CHIEF executive officer of the Sagicor Group, Dodridge Miller, has taken note of the fact that the Government of T&T has recently issued longer-dated bond instruments, which are more suitable for insurance companies.
Speaking at the group’s fourth quarter and full-year earnings call with three analysts earlier this month, Miller pointed out that insurance companies in the Caribbean have been faced with with long-dated liabilities and short-dated assets. This mismatch between liabilities—life insurance products and annuities sold to customers—and bonds that the companies are required to purchase, can be problematic, if prolonged.
“In the last two years at least, we’ve seen, particularly in Trinidad, the government’s taken a different stance on its own approach to the market and issued some longer-dated instruments, which better match our liabilities,” said Miller.
“There is still some space in our liability that needs to be fixed, but it is very much a function of if and when the government chooses to issue instruments within those buckets, so we can’t predict or give you any guidance on that, but there is still some room. But it is the question very much of when the government would want to do that and if they better match our positions,” he said.
Asked by the analyst from RBC Capital, if there is the possibility of moving away from bond issues by governments to corporate issuers, or engaging in swap instruments, Miller said: “The corporates tend to be short, and governments are now moving out particularly in Trinidad, and we saw, as well, a little bit of an uptick in interest rate. This also helped.
“As to the opportunity for derivatives, we don’t see them at the minute, but we keep our eyes open for any opportunity that would allow us to do that, and not only within that jurisdiction, but across the southern Caribbean.”
Asked for his base assumption of when tourism in the Caribbean is going to return to normal levels, Miller said: “I would say that we were looking forward to a fairly strong 2020 winter season, but then we saw the surge, and Barbados, in particular, also went into some lockdowns early in January to end of February. And with the aggressive rollout of the vaccine in Barbados and around the world, we remain optimistic about the 2021 tourism season.”
Sagicor Group’s chief financial officer, Andre Mousseau said the financial services company had about US$450 million on its balance in December 2019, when it was listed on the Toronto Stock Exchange.
He said the company has deployed US$8 million to buy back its own shares and US$42 million to buy shares in Playa, a tourism company listed on the Nasdaq, from a subsidiary.