Sagicor nets increased revenues

Sagicor Financial Corporation Half Year results to 30 June 2004 Amounts in BDS Dollars Exchange Rate TT$3.0258 to Bds$1

Total Revenue for the half year to 30 June 2004 increased by 11.77 percent to reach $388.5 million as Net premiums and contributions rose 13.03 percent to $266.57 million and Net investment and other income grew by 9.12 percent to $121.93 million. Net policy benefit was 15.69 percent higher compared with the same period last year and reached $220.29 million, while Expenses fell 2 percent to $124.11 million. Sagicor’s results show a 44.7 per cent growth in income from ordinary activities which reached $44.11 million. The effective rate of taxation increased from 11.33 percent in 2003 to 15.63 percent in 2004, resulting in Net income after tax of $37.2 million, up 37.7 percent. Minority interest was down from $7.22 million to $6.39 million bringing Net income for the period to $30.82 million, up 55.6 percent.

Of the $30.82 million of Net income, $1.05 million or 3.53 percent is attributable to participating policyholders, while $29.77 million or 96.47 percent is attributable to shareholders. Net income margin improved from 5.69 percent of Total revenue to 7.93 percent. Earnings per share of 11.4 cents was posted, up 3.8 cents or 50 percent from 7.6 cents last year. On the Balance sheet Total Assets increased by 5.45 percent to $2.9 billion and Total liabilities increased by 3.06 percent to $2.18 billion resulting in Net Assets of $720 million. Shareholders’ Equity grew by $13.32 percent, reaching $652.02 million as unrealised gains of $53.65 million on available for sale investments was taken directly to the reserve account and not accounted for in the Income statement. With a view to strengthening its market position in Jamaica, Sagicor entered an agreement to acquire certain business of the Jamaican company, First Life Insurance Company Ltd. This acquisition is expected to be completed by the end of 2004. Sagicor has operations in Barbados, Jamaica, Trinidad and Tobago and a number of other islands throughout the Caribbean.

Sagicor seems set to achieve or even surpass the forecast of 23.80 cents published in their prospectus for the initial public offering of the shares. If achieved these shares will be trading at an earnings multiple of 18.91 times at the Wednesday 1 September price of $4.50 in Barbados. The Group listed on the Trinidad and Tobago Stock Exchange on Tuesday 24 August with an opening price of TT$12.86 per share and appreciated 19 cents to close at $13.05. The share price has increased by a total of TT 55 cents per share since and is currently $13.50 per share, up a total of 74 cents or 5.76 percent. The equivalent forecast earnings per share of TT 72 cents per share, gives an earnings multiple on the local market of 18.89 times, which is slightly above the average multiples of similar companies in this sector. However, we expect some further price appreciation in the short term as supply of Sagicor shares on the local market may be quite thin initially.

The supply of these shares depends on existing shareholders transferring their shares from the Barbados Central Securities Depository to the Trinidad and Tobago Central Securities Depository before they can be sold on this market.  In our opinion, Sagicor is a solid company poised for strong growth which will be reflected in its share price.This document is based on information obtained from sources, which we believe to be reliable, but is not guaranteed as to accuracy or completeness by, and is not to be construed as a representation by, West Indies Stockbrokers Limited. WISE is a subsidiary of RBTT Financial Hodings Limited. West Indies Stockbrokers Limited, 23a Chacon Street, Port-of-Spain, Trinidad (868) 623-4861 Fax (868)-627-5002 e-mail: wise@carib-link.net. Member of the Trinidad and Tobago Stock Exchange Ltd.