Richard Byles, Sagicor Jamaica president. - File photos

agicor Jamaica has reported a 33 per cent rise, to approximately $3.9 billion, in its group profit to stockholders for 2008, but the company says that it is unlikely that some of the circumstances that added extra heft to the bottom line will recur this year.

When minority interest is taken into account, profit is $4.54 billion.

"There are components of this profit that we do not believe are sustainable, notably the positive impact of rising interest rates on insurance and annuity reserves and the very large single premium sales during the year under review," said the company's chairman Dodridge Miller and CEO Richard Byles in a statement accompanying the 2008 accounts, released on Wednesday.

"Excluding these items, net profit growth would be closer to 15 per cent," they said.

Last year's profit was on the back of a 67 per cent jump in revenue, to $28.25 billion, of which approximately 78 per cent, or $22.7 billion came from the insurance side of Sagicor's operations in gross premium income - precisely the segment whoseperformance the company said was unsustainable.

"This level of growth resulted, in large part, from the generation of significant single premium annuities and single premium health business during the year," Miller and Byles said. "Excluding this business, revenue growth would have been about 20 per cent."

Transactions not disclosed

The Sagicor bosses did not say what precisely were the transactions to which they alluded and it was not immediately clear if the accounts included a consolidation of any business by Blue Cross of Jamaica, which Sagicor formally acquired towards the end of 2008.

The group's banking and asset management business, done mostly through Pan Caribbean Financial Services, also a listed group, had revenue last year of $3.1 billion and after-tax profit of $1.28 billion.

Last year profit translated to an earning per share of $1.05, an improvement of 26 cents, or nearly 30 per cent, on 2007. The company declared a dividend of 44 cents a share, which means that it will distribute $1.65 billion to stockholders, compared to $1.124 billion in 2007 when it paid 30 cents a share.

But despite Sagicor's strong profit performance in 2008, its shareholders equity increased a mere one quarter of one per cent, to $15.54 billion, primarily because of a near $2.7 billion write-down the company had to take under accounting rules on its value of equities and securities, reflecting the turmoil in global financial markets.

Payouts

On the cost side, Sagicor paid out $8.76 billion to holders of its insurance policies and various employee benefit schemes, a 60 per cent jump on the previous year, but the immediately available data did not indicate what segment of the business fuelled this growth, or why.

Neither was there an explanation of why administration expenses, which, at $4.94 billion represented 22 per cent of overall expenses, grew by over 29 per cent - much faster than the rate of inflation. Significantly, administration costs accounted for nearly a quarter of revenue - excluding single premium business - and is seemingly behind Byles' motivation to transform Sagicor into a workplace where employee pay is tied to performance.