AFTER A turbulent first years of trading on the Toronto Stock Exchange (TSE), Sagicor Financial, the regional financial services company, says it remains interested in completing the acquisition of CLICO’s traditional insurance portfolio, following the signing of a sale and purchase agreement for the transfer of the portfolio on September 30, 2019.
“We remain committed to the CLICO transaction. We are not commenting on matters before the Court,” said Andre Mousseau, the Canadian group chief financial officer of Sagicor Financial Corporation, in an interview with Express Business on May 27.
Sagicor Life Inc was selected as the preferred bidder for the traditional portfolios of CLICO and British American (Trinidad) by the Central Bank, which has controlled the two insurance companies since they were bailed out by the Government in 2009.
But the process for transferring the traditional portfolios of the insurance companies to Sagicor Life was stopped by an injunction filed by Maritime Life (Caribbean), which was involved in the bidding process but was not chosen as the preferred bidder.
Maritime received a draft order of the High Court in April 2020, granting the insurance company leave to file a claim for judicial review as well as an interim injunction stopping the Central Bank from transferring the insurance portfolios to Sagicor pending the hearing and final determination of the matter.
In May 2020, the Central Bank appealed the Court’s decision to grant Maritime leave for judicial review. The Court granted the interim injunction in July 2020. The Central Bank appealed the court order granting leave for Maritime to file for judicial review. On February 17, 2021, the Court of Appeal dismissed the Central Bank’s appeal by a two to one margin.
“The Central Bank has taken steps to appeal this decision,” according to Note 1 of CLICO’s 2020 audited financial report. Included on its balance sheet for 2020, CLICO has $7.30 billion in assets held for sale and $7.72 billion in “liabilities directly associated with assets held for sale.”
Asked if Sagicor is interested in acquiring Barbados-based CIBC FirstCaribbean, Mousseau said: “Sagicor is committed to growing in the Caribbean and so we would look at any opportunities that would leverage our brand name, our expertise and our existing geographic footprint.
“Nothing would be precluded for us in the geography,” said Mousseau, who was appointed to the Sagicor post of group CFO, effective February 1, 2019.
In February 2021, regional regulators did not approve a plan by Canada’s CIBC, the majority owned of FirstCaribbean, to sell 66.73 per cent of its stake in CIBC FirstCaribbean to Colombia’s GNB Financial for US$797 million. CIBC agreed to sell the stake in November 2019, subject to regulatory approvals.
The company is divided into three main geographic segments—Sagicor Jamaica, Sagicor Life, comprising English-speaking Caribbean operations outside of Jamaica and Sagicor USA.
For its 2020 financial year, Sagicor generated revenue of US$1.87 billion.
Mousseau said Sagicor gets about 65 per cent of its revenue from the Caribbean.
According to the company’s first quarter 2021 investor presentation, Jamaica generated US$166 million in revenue, which totaled 38 per cent of the group’s US$431 million for the period January 1 to March 31, 2021.
Asked if the Sagicor group is comfortable with its shareholding of 49.11 per cent in Sagicor Jamaica, Mousseau said: “We have very good partners in Sagicor Jamaica in the Pan Jam group. We have been partners with them for a long time and we are comfortable with that arrangement.
“We have outside shareholders in Jamaica, given that the company is listed on the Jamaica Stock Exchange. Those shareholders have given Sagicor Jamaica a very good cost of equity capital. That business trades at a significant premium to book value, which reflects the strong financial performance that the Jamaica group has delivered over the last few years.”
The Sagicor CFO said the group is “committed to Sagicor Jamaica” as it enjoys owning and controlling the company as its largest shareholder “and we are very comfortable with our partners there.”
In the near term, Mousseau said Sagicor would not be looking to sell its 49.11 per cent stake in Jamaica “as it has been a very good business for us and it is an important part of the overall Sagicor group.”
For Sagicor Financial to increase its stake in Sagicor Jamaica would be “a significant undertaking with all sorts of disclosures and securities issues and would have to be done in conjunction with our partners.”
“I think our prospects are strong,” said Mousseau, “We have weathered the Covid-19 crisis very well. Our operations remained robust and we managed to serve our customers and policyholders very well throughout everything.”
He said while 2020 was not a positive year financially compared to prior years, given the context of the markets last year, the insurance executive is satisfied with how the group performed.
“We are very well capitalized and have the ability to execute on our growth plans. So we are excited with where we go from here,” said Mousseau.
He said the group has plans for both organic and inorganic growth.
“We are supporting new growth initiatives in the Caribbean, which are starting to push into adjacent lines of business. For example in Trinidad with our investment management business.
“And there are other growth initiatives you will hear about shortly, including in Barbados.
“We continue to support and believe we can grow our US business.”
With regard to the company’s plans for inorganic growth, which is growth by acquiring new businesses and opening new locations, Mousseau reiterated that the group is very well capitalised “and intends to avail itself of inorganic opportunities when they come up.”