The challenging environment impacted Sagicor Group Jamaica Q2 performance which saw its net profit slip to J$ 3.98 billion. 

Q1 had a one-off negative but when that was normalised, Sagicor published a figure of $J2.32 billion. When that is added to the $2.9 billion for the quarter, one is looking at a figure close to $5.3 billion which gives the Group a level of comfort.

While Sagicor Group Jamaica navigates the pernicious interest rate regime and its impact on consumers, it has put in place a number of strategies that are paying off.

Real Estate 

Many of its competitors have not garnered the anticipated returns from their forays into real estate and in some cases have gotten a bloody nose.. Sagicor Jamaica has done well in this space and its CEO Christopher Zacca put forward an explanation.

“Our real estate investments are a mix of on and off-balance sheet. Most of the developments going forward will be off-balance sheet where we manage those investments and earn fees. 

Executive Vice President, Strategy and Business Development, Joanna Banks added: “ We are very particular in what we invest in. We tend to be conservative yet innovative which you can see with projects like New Brunswick in St Catherine. There is a lot of interest both on the commercial and residential side in Spanish Town which some might say is an unusual place for this kind of mixed-use.

“This year we launched Portmore Promenade but we are evaluating a mixed-use model. In this regard, this  is pretty rare for Jamaica. We have executed on residential and commercial real estate projects where you typically don’t find them. We are offering to Jamaicans what we think is new and necessary for them. Our secret sauce is to employ strategies that are not necessarily needed now but for the future.

Sagicor Group Jamaica has made significant investments in the real estate arena. New Brunswick Village came in at a cost of J$6 billion and includes 89 units including studios, two-bedroom apartments and townhouses.

On the commercial side it will provide Spanish Town and its environs with retail opportunities from entities such as Island Grill, Imperial Optical, Devon House Ice Cream, R.A.  Williams Distributors among others.  Already there is close to complete take up of the units.

Portmore Promenade which was launched this year, is a $8.4 billion project on a 30 -acre site. It is expected to create in excess of 1,500 jobs and will house restaurants, a BPO operation, supermarket, retail outlets, green spaces and recreational facilities.  The project is located in the Bernard Lodge area. 

Looking beyond Jamaica 

While bullish on Jamaica, Sagicor Group Jamaica has also cast its eyes on other territories, more particularly Latin America. This may very well serve as a hedge against downturns in Jamaica. At the start of this year, Sagicor Group Jamaica announced a declaration of intent with a $230 million investment in Panama, a collaboration with its Costa Rican partner, Capital & Advice on a 50/50 equity split. This business was acquired from Sagicor Life in Barbados and offers Group and Individual Life insurance, Group and Individual Health insurance and Personal Accident insurance.

In 2013, Sagicor Group Jamaica entered the Costa Rican market with a US$6 million investment.

At a media briefing held at Sagicor Group Jamaica’s headquarters in New Kingston last week, CEO Christopher Zacca gave an update on its Latin American operations.

“The joint venture in Costa Rica has been expanded to Panama now with Sagicor taking the reins there. We have a team in place for Panama.  Our business in Costa Rica continues to do well outperforming other competitors there. Panama is up and running fully. Our Executive Vice President Willard Brown oversees both operations.”

Insurance 

Sagicor Group Jamaica’s main revenue line, insurance registered year-over-year growth of J$3.53 billion with both long-term and short-term insurance lines up. Here Zacca credits his Executive Vice President Mark Chisholm and his team for a commendable performance given the operating environment.

So what will the insurance business line look like in six months time? 

Chisholm responded: “ We continue to focus on our distribution channels and our continuous engagement with the broker community. This accounts for about 12 per cent of our insurance sales. The demand for insurance has increased since COVID because the death rate went up during that time. We continue to look at our product development process and pricing. We are focused on our service standard to our customer base. These are the positives we employ in order to drive our market share.”

There are ominous developments that the insurance business will have to contend with. COVID infections are on the rise again, the WHO is reporting an escalation of Mpox cases around the world. Should Mark Chisholm and his team be concerned?

“It is a risk that insurance companies around the world will have to take. That’s why we are in business, to provide a level of security for people. We are stressing to Jamaicans the value of having insurance.

“As the economy continues to struggle, our presentation to our clients is that you are creating an estate for your family just in case something dreadful happens. In a low environment, you want to create an asset that you can put on the household balance sheet that continues to keep you comfortable in your home,” said Sagicor Group Jamaica’s insurance main man. 

Banking

Sagicor Bank, is Jamaica’s third largest bank, lining up behind both Scotia and NCB.  The aim is to close the gap and take market share away from the two behemoths. How does Chris Zacca see the situation? 

“They are the two biggest banks in Jamaica but for three years in a row Sagicor Bank has posted strong results. We are growing and are focused on providing service and access to our banking products for any client depending on whether they want to walk in to our branch, get on their phone or laptop-we provide it all. We are not distinguishing between where you want to be or what channel you want to use. I think that has paid off for us. We are ensuring the bank has money to fund its assets including its loans. We are on the look out for acquisitions to grow that way.”

Digital currency and technological offerings 

It was recently revealed that the Bank of Jamaica is a little disappointed with the take up in Jamaica of digital wallets and the Central Bank Digital Currency (CBDC). To date, it cannot be said that Lynk is an outstanding success. Jamaicans are not gravitating wholeheartedly to digital solutions of this ilk. Here Sagicor Jamaica has not charged in like the Light Brigade. It has been circumspect, watching and evaluating developments.  Cash is still king in Jamaica.  Financial institutions see the need to embrace the technology and move into this new space but Jamaicans remain reticent. 

Zacca explained Sagicor’s position on these new digital offerings

“We take an omnichannel approach with our bank and it also applies to all of our businesses whether it be Tracy-Ann Spence with Investments and Mark Chisholm in Insurance. We will provide avenues for distribution of our products and services no matter how you want to deal with us. We will adjust the emphasis as people change over time.  So our approach is to be able to offer digital products and services in step with what the market demands. Yes, we are looking at it in a circumspect way but right now we are investing more than we ever have in technology. We just launched a pre-paid card at Sagicor Bank and it will be extensively be used by our Alliance Financial Remittance Services, so one can remit directly to that card.

“We are in the late stages of the first release of a wallet which will include CBDC but we are not throwing the whole kitchen sink at a wallet. We are judiciously investing and as additional requirements come about from the market, we will adapt and move to that. It must be stressed that we are in a heavy mode of investment  in digital at this time.”