Earnings call transcript: Sagicor Financial Q4 2024 shows strong growth

Sagicor Financial Company reported robust financial results for the full year 2024, with significant increases in net income and core earnings. The company achieved a net income of $98 million and core earnings of $91 million, surpassing previous guidance. Annual revenues rose to $3.1 billion from $2.5 billion the previous year. According to InvestingPro analysis, the company is currently trading below its Fair Value, with strong financial metrics including a healthy gross profit margin of 63% and an impressive Altman Z-Score of 4.16, indicating solid financial stability. In Q4, core earnings for shareholders were up by 28% from 2023, reaching $28 million. The company’s strategic initiatives, including cost reduction and technology upgrades, are expected to drive further growth in 2025.

Key Takeaways

• Full year 2024 net income reached $98 million, showing strong growth.
• Annual revenues increased to $3.1 billion, up from $2.5 billion.
• Q4 core earnings for shareholders rose by 28% compared to 2023.
• Strategic focus on U.S. market expansion and technology refresh initiatives.
• Dividend payout ratio target set at 30-40%.

Company Performance

Sagicor Financial demonstrated a solid performance in 2024, with significant improvements in both net income and core earnings. The company’s revenue growth from $2.5 billion to $3.1 billion reflects its successful expansion strategies and operational efficiencies. The focus on the U.S. market, particularly in the annuities sector, has positioned Sagicor well to capture growth opportunities driven by demographic trends and market volatility.

Financial Highlights

• Revenue: $3.1 billion, up from $2.5 billion year-over-year.
• Full Year Net Income: $98 million.
• Core Earnings: $91 million, exceeding Q2 guidance.
• Q4 Core Earnings: $28 million, a 28% increase from the previous year.
• Book Value per Share: US$7.08 or CAD$10.19.

Outlook & Guidance

Looking ahead, Sagicor Financial has set ambitious targets for 2025, projecting core basic EPS between $0.74 and $0.80 and core earnings of $100-$108 million. The company aims for a 14-23% growth on a per-share basis and anticipates new business CSM of $180-$200 million. InvestingPro data reveals the company’s strong financial health with a moderate debt level and liquid assets exceeding short-term obligations. These are just two of several positive indicators identified by InvestingPro’s comprehensive analysis tools. Additionally, a core ROE target of 13%+ and a medium-term dividend payout ratio of 30-40% have been established.

Executive Commentary

CEO Andre Muceau emphasized the company’s strategic direction, stating, "We intend to put more than $1,000,000 of new business on our books in 2025." He also highlighted the positive impact of market volatility on the fixed annuities space, saying, "We see equity volatility as positive for the fixed annuities space."

Risks and Challenges

• Market Volatility: While seen as an opportunity, it poses risks to financial stability.
• Economic Uncertainty: Could impact consumer confidence and investment decisions.
• Competitive Pressure: Intensifying competition in key markets may affect margins.
• Regulatory Changes: Potential changes in financial regulations could impact operations.
• Technology Implementation: Successful execution of technology refresh initiatives is crucial.

Q&A

During the earnings call, analysts inquired about the variability in U.S. production strategies and the impact of economic uncertainty on growth targets. Management expressed confidence in achieving growth targets, citing flexibility in production strategies and gains from investments like Playa, which generated a $43.9 million after-tax gain. For deeper insights into Sagicor’s financial health and growth potential, InvestingPro subscribers can access the comprehensive Pro Research Report, which includes detailed analysis of the company’s financial metrics, peer comparisons, and expert insights among the 1,400+ covered US equities.

Full transcript - Schaffer Corporation Ltd (SFC) Q4 2024:

Constantine, Conference Operator: Good morning. My name is Constantine, and I will be your conference operator today. At this time, I would like to welcome everyone to the Sagicor Financial Company’s Fourth Quarter and Full Year twenty twenty four Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question and answer session.

Mr. George Tsipsis, EVP, Corporate Development and Capital Markets, you may begin your conference.

George Tsipsis, EVP, Corporate Development and Capital Markets, Sagicor Financial Company: Great. Thank you, operator, and hello, everyone. Thank you for joining us today to discuss Sagicor’s fourth quarter and full year twenty twenty four results. I’d like to highlight our disclosures are available under the Investor Relations tab on our website at sagicor.com, which includes a press release, financial statements, MD and A, our annual information form, along with the unaudited supplemental information package containing core earnings, drivers of earnings and additional disclosures. A link to our live webcast is available on our website and a replay will be available.

This conference call is open to the financial community, investors, the media and the public with a reminder that the Q and A period is reserved for financial research analysts. I will proceed to refer you to the cautionary language and disclaimers in our materials and public filings regarding the use of forward looking statements and the use of non IFRS financial measures and ratios, which may be mentioned as part of our remarks today. I would also like to remind the audience that actual results regarding forward looking information could differ materially. And please note that a detailed discussion of Sadracore’s risk factors is provided in our MD and A, which is available on SEDAR Plus and on our website. A discussion of the assumptions underlying our expectations is provided in our filings and earnings releases.

Unless otherwise noted, all dollar amounts referenced will be in U. S. Dollars consistent with our reporting practice. Joining me today is our President and CEO, Andre Muceau our Chief Financial Officer, Kathy Jenkins and Anthony Chandler, our Chief Controller. We’ll begin with prepared remarks by Andre and Kathy followed by Q and A session.

With that, I’ll pass the call on to our President and CEO, Andre Musko.

Andre Muceau, President and CEO, Sagicor Financial Company: Thank you, George, and good morning, everyone. Thank you for taking the time to join us today. It is our pleasure to discuss another solid quarter to end 2024. In our first full year of earnings, including our Canadian segment, we recorded core earnings to shareholders consistent with our guidance and reported net income to shareholders in excess of our core earnings. Our annualized core return on equity in Q4 shows our potential for further earnings growth both in 2025 and beyond in the medium term.

We continue to make meaningful progress on our strategic initiatives, including collaboration between our operating segments, refreshing our technology and improving our access to and cost of capital, all with the aim to reduce costs, drive growth and ultimately expand our return on shareholders’ equity. I’ll now hand the call over to our CFO, Kathy Jenkins to discuss our consolidated and individual segment results. Kathy?

Kathy Jenkins, Chief Financial Officer, Sagicor Financial Company: Thank you, Andre, and good morning, everyone. As Andre mentioned, we are reporting a strong fourth quarter to cap off a solid year. For Q4, core earnings to shareholders was up 28% from $2,023,000,000 dollars to $28,000,000 dollars and net income to shareholders was $52,000,000 For full year 2024, Sagicor’s net income to shareholders was $98,000,000 and core earnings to shareholders was $91,000,000 exceeding management’s revised guidance from Q2 twenty twenty four of $80,000,000 to $90,000,000 Revenues were $3,100,000,000 for the year compared to $2,500,000,000 for last year New business CSM of 166,000,000 was within the revised guidance from Q2 of $160,000,000 to $180,000,000 net of reinsurance. Our total net income for the year came in slightly ahead of core as we saw some positive asset price emergence in the fourth quarter. Now I will give you some more detail on the segment financials.

Agicore Canada’s sales production of $18,000,000 in the quarter and $70,000,000 for the year was consistent with management expectations resulting in new business CSM of $12,000,000 for the quarter and $46,000,000 for the year. Core earnings to shareholders of $25,000,000 for the quarter increased $3,000,000 or 16% from the same quarter in prior year, reflecting an increase in expected investment earnings that was partially offset by unfavorable mortality experience. Net income to shareholders of $8,000,000 for the quarter was lower than core earnings to shareholders due to unfavorable market related impacts, primarily from higher risk free rates on surplus assets. Net CSM ended the year at $535,000,000 which was a slight decrease quarter over quarter resulting from changes in assumptions and unfavorable currency impact that was offset by organic CSM growth. Sagicor Life USA generated $152,000,000 of new business production for the quarter and $894,000,000 for the year.

The level of production in Q4 was lower than our targeted annualized run rate and we know today ten weeks into Q1, that our production in the first quarter of twenty twenty five is going to be over $300,000,000 We believe that we may still see quarterly volatility in the production due to the size and competitive environment, but measured in aggregate over years, we believe we’ll be able to meet our growth targets, albeit in a bit of a volatile manner. In the meantime, core earnings to shareholders this quarter for this segment of $11,000,000 increased $1,000,000 or 12% from the same quarter in the prior year, driven by higher net investment income on the growing investment portfolio. Net income to shareholders was $42,000,000 for the quarter and was higher than core earnings to shareholders due to market related impacts, including gains on equity investments and favorable tax recoveries. Net CSM decreased by $11,000,000 to $155,000,000 quarter over quarter due to basis changes from the previous quarter, lower volume of premiums written in Q4 and the impact of the introduction of a new and reinsurance agreement. Sagicor Jamaica capped off a lower than expected year with a soft fourth quarter.

Sagicor’s share of Sagicor Jamaica’s core earnings to shareholders of $8,000,000 for the quarter declined from $13,000,000 for the same period in the prior year due to unfavorable experience and the impact of rising interest rates, offset by improved margins on core non insurance activities and lower financing costs. Our share of reported net income to shareholders of $10,000,000 this quarter declined from $17,300,000 for the same period in the prior year due to marginally lower results from the long term insurance and commercial banking division. However, we see signs of reversion to historical performance in 2025 with strong net premium growth across all business lines and improved margins from repricing of Group Health products. Commercial Banking division continued its year over year growth trend in profit as a result of higher net investment income and fees and the investment banking division reversed the prior year’s unrealized capital losses leading to a meaningful improvement in profit. Net CSM of $282,000,000 increased 2% quarter over quarter as strong new business CSM of $15,000,000 was offset by changes in assumptions.

Zagicor Lifecore earnings to shareholders of $6,000,000 for the quarter increased 21% over Q4 twenty twenty three, reflecting improved profitability from short term and long term businesses from repricing and product offering adjustments and improved insurance experience and lower incidence of owners contracts in the long term business. Net income to shareholders of $12,000,000 for the quarter was higher than core earnings to shareholders, primarily due to positive market experience. In 2024, core earnings to shareholders was $26,000,000 and net income to shareholders was $39,000,000 Net CSM was $248,000,000 increasing from $244,000,000 at the September 2024 due to growth in organic CSM of $7,000,000 driven by strong new business sales, partially offset by changes in actuarial assumptions of $4,000,000 Returning to the consolidated picture, Cyzicor remained well capitalized in Q4. The group LICAT ratio was 139%, which improves by three percentage points year over year and our financial leverage ratio was 27.3. Our access to capital further improved in the fourth quarter through raising a CAD200 million term loan facility, which was used to repay the balance of the more expensive U.

S. Dollar debt used to acquire Avari, improving both our cost of capital and improving our natural hedge against Avari’s net asset position in Canadian dollars. Our book value per share finished the quarter at US7.08 dollars or CAD10.19. Our deployable capital or shareholders’ equity plus net CSM to shareholders was $2,000,000,000 or $15.02 per share or US21.61 dollars per share. I will now provide an update to our guidance on key measures.

We expect core basic EPS for 2025 to be approximately between $0.74 to $0.8 per share. This translates to approximately $100,000,000 to $108,000,000 of expected core earnings to shareholders. That represents 14% to 23% growth on a per share basis and 15% to 24% growth on an absolute constant currency basis. New business CSM is expected to be between $180,000,000 to $200,000,000 Our 2026 target for core earnings to shareholders growth is 10% plus growth beyond 2025 levels and thereafter we project a target core return on shareholders’ equity over the medium term of 13% plus and targeted core dividend payout ratio over the medium term of 30% to 40%. With that, I hand it back to Andre.

Andre Muceau, President and CEO, Sagicor Financial Company: All right. Thank you very much, Kathy. Beyond our strong financial results, we continue to be excited about our prospects for 2025 and beyond. Our internal initiatives, all of which are geared to generate strong sustainable return on equity growth are showing measurable progress. We continue to grow our asset base in our U.

S. Business and will accelerate and intend to accelerate this in 2025. We believe this will continue to offer a robust growth opportunity and deliver to us very high marginal returns on our capital. Our operating segments are working better than ever together to drive technological change and efficiencies that will allow us to cement our business where we have large market shares and continue to grow efficiently where we’re relatively small. And our balance sheet management is incrementally improving our cost of capital.

With these initiatives, we believe we can target a 13% or better return on shareholders’ equity towards the end of our three year planning cycle. We are very pleased to be able to deliver this growth while accelerating our return of capital to shareholders. We repurchased 3,000,000 shares in 2024 at a significant discount to book value, which contributed to a 4% net reduction in our share count through the year. This helped drive our book value per share higher than the rate of our retained earnings. Our increased projected core earnings, our robust capitalization and liquidity and the reduced share count are all enabling us to provide our shareholders with a meaningful increase in our quarterly dividend.

At this payment level, we anticipate we’ll be at approximately the midpoint of our 30% to 40% target core dividend payout ratio for 2025. And while economic uncertainty may cloud certain macroeconomic variables, we believe our core initiatives will enable us to continue to grow our return on shareholders’ equity. And I’m excited about coming out of our quiet period to get back out and talk to some of our new shareholders who’ve had a good run so far and to communicate that we believe that there’s a lot more good news to come. So with that, George, I think we’re ready to start the Q and A period.

George Tsipsis, EVP, Corporate Development and Capital Markets, Sagicor Financial Company: Yes, we are. Operator, please open the lines for questions.

Constantine, Conference Operator: Thank you. Your first question comes from the line of Manny Grumman from Scotiabank. Please go ahead. Manny Grumman, your line is now open. Please ask your question.

Manny Grauman, please check if your phone is on mute. Your line is now open. Please go ahead and ask your question.

Manny Grauman, Analyst, Scotiabank: Sorry there. Can you hear me now?

Andre Muceau, President and CEO, Sagicor Financial Company: Yes. Yes, indeed.

Manny Grauman, Analyst, Scotiabank: Okay, great. Thanks. Just a few questions. One, you talk about lower than expected production in The U. S, I think also for the quarter, but for the year as a whole.

And you talk about the impact of rate volatility on that. So I’m just wondering if you could flesh that out a little more in terms of the impact of rate volatility on competition. I’m trying to understand sort of what you’re getting at there in terms of rate volatility and how that impacted the production?

Andre Muceau, President and CEO, Sagicor Financial Company: Right. So thanks, Manny. So maybe I’ll take a little step back and talk about what we’re trying to achieve because we see the variability of production of our U. S. Business as a feature of our business model as opposed to a bug so to speak.

What we’re trying to do is over the next three or four years grow our balance sheet towards $10,000,000,000 in The U. S. And to do that at the best risk adjusted spreads that we can. And so we are nimble when we do that. And we are because of the size of the market, we are able to throttle production quite significantly from one week to the next.

And so we’re constantly making judgments on whether the risk adjusted spread is favorable relative to other times that we’re able to generate that production. Because when we take this business onto our books, we’re going to be investing the capital right up to the duration to match the liability and we’re going to take profit off that spread for the next five years if it’s a five year annuity. So if you look back over the last two or three years, our production has oscillated between with a significant degree of variability from the things in the mid-100s in a quarter to up towards $400,000,000 in any given quarter. And we think the ability to pick our spots adds in aggregate 10 to 30 basis points of additional spread compared to if we just targeted keeping production flat every month and every quarter. And so if you’re looking to bring on $1,000,000,000 of new annuities in a given year, that extra 10 to 30 basis points is $1,000,000 to $3,000,000 of pretax income a year every year for the five years that you have those products.

And once you get into towards a $10,000,000,000 balance sheet and add that all up, it starts to be really material amounts of net income. So it’s all a way of saying that we’re deliberately picking our spots. And so the spread is a function of where we can invest, which itself is a function of our sourcing of base rates and of credit spreads. And then it’s also a function of the crediting rates that you need to be in the market and to be competitive. And the specific thing that happened in Q4 was there was a moment in time where certain markets were priced to perfection in terms of the impending regime change and early days of the regime change in The United States and a soft landing and equity markets anticipating to go up forever.

And our adjudication at the time was that the spreads weren’t as good as they would be in following quarters. And so we backed off on the throttle and ended up with lower production. Now we’ve disclosed in our in Kathy’s comments that, that trend has reversed itself because we see a much more positive spread environment that has come with, let’s say, the market’s decoupling of the thesis of the economy being pricing imperfection. And we’ve seen a better rate environment. And so we can sit here today ten weeks into the quarter and know that we’ve got more than $300,000,000 that’s going to close in Q1.

So we see this as deliberate. I said in my comments that we intend to accelerate the growth of our U. S. Business. And so what I would say to you and to our investors is we intend to put more than $1,000,000,000 in new business on our books in 2025.

And thinking about ourselves as shareholders, we’re going to put that production in where we see the best economics. And so we intend for that production to be a bit variable quarter over quarter. So we may show up with $350,000,000 to $400,000,000 of production in Q1 and we may show up with meaningfully less than that in Q2 if it turns out that that is where that’s the optimal thing for our long term economics.

Manny Grauman, Analyst, Scotiabank: So just to kind of make sure I understand what you’re saying, are you saying that you’re willing to trade off like you’re basically willing to trade off volume for profit or it’s more just it’s just the message really is more just about expect volatility in the sales numbers on a quarter to quarter basis and it could be quite extreme depending on the circumstances?

Andre Muceau, President and CEO, Sagicor Financial Company: We have aggregate targets. So what we’re willing to trade off is volatility for excess spread. And so what I’m telling you is that we believe that by accepting that one quarter it may be $150,000,000 and another quarter it may be $400,000,000 we believe we can generate better spreads than if we just said we’re going to aim for $250,000,000 to $275,000,000 every quarter. And so we still as you draw a line through our production, we expect that line to trend up and you can look at this as an average on four or six quarter rolling basis, we would intend for that to tick up because we intend to put more than $1,000,000,000 of volume on in aggregate in 2025 and beyond. We’re just saying that we think it’s in the best interest of our shareholders for us to pick our spots and for the production to be a bit volatile quarter over quarter.

Manny Grauman, Analyst, Scotiabank: Understood. And then maybe as a follow-up just connecting it to the bigger picture. I mean, we are in a very volatile environment in terms of economic expectations and rates. And so I think you’re acknowledging that, I mean beyond the volatility in your sales numbers, the actual volatility on the market. And so the question is that volatility you’re acknowledging that volatility, but at the same time you seem to be pretty certain about over $1,000,000,000 in production in The U.

S. Your financial targets for 2025 are strong and pretty clear. So what gives you that confidence in those targets given the environment that we’re in?

Andre Muceau, President and CEO, Sagicor Financial Company: So with first to in The U. S. Annuities market, there are a couple of things that are going on. First thing is, we see equity volatility as positive for the fixed annuities space in that the fixed annuities market is big and robust, but the true addressable market is all retiree savings in effect. And so the substitutes for that can involve products that like mutual funds or other ways to access equity that don’t have the same certainty that a fixed annuity has.

And so when you see a meaningful drawdown in the equity markets when as we’re experiencing, I don’t know, today, but over the last couple of weeks, it reminds the addressable market that equity markets don’t go up in a straight line. And if you think about that, the equity volatility that started at the start of COVID back in 2020 went a long way to kick starting the big growth in the annuities market going back five years ago. And then the investing environment is a good one for spread investors right now. We play in a spot in the credit stack that is overwhelmingly investment grade and we continue to have confidence in how our portfolio will work out. And so we have good confidence on the robustness of investing and the demographic trends that are driving the annuities market with the baby boomers reaching retirement age continues to persist.

More broadly, when we talk about confidence about continuing to deliver earnings growth, we’ve got a view around the strategic initiatives that we have talked about or that I talked about earlier in the call. So there’s a little bit of reversion to the mean we believe of after a tough couple of years for our Caribbean businesses and we’re seeing green shoots on that. And where we’ve got more torque on our financial statements in our Canadian and U. S. Business just because of the size of the assets, we’ve got a good idea where some of that margin expansion comes from as we work to drive efficiencies in those businesses.

Manny Grauman, Analyst, Scotiabank: Got it. And maybe just a final question, just in the earnings release, your commentary upfront, there’s talk about technology refresh. And I’m just wondering if that is baked into guidance for 2025, ’20 ’20 ’6 or could that be something that is sort of a headwind to these targets? And so just wanted to clarify that.

Andre Muceau, President and CEO, Sagicor Financial Company: So the cost of it are baked into the guidance. When we talk about getting through a 13% ROE and we have internal targets that are higher than that, that is getting out into 2027 and beyond and is starting to see the effects of or would be seeing the effects of some of the investments that we’re making in 2025 and 2026.

Manny Grauman, Analyst, Scotiabank: Got it. Thank you.

Constantine, Conference Operator: Your next question comes from the line of Trevor Reynolds from Acumen Capital. Please go ahead.

Trevor Reynolds, Analyst, Acumen Capital: Good morning, guys. I was just curious about the primary drivers of your expected growth in new business CSM from that 166 level this year to that 180 to 200 next year and 10% beyond. Just maybe if you could just touch on what the primary drivers of that is?

Andre Muceau, President and CEO, Sagicor Financial Company: The big one would be accelerated production in our U. S. Business. So we had, like Kathy, about $850,000,000 thereabouts of new business production in The U. S.

This year. And we’re targeting through $1,000,000,000 for $2,025,000,000 dollars So I think mechanically that’s mostly it. I don’t think we’re projecting meaningfully different margins. Our Canadian and Caribbean businesses continue to generate net CSM in excess of what they’re replacing and so they continue to grow as well.

Trevor Reynolds, Analyst, Acumen Capital: Okay. And then as you look at that, the longer term ROE target, I was just wondering how we should think about that growth towards that target. Is it expected to be a fairly linear growth towards that or how that plays out over the next few years in your eyes?

Andre Muceau, President and CEO, Sagicor Financial Company: Yes, the progression is more linear than not. And it’s a combination of the organic growth that the businesses naturally generate with continuing to have The U. S. Being a bigger proportion of our earnings with then the overlay of our other strategic initiatives to improve cost structure and improve the cost of funding of our balance sheet. So as we’re looking out to 2027, that’s where we start to get into the range of that medium term guidance.

We wouldn’t want to put a hard number around our 2027 earnings. It’s a little early for that, but that’s how we’re planning.

Trevor Reynolds, Analyst, Acumen Capital: Okay, great. And then just I guess to touch on those cost reductions that you guys are targeting, where do you kind of sit in terms of those targets? And what’s the sort of timeframe for those cost reductions and where are they coming from?

Andre Muceau, President and CEO, Sagicor Financial Company: It’s throughout all of the segments, the operating segments and head office. And so there’s quite a list of initiatives there, bringing together procurement policies as an example, having the businesses on common technology platforms that allows us to bring down the cost of technology and eventually let the units work together to service each other which can lower our cost of delivery and allow our people as we upgrade the technology to be deployed on in value add initiatives as opposed to manual and administrative ones.

Trevor Reynolds, Analyst, Acumen Capital: Okay, great. And then just a last quick one. Obviously bought back quite a bit of stock last year, maybe just what the plans look like in terms of share buybacks moving forward?

Andre Muceau, President and CEO, Sagicor Financial Company: So we intend to keep our normal course issuer bid active. Now I think we as we’ve gone and accelerated our engagement with the equity market, one of the things that has that has resonated with some of our new investors is the dividend stream and growing the dividend. And so if you look at what we’ve done with the dividend, we have increased at 12.5% and maybe starting to tilt the return of capital towards dividends as opposed to buying back so much stock every year. One of the other comments we hear from investors is, they’d love to see more liquidity in the stock and we don’t necessarily want to be competing buying what’s out there for sale. We reserve the right if the stock reverts to even wider discounts to fundamental value to lean back in.

But we’ve started to see green shoots of a market develop. And so one of the things we want to do is to provide our investors the ability to anticipate not only a robust dividend, but that’s going to grow year over year as we if we can grow our net income. So it’s all to say, please, I’d rather you not model in us shrinking our share base by 4% every year, but we’re still going to keep it open.

Trevor Reynolds, Analyst, Acumen Capital: Okay, great. Thanks for taking my questions.

Andre Muceau, President and CEO, Sagicor Financial Company: Thank

Constantine, Conference Operator: Your next question is from the line of Darko Mihalyk from RBC Capital. Please go ahead.

Darko Mihalyk, Analyst, RBC Capital: Hi, thank you. Good morning. I just have a couple of modeling questions, should be pretty brief. The first question is for Canada. When I look at the expected investment earnings of $30,000,000 for the quarter, substantially better than last year and last quarter.

Presumably, you’re making some changes with your investment portfolio. I’m just curious, is $30,000,000 a good quarterly run rate to assume for Canada Twenty Twenty Five, sorry.

Andre Muceau, President and CEO, Sagicor Financial Company: We just have Kathy flipping through to the supplement here. I think if we’re going to get into drivers of earnings modeling On this individual question, Kathy, do you think it’d be better to do this in a holistic form with the analysts?

Kathy Jenkins, Chief Financial Officer, Sagicor Financial Company: I think so.

Andre Muceau, President and CEO, Sagicor Financial Company: So can we defer on that, Darko?

Darko Mihalyk, Analyst, RBC Capital: Yes, sure. No problem. Another question then for the head office corporate, was the I think very big job in stock price very late in December. Was that mark to market included in that results? And since then, I think the news has come out that Playa is being purchased by.

So maybe you can that’s actually in the quarter here in the expected earnings for that segment?

Andre Muceau, President and CEO, Sagicor Financial Company: Right. So you’re correct. So we owned our and still do 11,000,000 shares of FLYA. And so we mark those to market mostly through non core income. And so they announced a strategic process the night before Christmas and the stock went up and then they announced a definitive transaction in Q1.

So we marked it to market at the December. And now that there’s certainty around it, there’s a little bit more gain in Q1. And our shares were kind of distributed throughout the organization throughout the different segments. So Kathy, do you want to break that down?

Kathy Jenkins, Chief Financial Officer, Sagicor Financial Company: Yes. So this quarter, we had after tax gain of $43,900,000 on our Playa shares. So $36,800,000 in The U. S, Two Point Seven Million Dollars in Head Office and $4,400,000 in our SLI segment.

Darko Mihalyk, Analyst, RBC Capital: Okay. And sorry, and that just to be clear, that’s excluded from core earnings or is that included in core earnings?

Andre Muceau, President and CEO, Sagicor Financial Company: That’s excluded from core earnings.

Darko Mihalyk, Analyst, RBC Capital: Okay. And the rationale for splitting it into the segments is?

Andre Muceau, President and CEO, Sagicor Financial Company: We were just using as an asset to back capital in a couple of different spots. So it was basically you can use a small proportion of equities to back capital. And so we had some of it in The U. S. Company and some of it in Bermuda for the benefit of both SLI and The U.

S. Through our internal reinsurance company. So that will emerge in Q1 with a little bit more of a gain probably in aggregate about another $10,000,000 and then that will just turn into cash that we can deploy. And so out of that, we’ll get a bit of a capital bump because we have lower capital charges on non equity than we do on equity. So there’ll be there’s in the background, it frees up some capital and liquidity for us as well.

So in aggregate, our share ownership of Playa has been a very successful adventure.

Darko Mihalyk, Analyst, RBC Capital: Okay. And so since most of it was put into The U. S, presumably there is where you get the biggest impact for capital, correct?

Andre Muceau, President and CEO, Sagicor Financial Company: Yes, correct. And so that’s one of the things that helps us with reaccelerating growth in The U. S. Is we have had a bit of a capital windfall and so we can grow the business faster without capital injections because of how that’s worked through.

Darko Mihalyk, Analyst, RBC Capital: Okay. That’s very helpful. And then maybe just as well, while we’re sticking with that segment, you do mention that you get about $12,000,000 of savings and interest costs because of all the, let’s call it, financial management of debt. Is there any more in the pipeline or should I just consider now for that segment to just lower that financing cost or is there more Andre that’s on the way or do you think there’s more maybe rephrase it that way?

Andre Muceau, President and CEO, Sagicor Financial Company: We have now as of Q4 replaced the expense of debt, right? Like it was worth it to pay double digit interest rates to be able to get the Canadian acquisition across the line, but that’s all been refinanced. So as we grow, we wouldn’t put we may put more debt on the books just to manage our debt to cap closer to our target in the high 20s, but that will be incremental debt as opposed to replacement debt. And if you look at where we’re putting new debt on the books in and around 6%, it kind of it matches our overall cost of debt funding because the old bonds that we had from back when we were sub investment grade in the international market were done in such a radically different interest rate environment that the cost of debt is about the same.

Darko Mihalyk, Analyst, RBC Capital: Okay. Okay. That’s helpful. And then maybe if we’re going to have just a follow-up call on Canada, just my other modeling question was on the CSM for Sagicor Life USA. So maybe we can just that’s also just another nitty gritty question that I we can probably take offline.

Thank you.

Andre Muceau, President and CEO, Sagicor Financial Company: Yes. The CSM in Q4 was a little funny because some of the CSM goes away to the reinsurers and we did all of our U. S. Reinsurance in Q4. And so the new business CSM was not proportional to production in Q4 for The U.

S. But we can talk more about that in kind of a modeling session.

Darko Mihalyk, Analyst, RBC Capital: Okay, awesome. Thank you very much.

George Tsipsis, EVP, Corporate Development and Capital Markets, Sagicor Financial Company: Thank you.

Constantine, Conference Operator: Your last question is a follow-up from Manny Grumman from Scotiabank. Please go ahead.

Manny Grauman, Analyst, Scotiabank: Thanks for taking this question. Just about twenty twenty five targets, I think in the past you’ve been able to give us some guidance in terms of segments. So just wondering if you’re able to do that on a segment basis in terms of what to expect in 2025, if you could break it down by the segment, that would be helpful.

Andre Muceau, President and CEO, Sagicor Financial Company: We’re choosing not to do that right now. And so if you look at what we did this year, we had initial guidance and then we updated it. And so at some point during Q2, I think we’ll refresh the guidance and we’ll include segment guidance along with that. And so that’s the plan for now.

Manny Grauman, Analyst, Scotiabank: Got it. Thanks, Andre.

Constantine, Conference Operator: There are no further questions at this time. I would like to turn the call over to Mr. George Tsipsis for closing comments. Please go ahead, sir.

George Tsipsis, EVP, Corporate Development and Capital Markets, Sagicor Financial Company: Thank you, operator, and thank you everyone for joining the call today. Reminder, a replay of this call will be available for one month on our website and a transcript will be posted as soon as available. If you have any additional questions, please do not hesitate to reach out to any one of us. With that, thanks again for your participation and interest today. Have a great weekend everyone.

Constantine, Conference Operator: This concludes today’s conference call. Thank you very much for your participation. You may now disconnect.

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