Richard Byles, president and CEO of Sagicor Life Jamaica Limited. - Rudolph Brown/Chief Photographer
Sagicor Life Jamaica paid just under $1.7 billion for its acquisition last November of Sagicor's just-released accounts for 2008 show.
When both companies formally announced the buyout in mid-2008, neither disclosed the purchaseprice and the listed Sagicor never appeared to file a public notice on the cost of the transaction with the Jamaica Stock Exchange.
At the time Sagicor Jamaica's CEO, Richard Byles, said it would be up to Blue Cross of Jamaica, held primarily by scientist and businessman, Dr Henry Lowe, via a not-for-profit vehicle called the Health Foundation of Jamaica, to disclose the price. Lowe never spoke publicly on the deal.
Audited statement
However, in its audited financial statement to stockholders, lodged with the stock exchange late Wednesday, Sagicor, under its cash flow and investments report, disclosed that it spent $1,668,350,000 for the 'acquisition of insurance portfolios'.
Byles was not immediately available for comment on the Blue Cross purchase price.
The abbreviated statement, in the absence of notes, did not specifically say the reference was to the Blue Cross deal, but industry officials confirmed it to be.
Estimated gross premium
Blue Cross building on Hope Road in Kingston. - photos by Rudolph Brown/Chief Photographer
Blue Cross Jamaica, which used the name under franchise from Blue Cross/Blue Shield of the United States, which pulled out more than two decades ago, will bring to Sagicor an estimated $2.9 billion in gross premium annually. But just as important to Sagicor is the approximately 18 per cent of the market for group health business that Blue Cross controlled, including a scheme for the coverage of tens of thousands of public sector employees, from which Blue Cross gained a major chunk of its income.
Sagicor has begun to merge the two operations, sending Blue Cross agents to its existing branches and beginning the process of integrating management, technology and procedures, a move it expects to cut cost and send more revenue to the bottom line.
Prior to the Blue Cross acquisition, Sagicor Jamaica controlled more than 50 per cent of that segment of Jamaica's insurance market, from which, along with other employee benefit services, it last year grossed $17.4 billion or 61.5 per cent of group revenues. That side of Sagicor business returned after-tax profit of $1.28 billion, of 28 per cent of net earnings.
The Sagicor Jamaica CEO told the Financial Gleaner last month that Blue Cross' 100 staff members were expected to formally join the Sagicor payroll this month on a new pay for performance remuneration scheme that is to be eventually rolled out across the firm.
Cost-cutting measures
The new pay scheme and a company-wide pay freeze are among a raft of measures Sagicor is taking to chop costs, earning in the process, the ire of the Bustamante Industrial Trade Union (BITU), which represents some 300 workers there, and is itching to get negotiations going on its 13-point wage claim served last year seeking a 20 per cent increase in salary.
Byles said last month that, while the company had a good year in 2008, it was beginning to batten down for a rough ride in 2009, and while BITU president Kavan Gayle says the union is willing to revise the size of the pay rise demand, Sagicor is banking on its pay for performance methodology to reward top performers and cut loose from its payroll non-productive workers.
"With the large numbers of redundancies now taking place, people are losing their health insurance. We have to be paying out pensions. Group life is going to be affected, so too is individual life," Byles said then.
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Lowe