Earlier this month life insurance behemoth Sagicor Life Jamaica reported stellar net profits of J$5.52 billion for 2010, an 18 per cent increase on 2010’s yearly number. Net profits for 2011 were generated from revenues of J$28.7 billion, a 12 per cent increase on the J$25.6 billion posted for the prior year.

Life, the star of the show, contributed J$9.4 billion to total revenue and brought in a net profit of J$2.6 billion. Employee benefits for the year under review weighed in with total revenues of J$14.5 billion, generating an after-tax profit of J$2 billion.

Speaking with Caribbean Business Report from Sagicor’s headquarters in New Kingston, President and CEO Richard Byles said: “We had a very good year and the proof of that is in the profits which are up 18 per cent. What this proves is that even in a difficult economy exceptional people and exceptional companies can succeed. That’s the lesson I draw because it is very tough in this Jamaican economy to sell more insurance.”

Byles credits his team for 2011’s performance and singles out the espirit de corps that exists at Sagicor Life Jamaica as a major contributing factor to its success. In this regard he added: “What we are seeing is that whether on the Individual or Group side our people go out and sell more. That whole strong team spirit and ambition that is so prevalent in the company produces good top-line results even in a difficult situation. It also allows us to deliver a much higher level of customer service than is customary here in Jamaica. A lot has to do with allowing great people to do a great job and they deliver despite the circumstances.”

All lines of business did equally well last year, with Life contributing a third to profits, Employee Benefits the same and so also Banking and Asset Management. He singled out Individual Life under the stewardship of Mark Chisholm as doing particularly well, contributing J$2.5 billion to profits. Employee Benefits weighed in with J$2 billion and the bank , namely Pan Caribbean of which Sagicor has an 86 per cent stake offered up J$1.7 billion to Group profits. This illustrated that all three engines are very strong and producing good profits.

2012 will be a challenging year

This year, 2012 will prove particularly challenging. Already the local dollar is coming under pressure and geopolitical tensions in the Middle East is driving up global oil prices. This in turn could lead to increasing inflation and a negative impact on the balance of payments. Then there is the much anticipated new agreement with the IMF and a need to address tax and pension reform as well as public sector wages. How does Byles see these factors impacting Sagicor Life Jamaica?

“Doing better than we did last year in an increasingly challenging environment is going to be tough.But again I come back to the ingredients that have made us successful in 2011. It is the same ingredients that we are going to be using going forward. Firstly you will see a very charged-up sales team going out there. Already the first two months’ results are very good and are a little better than last year. Secondly, we will continue to deliver a great service to our customers. Then there are some efficiencies that we will be continuing to put in place in the company. We will be putting new products out there that will excite people and we will be keeping the brand strong and attractive.We will have to be more persistent in a more difficult economic environment.”

Entering the Central American market

Sagicor Life Jamaica’s CEO has no plans to offer new lines of business, particularly as it relates to Property and Casualty (P&C). It has already dipped its toe in that business in the Cayman Islands but did not find it agreeable, so came out of there. Two years ago Sagicor signed a joint agreement with a player in Costa Rica. That joint venture company has been granted a licence in Costa Rica and during the third quarter of this year, Sagicor will be selling insurance there. This will give the company a foothold into one of the fastest growing economies in Central America. It has to be borne in mind that the Cost Rican economy is stronger than Jamaica’s and the population there is larger. This is the beginning of a Central American strategy for Sagicor.

Jewel in the crown

Sagicor is a multi-jurisdictional insurance player, yet Jamaica continues to be the jewel in its crown. Sagicor Jamaica’s parent is Sagicor Financial Corporation and according to its financial statements going back to 2005, the geographical segment lines reveal that Jamaica in terms of total revenue and income from ordinary activities has led all other territories from 2005 to 2010.

A cursory look at Sagicor Financial Corporation’s financial statements for the year ended December 2010 is rather revealing. It segments into Sagicor Life Inc (housing most of the Caribbean), Sagicor Life Jamaica, Sagicor Europe, Sagicor USA, and Head Office and Other. A look at the net income line reveals that Jamaica provided the lion’s share with US$56.28 million. The total for all the segments came to just US$41.63 million. What does Byles make of this?

“Yes, when you look at the numbers we are the largest contributor to the Sagicor group. Some of the businesses that our parent operates do have some challenges, but my job here is to do the very best in Jamaica given that we have a challenging economic situation right here. This means we have to redouble our efforts to deliver good results.”

It is not inconceivable that Sagicor Financial Corporation may have a notion to relocate Byles to another jurisdiction and have him replicate the success he consistently has in Jamaica. How would he feel about such a move?

“I’m very comfortable here in Jamaica. I do work with a great team and I must say that is half of the satisfaction of this job. Yes, it would be disruptive in that sense, but I love a challenge and whatever is challenging and I can contribute positively to, I would be happy to do it, ” explained Sagicor Jamaica’s CEO.

He went on to proclaim that Sagicor Life Jamaica has the best sales force in the Caribbean and that the relationship they have with the brokers is excellent. “Our strategy is to maintain and fine tune that even as we build the efficiencies of the company. We want the 500,000 customers we have to feel totally satisfied with us and to be proud to be our customers. That is a magnificent objective to strive for. “

How does Byles view the Jamaican economy right now?

“Purchasing power has been compressed for the last two years. Sagicor did not get any help from the economy . Our investment income is down considerably because rates are down. It is the premiums that have driven our success. That is great because what it says is that business is healthy, not just investment income.

“I must say here that I am very concerned for the Jamaican economy. We had some tasks we needed to do over the last 18 months and we have not done them. In fact the situation is worse today than it was 18 months ago. It now makes the job twice as difficult and it makes the tough decisions twice as tough. Despite it all, we have to get on with doing it. In the long run , if we want employment and for people to have a future, then we have to get the fundamentals right. What is the good of having an education and being unemployed?

The fundamentals are you must have an economy that is stable and grows. Businesses must feel comfortable and happy to invest. Now the challenge I feel we have is this — we are torn between trying to get growth going and keeping the fiscal balance tight. I think that is a critical decision that we have to make. There is a sweet spot there between trying to do as much as we can to get growth and trying as much as we can to hold the fiscal deficit down. That’s the challenge the government currently faces. Now if you go too hard on the fiscal deficit side it really makes growing the economy tough. But if you go too hard on trying to stimulate the economy, you run the risk of shattering people’s confidence because the deficit then explodes. It’s a delicate balancing act and I don’t envy the Minister of Finance and the government for it. However, guess what? It can be done and we need to exhibit greater creativity.

” We need to bring as many people as we can who can help round the table, people who can come up with the ideas to stimulate the economy as well as to hold the fiscal deficit down. If we go that route I think we will find a solution.”

Honing the business

Sagicor, after acquiring the Blue Cross health portfolio in Jamaica five years ago, made no secret that it is on the lookout for more acquisitions. So does it have its eye on once again acquiring some plum companies?

” While we always have our eye out for acquisitions, we are much more focused on driving our business organically. We must get it even more efficient and hone it to become so competitive that other people in the business find it difficult to compete with us.The business of protecting and building the image of the brand in the public’s mind is crucial. We have been in the business for over 40 years and we are constantly honing how one sells insurance. The old days when your saleman was a flim-flam type of guy is done. What we are preparing our agents to do is to meeting all one’s financial needs. Now that includes life insurance coverage, but it may also include other things like an annuity, pension management , or health insurance,” said Richard Byles.