Significant increase in credit risk (SICR)
As of December 31, 2019
Barbados
Unemployment rate
GDP growth
Trinidad & Tobago
Unemployment rate
GDP growth
Jamaica
Interest rate
Expected state for the next 12 months
Base
Upside
Downside
Base
Upside
Downside
Expected state for the next 12 months
Base
Upside
Downside
Base
Upside
Downside
Expected state for the next 12 months
Base
Upside
Downside
Scenario
Negative
Stable
Negative
Stable
Stable
Negative
Scenario
Negative
Stable
Negative
Stable
Positive
Negative
Scenario
Positive
Positive
Stable
Unemployment rate
Base
Upside
Downside
Positive
Super Positive
Stable
127
260
The ECL impact of a SICR for debt securities has been estimated as follows:
SICR criteria
(see note 3.1)
Actual threshold
applied
Change in
threshold
Investments
2-notch downgrade
since origination
1-notch downgrade
since origination
ECL impact of change
in threshold
2020
2019
4,988
419
The staging for lending products is based primarily on days past due with 30-day used as backstop, thus
sensitivity analysis is not performed.
(c) Loss given default (LGD)
From the inception of IFRS 9, the Group has used the LGD for sovereigns as provided by Moody’s.
The 45% LGD in Moody’s current report represents the losses derived using the average trading prices
method for US denominated external debt. Due to the limited trading activity and the small percentage
of US denominated sovereign debt in our portfolio, we do not believe it is appropriate to use the average
trading price method. An analysis of this calculation shows that this LGD includes losses for places
such as Greece, Russia and African countries and does not truly reflect a Caribbean experience.
During 2019, an analysis of the LGD calculation was done, still using Moody’s data as a base but
exploring different scenarios for deriving the LGD for Caribbean territories.
Sagicor Life Inc’s sovereign exposure is primarily in the Caribbean region where bond markets are very
thinly traded. For the majority of our sovereign exposures an internal valuation method is used to
produce accurate fixed income prices. To determine the accurate fair value for disclosure purposes in
financial reporting, we use the present value of the bond’s expected cash flows.
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 41.3 Credit impairment losses – financial investments subject to impairment (continued)
41.3 Credit impairment losses – financial investments subject to impairment (continued)
(c) Loss given default (LGD) (continued)
(c) Loss given default (LGD) (continued)
Using Moody’s NPV method results in a loss given default (LGD) of approximately 35% regardless of
the inclusion of members CARICOM solely or all global defaults. Furthermore, Barbados, the most
recent defaulted bond issuer in the Caribbean suffered a maximum loss of approximately 36% on the
restructured domestic debt which is in line with the LGD using the NPV method.
In light of the above, we adopted the NPV method for determining the LGD for Caribbean Sovereigns
and reduced the LGD to 35% as derived from the calculation.
Debt securities
The ECL impact of changes in LGD rates is summarised as follows:
2019
LGD
ECL impact of
Rate
applied
Change
in rate
increase
in value
decrease in
value
The ECL impact of changes in LGD rates is summarised as follows:
Debt securities
2020
LGD
ECL impact of
Rate
applied
Change
in rate
increase
in value
decrease in
value
Corporate
53%
( - /+ 5) %
1,198
(1,198)
Sovereign, excluding Barbados
and Jamaica
Sovereign - Barbados - BAICO
bonds
35%
( - /+ 5) %
17%
( - /+ 5) %
Sovereign - Jamaica
15%
( - /+ 5) %
509
50
650
(509)
(50)
(650)
Corporate
Sovereign, excluding Barbados
and Jamaica
Sovereign - Barbados - BAICO
bonds
52%
( - /+ 5) %
35%
( - /+ 5) %
17%
( - /+ 5) %
Sovereign - Jamaica
15%
( - /+ 5) %
826
317
25
254
(786)
(317)
(25)
(254)
128
261
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 41.3 Credit impairment losses – financial investments subject to impairment (continued)
(d) Scenario design
The weightings assigned to each economic scenario as at December 31, 2020 are set out in the
following table. These weightings are unchanged from the prior year.
Sagicor Life portfolios
Sagicor Jamaica portfolios
Sagicor Life USA
Base
Upside Downside
80%
80%
80%
10%
10%
10%
10%
10%
10%
The results of varying the upside and downside scenarios are as follows:
Base – 80%
Upside – 5%
Downside – 15%
Base – 80%
Upside – 15%
Downside – 5%
Increase in ECL
Decrease in ECL
2020
2019
2020
2019
Debt securities
Lending products
628
253
269
43
(628)
(208)
($269)
($40)
129
262
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 41.4 Gross Carrying Values – financial investments subject to impairment
The following tables explain the movement in the gross carrying amounts of investments and in the ECL classifications for the year. Gross carrying amounts represent the maximum exposure to credit risk.
Debt securities and money market funds – FVOCI
Debt securities and money market funds – FVOCI
Gross carrying amount, beginning of year
3,458,152
70,695
2020
ECL Staging
Stage 1
12-month
ECL
Stage 2
lifetime
ECL
Stage 3
lifetime
ECL
2019
ECL Staging
POCI
Total
Stage 1
12-month
ECL
Stage 2
lifetime
ECL
Stage 3
lifetime
ECL
POCI
Total
30,144
3,558,991
2,566,176
97,233
54,279
-
2,717,688
-
-
164
-
(120,488)
120,488
(4,147)
4,147
-
-
(164)
-
-
(7,014)
7,014
-
-
-
-
-
-
-
-
-
267
-
-
(267)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
30,140
1,729,194
-
-
4
(801,366)
(56,353)
(30,172)
Securities originated or purchased
1,347,322
-
Securities fully derecognised
(1,310,349)
(18,052)
-
-
45
1,347,367
1,699,054
(72)
(1,328,473)
(717,305)
(30,568)
(53,493)
Changes in principal and interest
(113,924)
(4,120)
755
(1,503)
(118,792)
(57,536)
1,183
-
Effect of exchange rate changes
(52,378)
2,076
(21)
3
(50,320)
(28,357)
(1,033)
(786)
Transfers:
Stage 1 to Stage 2
Stage 1 to Stage 3
Stage 2 to Stage 1
Stage 2 to Stage 3
Gross carrying amount, end of year
3,208,171
164,073
7,912
28,617
3,408,773
3,458,152
70,695
-
30,144
3,558,991
130
263
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 41.4 Gross Carrying Values – financial investments subject to impairment (continued)
Debt securities – amortised cost
Debt securities – amortised cost
2020
ECL Staging
2019
ECL Staging
Stage 1
12-month
ECL
Stage 2
lifetime
ECL
Stage 3
lifetime
ECL
POCI
Total
Stage 1
12-month
ECL
Stage 2
lifetime
ECL
Stage 3
lifetime
ECL
POCI
Total
Gross carrying amount, beginning of year
988,324
4,555
Transfers:
Stage 1 to Stage 2
Stage 1 to Stage 3
Stage 2 to Stage 3
Securities originated or purchased
Securities fully derecognised
Changes in principal and interest
Effect of exchange rate changes
(3,874)
3,874
(24,570)
24,570
-
-
309,544
(178,539)
-
-
-
(6,468)
3,089
(22,172)
-
-
-
-
-
-
52
-
158,368
1,151,247
931,848
12,152
798
156,099
1,100,897
-
-
-
-
-
-
(180)
(305)
-
271
309,815
225,588
180
-
-
-
-
305
-
-
-
-
-
-
-
-
550
226,138
(66)
(178,605)
18,609
15,282
(135,291)
(7,294)
(1,100)
(86)
(143,771)
(20,044)
(483)
(3)
1,805
(18,725)
-
(22,172)
(13,292)
-
-
-
-
(13,292)
158,368
1,151,247
Gross carrying amount, end of year
1,066,119
28,340
3,926
177,182
1,275,567
988,324
4,555
131
264
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 41.4 Gross Carrying Values – financial investments subject to impairment (continued)
Mortgage loans – amortised cost
Mortgage loans – amortised cost
2020
ECL Staging
2019
ECL Staging
Stage 1
12-month
ECL
Stage 2
lifetime
ECL
Stage 3
lifetime
ECL
POCI
Total
Stage 1
12-month
ECL
Stage 2
lifetime
ECL
Stage 3
lifetime
ECL
POCI
Total
Gross carrying amount, beginning of year
300,647
38,766
25,026
Transfers:
Stage 1 to Stage 2
Stage 1 to Stage 3
Stage 2 to Stage 1
Stage 2 to Stage 3
Stage 3 to Stage 2
Stage 3 to Stage 1
Loans originated or purchased
(35,869)
35,869
-
(11,294)
11,294
14,771
(14,771)
-
-
-
(16,969)
16,969
1,518
(1,518)
2,410
75,363
-
-
(2,410)
-
Loans fully derecognised
(23,769)
(1,345)
(1,605)
Write-offs
Changes in principal and interest
-
(11,205)
-
181
-
309
Effect of exchange rate changes
(4,939)
(428)
(179)
Gross carrying amount, end of year
306,115
42,821
47,886
-
-
-
-
-
-
-
-
-
-
-
-
-
364,439
297,646
17,079
24,675
-
-
-
-
-
-
(31,398)
31,398
-
(8,080)
-
8,080
6,559
(6,559)
-
-
-
2,318
(3,258)
3,258
648
(648)
-
-
(2,318)
-
75,363
68,059
(26,719)
(12,622)
(3,749)
(7,483)
-
-
-
(10,715)
(19,884)
3,305
(5,546)
(1,951)
(98)
(21)
(318)
(199)
396,822
300,647
38,766
25,026
-
-
-
-
-
-
-
-
-
-
-
-
-
339,400
-
-
-
-
-
-
68,059
(23,854)
(21)
(16,897)
(2,248)
364,439
132
265
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 41.4 Gross Carrying Values – financial investments subject to impairment (continued)
Finance loans – amortised cost
Finance loans – amortised cost
2020
ECL Staging
2019
ECL Staging
Stage 1
12-month
ECL
Stage 2
lifetime
ECL
Stage 3
lifetime
ECL
POCI
Total
Stage 1
12-month
ECL
Stage 2
lifetime
ECL
Stage 3
lifetime
ECL
POCI
Total
Gross carrying amount, beginning of year
579,856
12,975
12,716
Transfers:
Stage 1 to Stage 2
Stage 1 to Stage 3
Stage 2 to Stage 1
Stage 2 to Stage 3
Stage 3 to Stage 1
Loans originated or purchased
Loans fully derecognised
Write-offs
Changes in principal and interest
Effect of exchange rate changes
(30,723)
30,723
-
(5,050)
-
5,050
2,372
(2,372)
-
93
130,947
(1,743)
1,743
-
-
(93)
-
(97,688)
(4,778)
(3,844)
(11)
(10)
-
(25,278)
(1,453)
(4,018)
(30,924)
145
(588)
Gross carrying amount, end of year
523,594
33,487
10,966
-
-
-
-
-
-
-
-
-
-
-
-
133
266
605,547
497,099
15,233
15,522
-
-
-
-
-
(9,367)
9,367
-
(3,838)
-
3,838
5,050
(5,050)
-
75
(848)
-
-
-
848
(75)
-
130,947
233,332
(106,310)
(21)
(30,749)
(31,367)
568,047
(97,897)
(3,674)
(4,996)
-
-
(79)
(29,312)
(1,608)
(1,865)
(15,286)
(445)
(477)
579,856
12,975
12,716
-
-
-
-
-
-
-
-
-
-
-
-
527,854
-
-
-
-
-
233,332
(106,567)
(79)
(32,785)
(16,208)
605,547
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 41.4 Gross Carrying Values – financial investments subject to impairment (continued)
Securities purchased for resale – amortised cost
Securities purchased for resale – amortised cost
2020
ECL Staging
Stage 1
12-month
ECL
Stage 2
lifetime
ECL
Stage 3
lifetime
ECL
POCI
Total
2019
ECL Staging
Stage 1
12-month
ECL
Stage 2
lifetime
ECL
Stage 3
lifetime
ECL
Gross carrying amount, beginning of year
Securities originated or purchased
Securities fully derecognised
Changes in principal and interest
Effect of exchange rate changes
Gross carrying amount, end of year
10,904
1,283,926
(1,237,810)
837
(747)
57,110
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10,904
7,170
1,283,926
1,772,783
(1,237,810)
(1,769,238)
837
(747)
57,110
(38)
227
10,904
-
-
-
-
-
-
-
-
-
-
-
-
POCI
Total
-
-
-
-
-
-
7,170
1,772,783
(1,769,238)
(38)
227
10,904
134
267
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 41.4 Gross Carrying Values – financial investments subject to impairment (continued)
Deposits – amortised cost
Deposits – amortised cost
2020
ECL Staging
2019
ECL Staging
Stage 1
12-month
ECL
Stage 2
lifetime
ECL
Stage 3
lifetime
ECL
POCI
Total
Stage 1
12-month
ECL
Stage 2
lifetime
ECL
Stage 3
lifetime
ECL
POCI
Total
Gross carrying amount, beginning of year
62,493
617
Transfers:
Stage 1 to Stage 2
(7,471)
7,471
Deposits originated or purchased
192,962
-
Deposits fully derecognised
(143,456)
(245)
Changes in principal and interest
13,393
3,652
Effect of exchange rate changes
(137)
-
Gross carrying amount, end of year
117,784
11,495
-
-
-
-
-
-
-
-
-
-
-
-
-
-
63,110
107,156
371
-
(616)
192,962
41,932
616
-
(143,701)
(79,081)
(371)
17,045
(6,071)
(137)
(827)
1
-
129,279
62,493
617
-
-
-
-
-
-
-
-
-
-
-
-
-
-
107,527
-
41,932
(79,452)
(6,070)
(827)
63,110
135
268
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 41.4 Gross Carrying Values – financial investments subject to impairment (continued)
Policy loans
2020
Policy loans
2019
ECL Staging
ECL Staging
Stage 1
12-month
ECL
Stage 2
lifetime
ECL
Stage 3
lifetime
ECL
POCI
Total
Stage 1
12-month
ECL
Stage 2
lifetime
ECL
Stage 3
lifetime
ECL
POCI
Total
Gross carrying amount, beginning of year
Policy loans originated or purchased
Policy loans fully derecognised
Changes in principal and interest
Effect of exchange rate changes
Gross carrying amount, end of year
151,730
4,464
(4,580)
(216)
(62)
151,336
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
151,730
4,464
(4,580)
(216)
(62)
147,156
5,990
(1,265)
(8)
(143)
151,336
151,730
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
147,156
5,990
(1,265)
(8)
(143)
151,730
136
269
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 41.4 Gross Carrying Values – financial investments subject to impairment (continued)
41.4 Gross Carrying Values – financial investments subject to impairment (continued)
(a) Reinsurance asset – Guggenheim Partners
The reinsurance asset held in the name of Guggenheim Partners is secured by assets held in a
trust. The excess of the fair value of the trust assets over the reinsurance asset is as follows:
Fair value of trust assets
Carrying value of reinsurance asset
2020
2019
472,395
526,146
(438,900)
(458,483)
33,495
67,663
(b) Reinsurance asset – Heritage Life Insurance Company
The reinsurance asset held in the name of Heritage Life Insurance Company is secured by assets
held in a trust. The excess of the fair value of the trust assets over the reinsurance asset is as
follows:
Fair value of trust assets
Carrying value of reinsurance asset
2020
170,191
(142,979)
27,212
2019
168,524
(150,726)
17,798
(c) Government of Barbados debt securities in default – Events in 2018
During the month of June 2018, the Government of Barbados (GOB) suspended all payments to
creditors of its external commercial debt which is denominated primarily in US dollars. Interest
payments due on June 5, 2018 and June 15, 2018 were not made. Principal payments on matured
domestic debt which is denominated in Barbados dollars were suspended and debt-holders were
required to roll over principal balances.
The announcement of the suspended payments was evidence that the financial assets were credit-
impaired and consequently, in June, Sagicor reclassified its GOB debt security holdings to Stage 3 with a
probability of default of 100%. Some GOB debt instruments were purchased more recently and therefore
there were instruments that had not yet experienced a significant increase in credit risk relative to the
initial credit risk that moved from Stage 1 to Stage 3 upon the announcement.
On September 7, 2018, the GOB announced its debt-restructuring programme which is being done in
conjunction with the economic recovery plan and an International Monetary Fund (IMF) programme. The
IMF programme will allow Barbados to reduce its current debt service cost substantially and it is expected
that the manageability of the restructured cash flows will improve the credit quality of the instrument offered
in the debt exchange.
As at September 30, 2018, the negotiations of the new bond were materially completed and on October
1, 2018, Sagicor signed an agreement with the Government of Barbados which outlined the terms of the
debt exchange. In exchange for its debt, the Group has accepted the following securities, the majority of
which are series G:
Series G
A 50-year amortising bond which includes a 15-year grace period on principal payments. The interest
rates on the bond range from 4% per annum for the first 15 years to 8% for years 26 through 50, with
interest capitalisation of 100% for the first five years.
Series C
A 15-year amortising bond with interest rates ranging from 1.0% for the first 3 years to 3.75% for years 5
through to maturity. Interest on these bonds is to be paid quarterly with the first payment due on December
31, 2018. The principal will be repaid in four equal quarterly instalments commencing one year prior to
maturity.
Series D
A 35-year amortising bond with interest rates ranging from 1.5% for the first 5 years to 7.5% for years 16
through to maturity. Interest on these bonds is paid quarterly with the first payment due on November 30,
2018. The principal will be repaid in three equal instalments commencing one year prior to maturity with
the final payment on August 31, 2053.
137
270
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000
41.4 Gross Carrying Values – financial investments subject to impairment (continued)
41.4 Gross Carrying Values – financial investments subject to impairment (continued)
Credit impairment loss and derecognition of original domestic debt securities
GOB Debt Securities
Domestic
debt
External
debt
Total
As a result of the debt restructure outlined above, a credit impairment loss was recognised in the
statement of income. In addition, the domestic debt securities were derecognised since the maturity
profile and interest rates of the replacement debt securities were materially different. In November 2018,
management derived a yield curve from which the initial fair values of the replacement securities were
determined. The yield curve was derived from the Central Bank of Barbados base-line yield curve to
which management applied a further risk premium considering:
•
•
•
•
the GOB credit rating relative to investment grade,
the potential for further default,
the lack of liquidity of the debt, and
the economic uncertainty as Barbados enters a period of severe economic reform and
structural adjustment.
The risk premium derived is summarised in the following table.
Years
0-10
11-21
22-24
25-29
30-50
Spread
(basis points)
25
50
75
100
150
The replacement debt securities are classified as “originated credit-impaired” (POCI).
The consequential movement in the carrying values of GOB debt for the period referred to above is
summarised in the table which follows:
Gross carrying value prior to default
275,805
50,741
326,546
Loss allowance prior to default
(7,890)
(1,645)
(9,535)
Net carrying value prior to default
267,915
49,096
317,011
Accrued interest and other adjustments
2,664
7,975
10,639
Credit impairment loss arising from the default
(75,394)
(16,508)
(91,902)
Carrying value as of October 1, 2018
195,185
40,563
235,748
Accrued interest and other adjustments
Domestic debt not included in restructure
(1)
Adjusted carrying value on restructure
1,014
(49,765)
146,434
Fair value on recognition of replacement securities
147,250
Gain on derecognition of original securities
816
(1) As part of the acquisition of the British American Insurance Company (BAICO) insurance portfolio,
Sagicor received bonds issued by the Government of Barbados of US$46.6 million to support the
policyholder liabilities transferred. In order to safeguard the interest of policyholders, these bonds
were issued with a protective clause in accordance with the sale and purchase agreement approved
by the Supreme Court which prevented the Government of Barbados from restructuring these bonds
at any time. Accordingly, these bonds have been excluded from the Government of Barbados’
restructuring plan, and, have been classified as Stage 1.
138
271
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 41.4 Gross Carrying Values – financial investments subject to impairment (continued)
41.4 Gross Carrying Values – financial investments subject to impairment (continued)
(d) Government of Barbados debt securities in default – Update for 2019
External Debt
The consequential movement in the carrying values of the external debt from the default in 2018
to the restructure in 2019 is summarised as follows:
The negotiations for the exchange of the external debt were completed on December 11, 2019. In
exchange for its debt, the Group has accepted the following:
GOB Debt Securities
-
-
-
Cash in the amount of $264.
Government of Barbados 6.5% 2021 bond offered in exchange for the accrued or past due interest
outstanding (PDI). The interest rate on the bond is 6.5% per annum from October 1, 2019 to, but
excluding February 1, 2021 with interest payable on October 1, 2020 and February 1, 2021. The
final maturity date on this bond is February 1, 2021.
Government of Barbados 6.5% 2029 bond offered in exchange for the principal outstanding. The
interest rate on the bond is 6.5% per annum from October 1, 2019 to, but excluding October 1,
2029 with interest payable each on April 1 and October 1, commencing on April 1, 2020. The final
maturity date on this bond is October 1, 2029.
Fair value of FVOCI Government of Barbados debt securities
The fair value of the restructured instruments was determined with reference to the price at which the
securities were traded at immediately subsequent to the issue of the restructured securities. These
trades were between third parties conducted at arm’s length and the prices at which the trades occurred
was independently verified.
Gross carrying value prior to default in June 2018
Loss allowance prior to default
Net carrying value prior to default
Accrued interest and other adjustments
Credit impairment loss recognised in 2018 arising from the default
Carrying value as of October 3, 2018
Disposals and adjustments recognised in 2019 before restructure
Adjusted carrying value on restructure as of December 11, 2019
Fair value on recognition of replacement securities
Gain on derecognition of original securities
External
debt
50,741
(1,645)
49,096
7,975
(16,508)
40,563
(12,978)
27,585
30,107
2,522
139
272
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000
41.5 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.
(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.
Maturing
within
1 year
323,144
149,355
472,499
260,048
127,054
387,102
Expected discounted cash flows
Maturing
1 to 5
years
1,251,502
18,067
1,269,569
1,004,307
30,549
1,034,856
Maturing
after
5 years
2,578,055
67,189
2,645,244
2,340,298
70,265
2,410,563
Total
4,152,701
234,611
4,387,312
3,604,653
227,868
3,832,521
2020
Actuarial liabilities
Other policy liabilities
Total
2019
Actuarial liabilities
Other policy liabilities
Total
140
273
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 41.5 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
Lease liabilities
Deposit and security liabilities:
Other funding instruments
Customer deposits
Structured products
Securities sold for repurchase
Derivative financial instruments
Bank overdrafts
2020 - Contractual un-discounted cash flows
2019 - 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
372,337
23,543
9,462
355,050
852,836
-
577,998
-
980
56,534
480,314
24,827
38,831
17,106
-
-
-
-
21,091
11,123
22,300
24,347
6
-
-
-
-
449,962
514,980
56,589
418,228
869,948
-
577,998
-
980
347,937
445,894
8,289
397,057
815,410
6,842
514,594
264
6,646
66,481
45,297
25,638
14,110
278
-
-
-
-
22,160
68,286
13,164
19,918
-
-
-
-
-
436,578
559,477
47,091
431,085
815,688
6,842
514,594
264
6,646
Accounts payable and accrued liabilities
248,212
1,852
385
250,449
238,569
1,291
473
240,333
Total financial liabilities
2,440,418
619,464
79,252
3,139,134
2,781,502
153,095
124,001
3,058,598
Off financial statement commitments:
Loan commitments
Non-cancellable lease and rental payments
Investments and Investment management fees
Customer guarantees and letters of credit
Capital commitments
Total off financial statement commitments
Total
141
274
63,831
434
32,526
20,095
15,304
132,190
313
-
2,322
5,417
-
8,052
2,572,608
627,516
628
-
-
9,643
-
10,271
89,523
64,772
434
34,848
35,155
15,304
66,614
485
14,330
14,385
17,931
150,513
113,745
3,289,647
2,895,247
10,999
1,093
-
4,822
9,009
-
24,830
177,925
-
-
11,375
-
78,706
485
19,152
34,769
17,931
12,468
151,043
136,469
3,209,641
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 41.5 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.
2020 – Contractual or expected discounted cash flows
2019 – 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
Debt securities and money market funds
699,719
944,657
3,585,901
5,230,277
1,166,928
774,148
3,124,191
5,065,267
Mortgage loans
Policy loans
Finance loans
Securities purchased for resale
Deposits
Derivative financial instruments
Reinsurance assets: share of actuarial liabilities
Reinsurance assets: other
Premiums receivable
Other assets and accounts receivable
Cash resources
Total
24,138
4,589
72,260
13,756
160,965
207,243
322,881
132,693
187,176
57,110
127,559
37,188
67,237
48,893
59,780
76,876
439,610
-
161
-
-
-
-
291,116
281,444
-
-
2,044
-
189
-
522
-
419,279
151,038
555,384
57,110
127,720
37,188
639,797
49,082
59,780
79,442
439,610
21,172
5,264
38,956
14,343
184,442
286,589
-
2,741
-
331,352
131,926
124,276
-
1,802
-
391,480
151,533
595,307
10,904
62,798
36,891
279,520
311,713
661,811
-
-
2,083
-
189
-
544
-
37,598
57,584
78,513
361,468
10,904
58,255
36,891
70,578
37,409
57,584
75,886
361,468
1,803,664
1,531,237
4,510,806
7,845,707
2,086,781
1,398,380
4,025,993
7,511,154
142
275
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 41.6 Interest rate risk (continued)
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.
The Group manages its interest rate risk by various 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.
41.5 Liquidity risk (continued)
(d) Sale and purchase of held-to-collect debt securities
In September 2020, given its continued focus on mitigating liquidity risks by improving its asset liability
matching, the Group made a decision to purchase long-term bonds issued by the Government of Trinidad
& Tobago (GOTT) in the amount of US$164 million. The transaction was facilitated and financed by the
sale of several shorter-term bonds totalling US$129 million which had been included in the “held to
collect” category in accordance with this IFRS 9 classification, based on the business model for managing
these instruments and their contractual cash flow characteristics. Given the purpose of the transaction,
which was not profit-oriented and which yielded an immaterial gain of US$0.3 million, the new instruments
acquired have been classified as “held to collect” under the business model, which remains unchanged,
and given the contractual terms governing their cash flows.
41.6 Interest rate risk
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.
143
276
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 41.6 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
2020
Exposure
after
5 years
Not
exposed to
interest
Total
Exposure
within
1 year
Exposure
1 to 5
years
Other policy liabilities
13,676
4,103
Investment contract liabilities
366,918
46,710
15,343
445,706
7,691
20,547
66,466
23,894
9,859
10,251
150,366
234,611
82
714
437,604
471,622
1,120
39,609
Notes and loans payable
Lease liabilities
Deposit and security liabilities:
Other funding instruments
Customer deposits
Structured products
Securities sold for repurchase
Derivative financial instruments
Bank overdrafts
Accounts payable and accrued liabilities
352,306
845,326
-
573,540
-
969
826
20,285
14,934
15,721
211
388,523
5
1,387
861,652
-
-
-
-
1,127
-
-
-
-
-
-
-
2,064
575,604
-
11
-
980
248,497
250,450
2019
Exposure
after
5 years
49,277
17,657
71,479
4,232
12,569
-
-
-
-
-
-
Not
exposed to
interest
166,620
88
(446)
5,905
236
3,002
-
Total
227,868
424,340
517,732
35,700
418,047
808,119
6,756
1,548
512,857
264
-
264
6,646
238,185
240,333
8,074
346,154
419,647
6,527
395,444
804,901
6,756
511,309
-
6,646
1,074
3,897
60,441
27,052
19,036
9,798
216
-
-
-
-
1,074
Total
2,176,595
553,412
126,196
404,452
3,260,655
2,506,532
121,514
155,214
415,402
3,198,662
144
277
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 41.6 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
2020
Exposure
after
5 years
Not
exposed
to interest
Total
Exposure
within
1 year
Exposure
1 to 5
years
2019
Exposure
after
5 years
Not
exposed
to interest
Total
Debt securities and money market funds
787,764
889,132
3,472,756
80,625
5,230,277
1,308,182
727,057
2,969,807
60,221
5,065,267
-
93,733
3,925
528,923
57,011
-
65,789
13,380
15,279
-
125,411
2,092
-
-
-
-
-
-
896
1,127
84,246
-
-
660,573
660,573
256,392
127,849
3,365
419,279
5,884
151,038
6,192
4,990
555,384
-
-
-
99
57,110
217
127,720
37,188
37,188
189
48,893
49,082
59,780
59,780
-
77,676
4,400
572,442
10,871
57,918
264
151
105
-
30,276
14,141
15,574
-
2,733
-
-
-
-
-
-
77,419
79,442
2,804
1,179
355,364
439,610
220,494
-
-
371,464
371,464
281,183
131,791
5,665
-
1,802
-
189
-
-
-
2,345
1,201
1,626
33
345
36,627
37,258
57,479
74,530
391,480
151,533
595,307
10,904
62,798
36,891
37,598
57,584
78,513
140,974
361,468
1,681,909
986,799
3,863,378
1,334,397
7,866,483
2,255,307
790,960
3,390,437
784,103
7,220,807
Equity securities
Mortgage loans
Policy loans
Finance loans
Securities purchased for resale
Deposits
Derivative financial instruments
Reinsurance assets: other
Premiums receivable
Other assets and accounts receivable
Cash resources
Total
145
278
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 41.6 Interest rate risk (continued)
41.6 Interest rate risk (continued)
The table below summarises the average interest yields on certain financial investments and financial
liabilities held during the year.
Sagicor Investments Jamaica Limited and Sagicor Bank Jamaica Limited
2020
2019
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 investments carried at FVOCI
and amortised cost:
Debt securities and money market funds
Mortgage loans
Policy loans
Finance loans
Securities purchased for resale
Deposits
Financial liabilities carried at amortised cost:
Investment contract liabilities
Notes and loans payable
Other funding instruments
Deposits
Securities sold for repurchase
a) Sensitivity
4.6%
5.8%
7.5%
11.2%
2.4%
1.0%
2.8%
8.3%
0.9%
1.2%
2.3%
5.1%
6.0%
7.3%
11.6%
6.2%
1.6%
2.6%
8.1%
2.3%
1.3%
3.0%
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 their interest-
bearing instruments have 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
financial assets carried at FVOCI 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
2020
Effect on
net
income
Effect on
TCI
Change in
interest rate
JMD
USD
2019
Effect on
net
income
Effect on
TCI
- 1%
- 0.5%
3,454
48,538
- 1%
- 0.5%
2,501
21,906
+1%
+ 0.5%
(3,454)
(42,924)
+1%
+ 0.5%
(2,501)
(30,360)
41.7 Foreign exchange risk
The Group is exposed to foreign exchange risk as a result of fluctuations in exchange rates as its
financial assets and liabilities are denominated in 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.
146
279
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 41.7 Foreign exchange risk (continued)
2020
US$000 equivalents of balances denominated in
Barbados $
Jamaica $
Trinidad $
Eastern
Caribbean $
US $
Other
Currencies
Total
ASSETS
Financial investments (1)
Reinsurance assets (1)
Receivables (1)
Cash resources
Total monetary assets
Other assets (2)
Total assets of continuing operations
LIABILITIES
Actuarial liabilities
Other policy liabilities (1)
Investment contracts
Notes and loans payable
Lease liabilities
Deposit and security liabilities
Other liabilities / Retirement benefit liabilities
Accounts payable and accruals
Total monetary liabilities
Other liabilities (2)
Total liabilities of continuing operations
Net position
362,242
1,296,881
575,067
164,029
4,065,554
114,223
6,577,996
1,805
21,195
29,335
414,577
202,633
617,210
10,129
57,964
98,249
1,463,223
416,232
1,879,455
441,850
330,888
81,774
30,571
21,686
439
25
16,011
45,469
637,825
20,207
658,032
(40,822)
54,671
74,781
51,948
19,520
694,015
26,019
88,415
1,340,257
45,733
1,385,990
493,465
1,206
12,654
42,160
631,087
87,267
718,354
456,668
32,132
175,492
-
427
19,273
13,065
19,072
716,129
14,165
730,294
(11,940)
1,218
13,213
15,489
193,949
19,912
213,861
82,634
11,893
55,993
-
4
15,184
(57)
4,426
170,077
4,959
175,036
38,825
673,676
31,103
203,805
4,974,138
692,692
5,666,830
2,713,759
40,128
91,151
397,988
18,452
1,080,462
576
87,339
4,429,855
35,791
4,465,646
1,201,184
845
3,915
50,572
169,555
1,048
170,603
126,902
14,013
9,616
-
767
17,800
10,928
5,730
185,756
2,338
188,094
(17,491)
688,879
140,044
439,610
7,846,529
1,419,784
9,266,313
4,152,701
234,611
437,604
471,622
39,609
1,826,759
66,542
250,451
7,479,899
123,193
7,603,092
1,663,221
(1) Monetary balances only
(2) Non-monetary balances, income tax balances and retirement plan assets
147
280
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000
41.7 Foreign exchange risk (continued)
2019
US$000 equivalents of balances denominated in
Barbados $
Jamaica $
Trinidad $
Eastern
Caribbean $
US $
Other
Currencies
Total
ASSETS
Financial investments (1)
Reinsurance assets (1)
Receivables (1)
Cash resources
Total monetary assets
Other assets (2)
Total assets of continuing operations
LIABILITIES
Actuarial liabilities
Other policy liabilities (1)
Investment contracts
Notes and loans payable
Lease liabilities
Deposit and security liabilities
Other liabilities / Retirement benefit liabilities
Accounts payable and accruals
Total monetary liabilities
Other liabilities (2)
Total liabilities of continuing operations
Net position
341,196
1,344,085
474,248
150,089
3,879,177
125,385
6,314,180
6,739
22,843
21,158
391,936
199,216
591,152
438,452
80,640
31,632
14,436
2,764
1,276
11,901
40,699
621,800
18,749
640,549
(49,397)
3,774
69,362
91,584
1,508,805
477,784
1,986,589
411,439
55,802
81,800
104,402
23,251
684,219
25,238
116,864
1,503,015
32,529
1,535,544
451,045
4,767
10,309
26,510
515,834
90,844
606,678
366,143
32,844
182,907
-
2,317
1,087
12,871
18,115
616,284
15,199
631,483
(24,805)
2,146
15,746
9,658
177,639
20,828
198,467
79,372
12,187
53,405
-
128
681,582
14,785
165,368
4,740,912
425,766
5,166,678
2,194,599
31,725
65,321
398,894
6,392
15,316
1,033,146
46
1,902
2,294
57,389
162,356
3,789,760
5,079
167,435
31,032
42,210
3,831,970
1,334,708
401
5,023
47,190
177,999
1,308
179,307
114,648
14,670
9,275
-
848
17,645
7,445
5,364
169,895
2,215
172,110
7,197
699,409
138,068
361,468
7,513,125
1,215,746
8,728,871
3,604,653
227,868
424,340
517,732
35,700
1,752,689
59,795
240,333
6,863,110
115,981
6,979,091
1,749,780
(1) Monetary balances only
(2) Non-monetary balances, income tax balances and retirement plan assets
148
281
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000
41.7 Foreign exchange risk (continued)
(a) Sensitivity
41.7 Foreign exchange risk (continued)
JMD currency risk
The Group is exposed to currency risk in its operating currencies for which 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, 2020 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 27).
Amounts denominated in
JMD
USD
Total
amounts
Effect of a 10%
depreciation
Financial position:
Assets
Liabilities
Net position
Represented by:
2,637,242
1,139,538
3,776,780
1,746,457
982,566
2,729,023
890,785
156,972
1,047,757
•
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 is 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:
488,376
89,822
578,198
(33,063)
(204,982)
(6,035)
(211,017)
(196,552)
(13,693)
(210,245)
(42,949)
43,893
-
(42,949)
70,094
113,987
Currency risk relating to the future cash flows of monetary balances
Currency risk of reported results of foreign operations
(263,725)
(174,646)
(89,079)
(89,079)
20,498
19,655
4,295
11,385
15,775
(4,390)
11,385
The operating currency for which value noticeably fluctuates 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.
149
282
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000
41.8 Fair value of financial instruments
41.8 Fair value of financial instruments (continued)
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.
(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 assets designated as FVTPL include mortgage loans, debt securities and equities for which the
full income and capital returns accrue to holders of unit linked liabilities. These assets are valued with
inputs other than observable market data.
The techniques and methods described in the preceding section (ii) for non-traded financial assets and
liabilities may also be used in determining the fair value of Level 3 instruments.
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.
150
283
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 41.8 Fair value of financial instruments (continued)
(a) Financial instruments carried at fair value
FVOCI securities:
Debt securities and money market funds
Equity securities
FVTPL investments:
Debt securities
Equity securities
Derivative financial instruments
Mortgage loans
Total assets
Total assets by percentage
FVTPL investment contracts:
Unit linked deposit administration liabilities
FVTPL deposit and security liabilities:
Structured products
Derivative financial instruments
Total liabilities
Total liabilities by percentage
151
284
2020
2019
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
428,362
3,183,555
498
513
428,860
3,184,068
-
43
43
3,611,917
1,054
3,612,971
488,832
3,184,589
754
491
489,586
3,185,080
21,160
347,056
194,394
286,545
-
-
-
-
133,320
25,918
37,188
26,065
348,874
659,519
37,188
26,065
368,216
480,939
222,491
1,071,646
797,076
3,665,007
222,534
4,684,617
17%
78%
5%
100%
-
-
-
-
-
-
-
-
-
-
-
-
154,442
154,442
-
-
-
-
-
-
154,442
154,442
100%
100%
0%
-
46
46
121,265
22,440
36,627
28,933
209,265
209,311
3,673,421
1,291
3,674,712
243,107
370,173
36,891
28,933
679,104
4,353,816
104,123
262,344
264
-
366,731
3,551,811
81%
5%
100%
-
-
264
264
264
0%
162,385
162,385
6,756
-
6,756
6,756
264
7,020
169,141
169,405
100%
100%
17,719
85,389
-
-
103,108
592,694
14%
-
-
-
-
-
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000
41.8 Fair value of financial instruments (continued)
For Level 3 instruments, reasonable changes in inputs which could be applied to the valuation of FVOCI securities would affect other comprehensive income. Reasonable changes in inputs which could be applied to
the valuations of investments designated at FVTPL 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.
Level 3 Financial Instruments
2020
FVOCI
investments
FVTPL
investments
Derivative
instruments
Total
assets
2019
Total
assets
FVTPL
investment
contracts
2020
FVTPL
structured
products
Total
liabilities
2019
Total
liabilities
Balance, beginning of year
46
Additions
Issues
Settlements
Fair value gains / (losses) recorded in net
investment income
Fair value gains / (losses) recorded in
interest expense
Disposals and divestitures
Transfers (out of) Level 3 classification(1)
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
-
-
-
-
-
-
-
(3)
43
-
-
172,638
50,682
36,627
22,848
209,311
73,530
140,433
87,418
-
-
-
-
-
-
-
-
162,385
6,756
169,141
-
19,792
(26,271)
-
-
(6,884)
-
19,792
(33,155)
(1,206)
7,677
6,471
35,633
-
-
-
-
-
-
-
(1,527)
156
(1,371)
(26,017)
(11,019)
225
(29,964)
-
-
(55,981)
(11,019)
222
(53,424)
-
(749)
-
-
63
185,303
37,188
222,534
209,311
154,442
(1,228)
14,748
13,520
15,627
-
-
-
-
-
(1,527)
-
-
(28)
-
-
-
-
-
35
154,442
-
213,792
-
21,255
(68,192)
-
4,806
-
-
(2,520)
169,141
-
(1,527)
2,488
(1) In the course of reviewing the classification of fair value assets, the Group determined that fixed income assets previously classified as Level 3 would be more appropriately disclosed as Level 2. The fair value of
these assets is determined by third party investment brokers based on observable market inputs.
152
285
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000
41.8 Fair value of financial instruments (continued)
(b) Financial instruments carried at amortised cost
41.8 Fair value of financial instruments (continued)
(b) Financial instruments carried at amortised cost (continued)
736,175
1,940,328
2,676,503
Investment contracts:
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 is set out in the following tables.
As of December 31, 2020
Financial assets at amortised cost
Level 1
Level 2
Level 3
Total
Debt securities
Mortgage loans
Policy loans
Finance loans
Securities purchased for resale
-
-
-
-
-
-
736,175
753,924
1,490,099
-
-
-
-
390,938
390,938
177,813
177,813
560,543
560,543
57,110
57,110
Financial liabilities at amortised cost
Level 1
Level 2
Level 3
Total
-
-
-
117,046
117,046
169,002
169,002
286,048
286,048
395,833
83,006
478,839
348,559
38,647
387,206
1,233
866,084
867,317
Investment contracts:
Deposit administration liabilities
Other investment contracts
Notes and loans payables
Deposit and security liabilities:
Other funding instruments
Customer deposits
Securities sold for repurchase
153
286
-
-
-
-
-
-
-
-
-
As of December 31, 2019
Financial assets at amortised cost
Level 1
Level 2
Level 3
Total
Debt securities
Mortgage loans
Policy loans
Finance loans
Securities purchased for resale
-
-
-
-
-
-
752,806
609,167
1,361,973
-
-
-
-
362,341
181,902
602,512
10,904
362,341
181,902
602,512
10,904
752,806
1,766,826
2,519,632
Financial liabilities at amortised cost
Level 1
Level 2
Level 3
Total
Deposit administration liabilities
Other investment contracts
Notes and loans payable
Deposit and security liabilities:
Other funding instruments
Customer deposits
Securities sold for repurchase
-
-
-
-
-
-
-
-
-
-
-
-
113,767
149,928
263,695
113,767
149,928
263,695
332,893
200,958
533,851
-
1,121
-
418,932
810,594
512,857
418,932
811,715
512,857
1,121
1,742,383
1,743,504
334,014
2,207,036
2,541,050
18,226
557,378
575,604
(c) Equity price risk
368,018
1,462,109
1,830,127
763,851
1,831,163
2,595,014
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.
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 41.8 Fair value of financial instruments (continued)
41.9 Derivative financial instruments and hedging activities (continued)
Sensitivity
The contract or notional amounts of derivatives and their fair values are set out in the table which follows.
The sensitivity to fair value changes in equity securities arises from those instruments which are
not held under the unit linked model. The table below sets out the source markets of such equity
securities and the effects of an across the board 20% change in equity prices on income before tax
(IBT) as at December 31, 2020.
Listed on Caribbean stock exchanges and markets
Listed on US stock exchanges and markets
Listed on other exchanges and markets
Carrying value
Effect of 20%
change
on IBT
37,854
396,451
39,145
473,450
7,571
79,290
7,829
94,690
2020
Derivatives held for trading:
Equity indexed options
2019
Derivatives held for trading:
Equity indexed options
(i) Equity indexed options
Contract /
notional
amount
Fair value
Assets
Liabilities
756,586
37,188
-
807,020
36,891
264
41.9 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.
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 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.
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. 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.
154
287
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 41.10 Offsetting Financial Assets and Liabilities
The Group is eligible to present certain financial assets and financial liabilities on a net basis in the statement of financial position pursuant to criteria described in note 2.13. The following table provides information on
(i) the impact of offsetting in the consolidated statement of financial position; (ii) the financial impact of netting for instruments which are subject to enforceable master-netting arrangements or similar agreements, and
(iii) cash and financial instrument collateral which can be potentially offset.
Gross amounts of
financial assets
Gross amounts set
off in the statement
of financial position
Net amounts of
financial assets as
presented in the
statement of financial
position
Impact of master
netting arrangements
Impact of offsetting
financial instrument
collateral
Net amount
2020
ASSETS
Non-derivative financial investments
Derivative financial instruments
LIABILITIES
7,201,381
37,188
7,238,569
Non-derivative deposit and security liabilities
1,826,759
2019
ASSETS
Non-derivative financial investments
Derivative financial instruments
LIABILITIES
Non-derivative deposit and security liabilities
Derivative financial instruments
6,648,753
36,891
6,685,644
1,752,425
264
1,752,689
155
288
-
-
-
-
-
-
-
-
-
-
7,201,381
37,188
7,238,569
(557,378)
-
(557,378)
(384,337)
-
(384,337)
6,259,666
37,188
6,296,854
1,826,759
(557,378)
(348,559)
920,822
6,648,753
36,891
6,685,644
1,752,425
264
1,752,689
(512,857)
(264)
(513,121)
(512,857)
(264)
(513,121)
(396,952)
-
(396,952)
(386,981)
-
(386,981)
5,738,944
36,627
5,775,571
852,587
-
852,587
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 42 INSURANCE RISK – PROPERTY & CASUALTY CONTRACTS
42.2 Claims risk
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 and Advantage General Insurance are the principal insurers within the
Group's continuing operations that issue property and casualty insurance contracts. They operate
mainly in Barbados, Trinidad and Tobago and Jamaica.
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. 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.
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 is refined over time until final settlement occurs. In addition,
from the pricing methodology used for risks, it is assumed that at any 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 very many
claims. Concentration of risk is mitigated through risk selection, line sizes, event limits, quota share
reinsurance and excess of loss reinsurance.
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.
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.
156
289
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000
42.2 Claims risk (continued)
Total insurance coverage
2020
2019
Property
Motor
Gross
10,355,536
9,918,290
Net
Gross
Net
1,829,004
1,685,857
980,814
739,197
985,202
628,383
Accident and liability
Gross
3,444,904
3,308,670
Total
Net
3,168,727
3,064,125
Gross
14,781,254
14,212,162
Net
5,736,928
5,378,365
Each insurer assesses its exposures by modelling realistic disaster scenarios of potential catastrophic
events. Claims arising from windstorms, earthquakes and floods, and events triggering multi-coverage
corporate liability claims, are potential sources of catastrophic losses arising from insurance risks.
Realistic disaster scenarios modelled for 2020 are presented below and result in estimated gross and
net losses.
Sagicor General Insurance (SGI)
A Barbados and St. Lucia windstorm having a 200-year return period
257,408
5,000
Gross loss Net loss
Advantage General Insurance Co. Limited (AGI)
(subsidiary of Sagicor Group Jamaica Ltd)
A Jamaican windstorm having a 250-year return period for properties
110,616
500
Gross loss Net loss
The occurrence of one or more catastrophic events in any year may have a material impact on the
reported net income of the Group.
157
290
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 42.2 Claims risk (continued)
Development claim liabilities
In addition to sensitivity analysis, the development of insurance liabilities provides a measure of SGI’s and AGI's ability to estimate the ultimate value of claims. The table below illustrates how SGI’s and AGI's estimate
of the ultimate claims liability for accident years 2015 - 2020 has changed at successive year ends, up to 2020. Updated unpaid claims and adjustment expenses (ULAE) and IBNR estimates in each successive year,
as well as amounts paid to date are used to derive the revised amounts for the ultimate claims liability for each accident year, used in the development calculations. The most recent estimate is then reconciled to the
liability recognised in the statement of financial position.
Gross
Estimate of ultimate claims incurred:
At the end of financial reporting year
One year later
Two years later
Three years later
Four years later
Five years later
2015
2016
2017
2018
2019
2020
Total
40,662
39,211
40,422
38,426
38,260
38,726
37,074
41,534
40,627
41,338
41,351
52,834
58,785
60,154
60,630
43,895
45,367
45,520
40,980
39,833
31,603
Current estimate of cumulative claims
38,726
41,351
60,630
45,520
39,833
31,603
257,663
Cumulative payments to date
Liability recognised
Liability in respect of prior years and ULAE
Total liability (note 14.2)
158
(35,782)
(37,889)
(55,196)
(37,790)
(28,578)
(14,678)
(209,913)
2,944
3,462
5,434
7,730
11,255
16,925
47,750
11,134
58,884
291
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 42.2 Claims risk (continued)
Development claim liabilities (continued)
The reinsurers’ share of the amounts is set out below in the following table.
Reinsurance
Estimate of reinsurance recoveries:
At the end of financial reporting year
One year later
Two years later
Three years later
Four years later
Five years later
Current estimate of reinsurance recoveries
Cumulative reinsurance receipts to date
Recoverable recognised
Recoverable in respect of prior years
Total recoverable from reinsurers (note 14.2)
2015
2016
2017
2018
2019
2020
Total
14,654
13,892
12,236
11,561
11,401
11,076
11,076
(10,061)
1,015
15,354
15,578
12,725
12,591
12,329
13,200
16,883
15,093
15,141
6,075
6,795
4,399
2,625
3,349
8,025
12,329
(11,447)
882
15,141
(14,141)
1,000
4,399
(4,252)
147
3,349
(2,517)
832
8,025
(3,175)
4,850
54,319
(45,593)
8,726
2,316
11,042
159
292
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 42.3 Reinsurance risk
42.3 Reinsurance risk (continued)
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 :
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 programmes used by Sagicor General and Advantage
General for their property insurance class are summarised in the following table.
•
•
•
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 Sagicor General Insurance - currency amounts in thousands
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.
Property
• maximum retention of $4,500 for a single event;
• maximum retention of $5,000 for a catastrophic event;
•
•
quota share retention to maximum of 20% in respect of treaty limits;
quota share retention is further reduced to a maximum of $375 per event.
The 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.
Type of risk
Retention by Advantage General Insurance Co. Limited - currency
amounts in thousands
Property
• maximum quota share treaty retention of $700 for a single event;
• maximum excess of loss retention of $500 for a catastrophic event;
•
quota share retention to maximum of 10% in respect of treaty limits.
•
quota share retention is further reduced to a maximum of $500 per event.
The effects of reinsurance ceded are disclosed in notes 14, 24 and 25 and information on reinsurance
balances is included in notes 10, 20 and 41.
160
293
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 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.
• Hurricane and earthquakes with a 250-year return period affecting Jamaica.
The reinsurance recoveries derived from the foregoing are assigned internal credit ratings as follows:
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
Exposure
$000
Exposure
%
432,775
467,395
48%
52%
-
-
-
-
-
-
-
-
-
-
-
-
TOTAL
900,170
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. 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 occurrence 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).
161
294
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 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.
2020 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
28,099
87,901
36,957
23,618
47
986
2,866
99
1,105
33
27,113
85,035
36,858
22,513
14
176,622
5,089
171,533
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.
2020
2019
Liability
5% increase
in liability
Liability
5% increase
in liability
40,874
4,260
45,134
2,044
213
2,257
41,573
5,252
46,825
2,079
263
2,342
Actuarial liability
Claims payable
162
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.
(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 pay-out 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 pay-out 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.
295
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000
43.2 Contracts with investment returns (continued)
Total liability under annuity contracts provide a good measure of longevity risk exposure.
Total liability
under annuity contracts
Individual
contracts
Group
contracts
Individual
contracts
Group
contracts
2020
2019
Barbados
Jamaica
Gross
Net
Gross
Net
Trinidad & Tobago
Gross
Net
USA
Total
Net
Gross
Net
Gross
Net
132,153
132,153
808
808
234,514
234,514
60,885
60,885
2,133,520
1,480,655
2,561,880
1,909,015
51,697
51,697
366,268
366,268
-
-
84
84
18,541
5,641
436,590
423,690
131,757
131,757
875
875
166,644
166,644
53,752
53,716
1,663,194
982,045
2,016,222
1,335,037
48,771
48,771
359,566
359,566
-
-
31
31
19,682
5,845
428,050
414,213
4,541,510
1,348,210
4,386,200
1,260,085
Other Caribbean
Gross
43.2 Contracts with investment return s (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
very many 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
2020
2019
Barbados
Jamaica
Gross
Net
Gross
Net
4,273,518
1,299,099
4,113,950
1,204,619
9,972,092
7,014,650
9,571,001
7,032,326
9,820,069
6,912,347
9,438,735
6,929,672
Trinidad & Tobago
Gross
3,936,798
2,593,200
3,738,534
2,498,258
Net
3,358,690
2,424,954
3,159,462
2,348,251
Other Caribbean
Gross
8,752,868
1,554,039
8,376,550
1,526,610
USA
Total
Net
Gross
Net
Gross
Net
7,801,984
1,371,882
7,414,626
1,338,472
8,507,242
3,728,123
32,723
29,497
7,414,643
3,356,037
33,354
32,466
35,710,510
12,542,822
33,486,928
12,350,633
28,982,384
12,037,779
27,482,810
11,853,480
163
296
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 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 is 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 $88
Health insurance contracts with groups
Retention per individual to a maximum of $150
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 $250
43.4 Sensitivity arising from the valuation of actuarial liabilities
The estimation of actuarial liabilities is sensitive to the assumptions made. 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)).
164
297
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 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)
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 Life USA
segment
2020
2019
2020
2019
2020
2019
Base net actuarial
liability
1,136,488 1,038,694
345,376
359,954
1,734,757 1,212,162
Scenario
Increase in net liability
Increase in net liability
Increase in net liability
Worsening rate
of lapse
202,878
177,552
87,972
78,539
25,481
18,430
High interest rate
(94,942)
(97,634)
(112,512) (116,591)
(99,495)
(72,194)
Low interest rate
199,405
163,321
83,857
97,115
123,193
83,064
Worsening mortality /
morbidity
69,512
42,585
48,908
56,942
16,304
16,980
Higher expenses
39,156
20,419
17,066
20,894
2,630
2,908
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
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
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.
Low interest Assumed decreases in
rate
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.
For life insurance and deferred
annuity products,
the base
assumed rates were increased
annually by 3% cumulatively
over the next 5 years. For pay-
out 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.
165298
.
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000
43.5 Financial Condition Testing
44 FIDUCIARY RISK
The Financial Condition Testing (FCT) is a technique used by the Group to assess the adequacy of the
insurer’s financial condition by stress-testing the future solvency of the company under different future
adverse economic and experience scenarios. The FCT assesses the impact over the next 5 years on
the insurer’s financial condition under specific scenarios. The period of 5 years and the specific
scenarios have been selected by the Appointed Actuary as per the FCT guidance from the Canadian
Institute of Actuaries.
The financial position of an insurer is reflected by the amounts of assets, liabilities and equity in the
financial statements at a given date, such as at the end of its most recent fiscal year. 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. The analysis projects the expected future financial position under these scenarios over the
FCT period.
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.
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.
2020
2019
Pension and insurance fund assets
2,145,393
2,469,920
Mutual fund, unit trust and other investment fund assets
1,375,284
1,665,672
3,520,677
4,135,592
45 STATUTORY RESTRICTIONS ON ASSETS
The purpose of the FCT is:
•
•
•
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.
Insurers are registered to conduct insurance business under legislation in place in each relevant
jurisdiction. This legislation may prescribe 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.
An FCT is conducted periodically by some insurers within the Group.
To satisfy the above requirements, invested assets and cash totalling $1,521,634 (2019 - $1,431,443)
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.
166
299
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 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 interests’ equity
Notes and loans payable (debt)
2020
2019
1,109,780
1,154,051
546,823
471,622
594,506
517,732
Total financial statement capital resources
2,128,225
2,266,289
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 252.2% (2019 – 253.2%). 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 and not necessarily applicable to each individual segment,
insurance subsidiary or insurance subsidiary branch.
The Group complies with all regulatory capital requirements.
167
300
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 46.2 Capital adequacy (continued)
(i) Sagicor Life Jamaica
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, 2020 and 2019, this ratio was 183.1%
and 179.4% 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 a surplus of at least 300% of the RBC amount, and
the company has maintained these ratios as of December 31, 2020 and 2019 respectively.
46.2 Capital adequacy (continued)
(b) Sagicor Investments Jamaica Limited and Sagicor Bank Jamaica Limited
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 2020 and 2019, all applicable
externally imposed capital requirements were complied with.
Actual capital base to risk-weighted assets
Required capital base to risk-weighted assets
Sagicor
Investments
Jamaica
Sagicor Bank
Jamaica
2020
2019
2020
2019
15%
10%
20%
10%
14%
10%
14%
10%
168
301
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 46.3 Financial covenants (continued)
(1)
See note 1, for further details on the arrangement agreement with Alignvest Acquisition II
Corporation. On December 20, 2019, the Group made an Offer to purchase for cash, any and all
of the outstanding $320.0 million aggregate principal amount of 8.875% Senior Notes due 2022.
On January 27, 2020, $1.9 million notes were tendered, purchased and cancelled.
46.3 Financial covenants
(a) 8.875% Senior Notes
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
Limitation of indebtedness
Limitation on restricted
payments covenant
DESCRIPTION
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%.
Limitation on restricted
distributions from subsidiaries
This covenant limits the subsidiaries from creating encumbrances
or restrictions on their ability to make distributions to the Parent.
Limitation on sale of assets of
subsidiary stock
This covenant restricts the Group from selling material subsidiary
assets without using the proceeds to either reinvest in the
business or offer to buy back bondholders.
Limitation on affiliate
transactions
Change in control (1)
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.
At December 31, 2020, the Group was in compliance with the specified covenants.
169
302
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 46.3 Financial covenants (continued)
46.3 Financial covenants (continued)
(b) Unsecured bond, 5.50% and 6.25% tranches due 2022
(c) Sagicor General Insurance Inc 3.50% loan agreement
Under a trust deed dated September 26, 2019 entered into by the Group on the issue of these
securities, the Group has to comply with a number of covenants as follows:
COVENANT
DESCRIPTION
COVENANT
Change in control
Limitation on indebtedness
Limitation on indebtedness
Restrictions on dividends
Restrictions on dealing with
affiliates
DESCRIPTION
Under a change in control, each holder has the right to require
the issuer to purchase all or any part of the bonds.
SFCL will not create, or permit to subsist, any security interest
on any of its present or future assets without the prior consent
in writing of the Trustee.
SFCL will not seek to incur any additional indebtedness where
the incurrence of additional indebtedness will give rise to any
breach of the Financial Covenants, except with the prior written
consent of the Trustee.
Financial Covenants
SFCL will maintain the following ratios:
(i)
(ii)
Minimum Interest Services Coverage Ratio
of 1.5.
Maximum Debt to Equity Ratio of 75%
Except with the prior written consent of the Trustee, SFCL will
not pay any dividends while SFCL is in breach of any of the
financial covenants.
The covenant restricts affiliate transactions of the Group.
At December 31, 2020, the Group was in compliance with the specified covenants.
Debt service coverage ratio
The guarantor subsidiary, Sagicor Life Inc, must maintain a
minimum debt service coverage ratio of 1.5 to 1.0.
Effective net worth
Total funded debt to net worth
The subsidiary net worth must not fall below US$15.0 million.
The total funded debt to net worth ratio of the subsidiary must
not exceed 1.0 to 1.0.
At December 31, 2020, the Group was in compliance with the specified covenants.
(d) 4.90% USD mortgage notes due 2025
COVENANT
DESCRIPTION
Debt service coverage ratio
The mortgage note contains a minimum debt service coverage
ratio of 1.25 and, upon failing to meet the debt service coverage
ratio, substantially all the cash flows from the hotel must be
directed to accounts controlled by the lender.
As at December 31, 2020, the subsidiary was not in compliance
with the debt service coverage ratio covenant.
170
303
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 46.3 Financial covenants (continued)
(e) 4.75% USD mortgage notes due 2021
COVENANT
DESCRIPTION
Interest coverage ratio, Debt to
EBIDTA ratio and a maximum
loan to security value ratio.
The company must maintain a minimum interest coverage of
1.35. The company was not compliant at year end.
46.3 Financial covenants (continued)
(f)
9.00% JMD mortgage notes due 2048
8.00% JMD mortgage notes due 2021
10.00% JMD mortgage notes due 2026
3.26%/3.61% mortgage notes due 2026
The company must maintain a maximum ratio of 4.75 for total
debt to EBITDA. In 2020, the subsidiary failed to meet its debt
covenants of minimum interest coverage and maximum debt to
earnings before interest, taxes, depreciation and amortisation
(EBITDA) ratio.
There were no penalties for the breaches.
The company must maintain a maximum loan to security value
ratio of 75%. The company was compliant at year end.
COVENANT
DESCRIPTION
Interest coverage
maximum debt to equity ratio
ratio and
The mortgage notes contain a minimum interest coverage of 1.5
which is EBITDA divided by interest charges. The company
was not compliant at year end.
A maximum debt to equity ratio of 1.8 is to be maintained. The
company was compliant at year end.
As a result of the breach of covenant, the notes payable have
been classified as “On demand or within 1 year” (see note 41.5).
171
304
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 47 RELATED PARTY TRANSACTIONS
47 RELATED PARTY TRANSACTIONS (continued)
Other than as disclosed in notes 5, 9, 12, 16, 27, 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:
Salaries, directors’ fees and other short-term benefits
31,325
26,174
2020
2019
Optional contract benefit
Equity-settled contract benefits (note 1)
Equity-settled compensation benefits
Pension and other retirement benefits
-
-
7,067
1,369
39,761
1,390
5,994
7,289
1,341
42,188
Balance, beginning of year
Advances
Repayments
Effects of exchange rate changes
Balance, end of year
Mortgage loans
Other loans
Total loans
4,095
554
(1,230)
(25)
3,394
2,690
242
6,785
796
(2,084)
(3,314)
(168)
680
(193)
4,074
Interest rates prevailing during the year
3.75% - 7.50%
4.00% - 19.95%
Investment advisory and management advisory agreement.
that Alignvest or
On April 10, 2019, Sagicor Financial Corporation Limited (Sagicor) entered into an Investment Advisory
and Management Agreement with Alignvest Management Corporation (Alignvest) for the provision of
investment advisory services and/or discretionary investment management services in respect of
Sagicor’s and its subsidiaries’ assets. Under this agreement, Alignvest was appointed to provide
specified advisory services and has a right of first offer to provide other investment advisory services or
investment management services to Sagicor and its subsidiaries where Sagicor wishes to externalise
these services, provided
its affiliates have clearly defined and relevant
core competencies. Any such services would be provided by Alignvest or its affiliates on arm’s length
commercial terms. As consideration for services rendered and performed under the agreement,
Alignvest or its applicable affiliates will receive a fee equal to $2.5 million, reduced annually for any fees
paid to Alignvest or its affiliates with respect to investment management services or other services
provided. The Agreement commenced on December 5, 2019, when Sagicor completed its proposed
transaction between Alignvest Acquisition II Corporation and will continue for an initial term of three
years unless terminated for cause. On December 5, 2019, Alignvest gave notice that it had assigned
certain rights and obligations under the agreement to High Vest Partners Inc, a joint venture between
Alignvest and KGT Investments, LLC.
Sagicor Real Estate X-Fund Group – disposal of investment property.
On September 22, 2020, Sagicor Real Estate X-Fund Group sold an investment property, Jewel
Grande Montego Bay Resort and Spa, to Sagicor Pooled Investment Funds Limited, a fund managed
by Sagicor Life Jamaica Limited. The terms of sale were established by independent valuation of the
property and the transaction resulted in a loss to the Group of US$2.9 million.
172
305
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000
48 LEASE LIABILITIES
The lease liabilities recognised are as follows:
Current lease liabilities
Non-current lease liabilities
December 31, 2020
December 31, 2019
8,556
31,053
39,609
7,748
27,952
35,700
The lease liabilities relate to the following right-of-use assets:
Land & buildings
Office furnishing, equipment & vehicles
Total right-of-use assets(1)
(1) Included in property, plant and equipment
December 31, 2020
December 31, 2019
30,424
527
30,951
29,058
311
29,369
49 DEVELOPMENTS DURING THE YEAR
On March 11, 2020, the World Health Organisation declared the emergence of COVID-19 coronavirus,
a global pandemic. This pandemic has affected many countries and all levels of society and has affected
our economic environment in significant ways. The COVID-19 situation continues to evolve and many
of the markets in which Sagicor operates have implemented public health safety protocols. At various
stages during the year, most Caribbean countries have shut down air and sea traffic. Similar procedures
have also been applied in the United States, Canada and elsewhere. The COVID-19 pandemic has
caused significant economic and financial turmoil and uncertainty, both in the U.S. and around the world,
and has fuelled concerns that have led to a global recession.
The pandemic has also caused a contraction in the economies in which the Group operates. The spread
of the virus, which resulted in widespread travel restrictions and cancellations, has had a significant,
negative effect on global travel and the demand for entertainment and related products offered in key
markets in which the Group holds investments. Declines in global demand for oil and gas impacted
prices and also constrained the Group’s customers.
Investment portfolios have been impacted by the widening of credit spreads which resulted in significant
fall-off in asset prices, causing significant reduction in investment income and portfolio management fee
income. While international markets have largely recovered, those in the Caribbean remain depressed.
Income has also been negatively affected by waivers and reduction of fees associated with loans, in
addition to the decline in loan volumes due to contraction in economic activity.
The Group, on recognising that certain of its customers were experiencing financial difficulties, offered
extensions of moratoriums, payment deferrals and other accommodative measures to several clients on
a case by case basis. By offering some reprieve in these areas, the Group noted positive effects on the
delinquency levels of its borrowing and insurance portfolios. Despite these measures, the Group has
made significant adjustments to ECLs to recognise the increased credit risk associated with the fall-out
in relation to its borrowing and investment portfolios, driven by the downturn in the economy.
173
306
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 49 DEVELOPMENTS DURING THE YEAR (continued)
50 SUBSEQUENT EVENTS
In response to the changing, and increasingly uncertain, economic environment, the Sagicor Group
has performed reviews and updated its assumptions, including those related to asset impairment,
where necessary. Changes in the economic outlook data have been reported in note 41.3 on credit
risk and impairment. As part of this process, goodwill was reviewed and stress testing was
performed on assessment assumptions. As a result of this exercise, goodwill has been impaired
relating to the subsidiary, Sagicor General Insurance Inc (note 8.2). Impairment related to the
investment in Playa is detailed in note 6.2 and the Group has revalued downwards certain of its hotel
properties. Management considered the potential impact of the pandemic on actuarial reserves but
concluded that it had not had a significant impact on actuarial assumptions and the valuation of
actuarial liabilities of the Group.
The Group continues to monitor the health crisis and the economic impact on its investments, actuarial
reserves, customer and trading partners, and the effect on the industries in which it operates. While
global vaccination programmes should allow the world, and more particularly the markets in which the
Group operates, to gradually return to normal, this will take time. As a result, the pandemic may
continue to negatively impact levels of new business and the level of policyholder lapses and
surrenders, as well as loan and credit card delinquencies.
i.
On January 15, 2021, Sagicor Group Jamaica (SGJ) completed the disposal of its 14.9%
equity interest (20,000,000 ordinary shares) in Playa for a net cash consideration of US$96
million. The sale of shares took place in a public offering of 11,499,000 ordinary shares held
by the Group, concurrent to an underwritten public offering of 25,000,000 new shares by Playa
at a public offering price of US$5.00 per share. These transactions were simultaneous with
an assignment of an additional 8,501,000 ordinary shares in Playa held by SGJ to Sagicor
Financial Corporation Limited, for cash consideration, at a price equal to the price offered
through the public offering, less commission expenses associated with the public offering.
Following this transaction, SFCL holds 10,001,000 shares directly in Playa and the Group’s
reduced interest in Playa will result in the investment being designated as a FVTPL
investment.
ii.
Subsequent to the year end, the Board of Directors of Sagicor Financial Company Ltd.
approved and declared a quarterly dividend of US$0.05625 per common share payable on
April 21, 2021 to the shareholders of record at the close of business on March 31, 2021.
174
307
Notes to the Financial Statements SAGICOR FINANCIAL COMPANY Ltd. (formerly Sagicor Financial Corporation Limited)Year ended December 31, 2020 and December 31, 2019 Amounts expressed in US $000 308
SHAREHOLDER
INFORMATION
SHAREHOLDER INFORMATION
DIVIDENDS
Quarterly dividends were declared and paid as
follows in 2020:
A first quarterly dividend of US 5.625 cents per
common share, payable on February 28, 2020, was
approved as part payment of the final dividend for
the financial year ended December 31, 2019 to the
registered holders of the common shares of record at
the close of business on February 10, 2020.
data related to your account, including a summary
of holdings, transaction history and, proxy voting
and more. For your convenience, the TSX has also
created a list of Frequently Asked Questions and
provided several useful forms at the following link
- https://www.sagicor.com/en/Investor-Relations/
Transfer-Agent.
Connect with TSX Trust
By Telephone:
North America)
1- 647-727-0851 (Outside of
A second quarterly dividend of US 5.625 cents per
common share was approved, payable on May 29,
2020 to the registered holders of the common shares
of record at the close of business on May 5, 2020.
American Toll Free)
By Email:
By Mail:
Adelaide Street West
1-833-955-1277 (North
sagicor@tsxtrust.com
TSX Trust Company 301-100
Toronto, ON, M5H 4H1
Attn: Investor Services
9:00 am to 5:00 pm Monday to
Office Hours:
Friday (Eastern Time)
CONNECT WITH SAGICOR FINANCIAL
COMPANY LTD.
Investors may contact Sagicor directly:
By Email:
By Telephone:
investorrelations@sagicor.com
1-246-467-7500
STOCK EXCHANGE LISTINGS
Sagicor Financial Company Ltd. is listed on the
Toronto Stock Exchange – Symbol TSX:SFC.
Sagicor Financial Corporation Limited was delisted
from the London Stock Exchange and has applied
to be delisted from the Trinidad and Tobago and
Barbados Stock Exchanges.
A third quarterly dividend of US 5.625 cents per
common share was approved, payable on September
18, 2020 to the registered holders of the common
shares of record at the close of business on August
28, 2020.
A fourth quarterly dividend of US 5.625 cents
per common share was approved, payable on
December 16, 2020 to the registered holders of the
common shares of record at the close of business on
November 25, 2020.
TRANSFER AGENT – SHAREHOLDER
ASSISTANCE
For more information on managing your Sagicor
shares, shareholders may contact our Transfer Agent,
TSX Trust Company.
Investor & Account Assistance
Sign in to your TSX Trust account to access all the
309
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
Barry L V Gale, QC, Barbados
Blakes, Cassels & Graydon LLP, Canada
Carrington & Sealy, Barbados
Conyers Dill & Pearman Limited, Bermuda
Hamel-Smith, Trinidad and Tobago
Hobsons, Trinidad and Tobago
Holman Fenwick Willan LLP, UK
Lex Caribbean, Barbados
Patterson K H Cheltenham, QC, Barbados
Paul Hastings LLP, USA
Shutts & Bowen LLP, USA
Stikeman Elliott LLP, Canada
Torys LLP, Canada
BANKERS
First Citizens Bank (Barbados) Limited
CIBC FirstCaribbean International Bank Limited
JP Morgan, USA
RBC Royal Bank (Trinidad & Tobago) Limited
The Bank of New York Mellon
The Bank of Nova Scotia
310
OFFICES
Sagicor Registered Office
SAGICOR FINANCIAL COMPANY Ltd
Clarendon House
2 Church Street
Hamilton HM11
Bermuda
Tel: (441) 295-1422
Fax: (441) 292-4720
Sagicor Life Inc Branch Offices
Barbados
Sagicor Life Inc
Sagicor Financial Centre
Collymore Rock
St Michael
Tel: (246) 467-7500
Fax: (246) 436-8829
SAGICOR FINANCIAL CORPORATION LIMITED
Clarendon House
2 Church Street
Hamilton HM11
Bermuda
Tel: (441) 295-1422
Fax: (441) 292-4720
Antigua
Sagicor Financial Centre
#9 Sir Sydney Walling Highway
St John’s
Tel: (268) 480-5500
Fax: (268) 480-5520
Email: info_antigua@sagicor.com
Sagicor Corporate Head Office
SAGICOR FINANCIAL COMPANY Ltd
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
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.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
Willemstad
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
Curaçao
Guillen Insurance Consultants
P O Box 4929
Kaya E, Salas No 34
Tel: (599) 9 461-2081
Fax: (599) 9 461-1675
Email: chris-guillen@betlinks.an
Dominica
WillCher Services Inc
44 Hillsborough Street
Corner Hillsborough & Independence Streets
Roseau
Tel: (767) 440-2562
Fax: (767) 440-2563
Haiti
Cabinet d’Assurance
Fritz de Catalogne
Angles Rues de Peuple et des Miracles
Port-au-Prince
Tel: (509) 3701 1737
OFFICES
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
St Vincent
Sagicor Life Inc
S.V. Browne Agency Limited
Frenches
Kingstown
Tel: (784) 456-1159
Fax: (784) 456-2232
SAGICOR LIFE (EASTERN CARIBBEAN) INC
Sagicor Financial Centre
Choc Estate Castries, St Lucia
Tel: (758) 456-1700
Tel: (758) 450-3787
Sagicor Life (Eastern Caribbean) Inc
Branch Offices
Antigua
Sagicor Financial Centre
#9 Sir Sydney Walling Highway St John’s
Tel: (268) 480-5500
Fax: (268) 480-5520
Email: info_antigua@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
311
Sagicor Life (Eastern Caribbean) Inc
Agencies
Dominica
WillCher Services Inc
44 Hillsborough Street
Corner Hillsborough & Independence Streets
Roseau
Tel: (767) 440-2562
Fax: (767) 440-2563
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
St Vincent
Sagicor Life Inc
C/o Incorporated Agencies Limited Frenches
Kingstown
Tel: (784) 456-1159
Fax: (784) 456-2232
Sagicor General Insurance Registered Office
SAGICOR GENERAL INSURANCE INC
Cecil F DeCaries Building
Wildey, St Michael, Barbados
Tel: (246) 431-2800
Fax: (246) 228-8266
Email: sgi-info@sagicorgeneral.com
Sagicor General Insurance Inc
Haggatt Hall
St Michael
Barbados
Tel: (246) 431-2800
Fax: (246) 426-0752
(246) 228-8266
Email: sgi-info@sagicorgeneral.com
Antigua
Sagicor Financial Centre
#9 Sir Sydney Walling Highway
St John’s
Tel: (268) 480-5500
Fax: (268) 480-5550
Email: info_dominica@sagicor.com
St Lucia
Sagicor Financial Centre
Choc Estate
Castries
St Lucia
Tel: (758) 452-0994
Fax: (758) 450-4870
Trinidad and Tobago
16 Queen’s Park West
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
312
OFFICES
JE Maxwell & Company Limited
Linmores Building
Castries
St Lucia
Tel: (758) 451-7829
Fax: (758) 451-7271
Email: jemax@candw.lc
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
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
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
SAGICOR BERMUDA RE LTD
30 Woodbourne Ave,
Pembroke, HM 08 P.O. Box HM 2020 Hamilton HM
HX Bermuda
Tel: (441) 296-1711
Fax: (441) 292-1540
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
Lyder Insurance Consultants
Seroe Blanco 56A
Tel: (297) 582-6133
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
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
OFFICES
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
63-67 Knutsford Boulevard
Kingston 5
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
Kingston, Jamaica
Tel: (876) 929-8920(-9)
Fax: (876) 960-1927
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
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
313
RGM LTD
Albion Plaza Energy Centre
22-24 Victoria Avenue
Port of Spain
Trinidad
Tel: (868) 625-6505
Fax: (868) 624-7607
Other Offices
1222948 B.C. Ltd
Thomson Building
65 Queen Street West
Suite 400, Toronto
ON M5H 2M5
Email: investorrelations@sagicor.com
SAGICOR BANK JAMAICA LIMITED
17 Dominica Drive
Kingston, Jamaica
Tel: (876) 960-2340
Fax: (876) 929-7324
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
Website: www.sagicorlifeusa.com
4343 N. Scottsdale Road, Suite 300
Scottsdale, Arizona, 85251, USA
Tel: 1-800-531-5067
Fax: (480) 425-5150
Website: www.sagicorlifeusa.com
SAGICOR FINANCE LIMITED
Maples Corporate Services Limited
Ugland House
South Church Street
George Town, Grand Cayman
Cayman Islands
Stronger
Together
2020 ANNUAL REPORT