Sagicor Group Q2 profit shrinks 12%
Published:Sunday | August 18, 2024 | 12:08 AM
Insurance conglomerate Sagicor Group Jamaica Limited earned $3 billion in profit for the second quarter ending June, reflecting a 12 per cent decline.
The outlook remains cautious due to inflation and high interest rates.
The company’s executive team thinks interest rates may start trending down later than initially expected, due to Hurricane Beryl, which swiped Jamaica in July. The precise timeline, however, requires a “crystal ball”, Sagicor Group President and CEO Christopher Zacca said during an investor briefing on Thursday.
“The BOJ has been spot on and better than its colleagues across the world,” Zacca said of the Bank of Jamaica’s rate-setting decisions.
“I am hoping there is something this year, but I do not have a crystal ball,” he added. “But in terms of how we manage our assets and liabilities, our outlook and how we control costs, we are being cautious and prudent in what we do because we do not have that crystal ball.”
The BOJ’s benchmark policy interest rate has been held at 7.0 per cent for nearly two years, and both the financial sector and businesses, because of the impact on asset prices and borrowing costs, have been itching for the central bank to pivot to rate cuts.
“I would say that sentiments would have been impacted by Hurricane Beryl,” said Sagicor’s Chief Investment Officer Tracy-Ann Spence. “So people think it may take a longer time for us to see a fall in interest rates.”
Spence added, however, that although rates are elevated, certificates of deposit, a popular fixed-income instrument offered by the BOJ, dipped during last week to 9.0 per cent from 11 per cent earlier in the year. It indicates that rates are trending down even without a policy rate cut. Spence expects the policy rate to dip “by December the earliest”.
During the April-June quarter, Sagicor Group grew its revenue to $13.1 billion, up from $11.1 billion in the year-prior period. Over six months, from January to June, revenue grew to $25.6 billion from $22.1 billion.
Sagicor Group currently holds $569 billion of assets, with capital improving by more than seven per cent to $101 billion.
The fall in profit during the quarter and half-year horizons reflected “increased expenses from inflation and from continued investments in digital platforms and data security,” the company reported.
Sagicor Group operates various businesses in insurance, investments, banking and property services.
All segments made a profit, but long-term insurance services experienced a big slide at half-year, falling to $2.5 billion from $3.7 billion a year earlier.
Sagicor will be releasing a digital wallet that will facilitate the central bank’s digital currency, Jam-Dex. Few Jamaicans use BOJ’s digital currency or even understand its usability.
Zacca gave no timeline for the wallet launch.