JMMB banks on SFC ‘Smart growth’ diversification strategy remains active

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JMMB Group Limited CEO Keith Duncan addressing shareholders at the company's 11th annual general meeting on Monday. (Photos: Garfield Robinson)

D espite a one-off loss whi ch impacted its usual substantial contributions to group bottom line during the first quarter, the management of JMMB Group Limited (JMMBGL) said it remains optimistic about the future performance of its associate company Sagicor Financial Company.

Since acquiring shares in the insurance company back in 2019, JMMBGL, following marginal growths in its shareholding, now holds a 23.62 per cent stake in SFC.

Speaking at the 11th annual general meeting on Monday, CEO of JMMBGL Keith Duncan said that the $1.4-billion hit in its share of profits, which sent group earnings in reverse at the end the three-month period, stemmed from a negative mark to market adjustment which he expects to be short-lived with SFC continuing to make meaningful and accretive contributions to the financial group going forward.

“The fall-off was due to the International Financial Reporting Standards (IFRS) 17 reclassification that had to take place, but the SFC team is now working assiduously to ensure they manage the portfolio in a way that will reduce volatility in their profitability. Despite the challenge, as a board we continue to share the belief that this company has a very bright future,” he said in his report to shareholders gathered online and in person at the meeting.

During the last financial year the group’s strategic investment in SFC contributed approximately $20.3 billion in the share of profit. This was primarily driven by one-off gains of over $16 billion derived from its acquisition of ivari, one of Canada’s leading individual life insurance providers.

“As the single largest shareholder of SFC, we are well poised to get a good share of earnings from Sagicor Jamaica, Sagicor Eastern Caribbean, Trinidad and Tobago, Barbados as well as Sagicor USA and Canada, and as such we are very happy and bullish about the performance of SFC into the future,” Duncan stated.

Patrick Ellis, chief financial officer, in noting SFC’s contribution of more than $40 billion to group assets, which up to June was valued at $680 billion, further said that as the SFC team continues to work through the volatility, he, too, remains positive that it will be able to sort out the necessary requirements in matching its assets and liabilities.

“I think before the end of the calendar year we should know where we are, and I feel hopeful it will be positive,” Ellis added.

Aggressive with the push of its ‘smart growth’ diversification strategy through which it seeks to diversify revenue streams, the CEO, in an outlook, said that a further unlocking of new products and services will aid the group with securing greater value from new and existing business lines.

On the heels of the group’s recent partnership with Liberty Latin America which saw the launch of new fintech solution Myne Lend, Duncan said the group’s roll-out of more products and services remain ongoing.

“As we monetise our land bank and push to grow our real estate business line we expect it to continue to deliver for us. Our private equity business line in which we take stakes in other companies also continues to grow, and through our Vertex SME fund we’ve been able to recently acquire a 35 per cent stake in Erin Radiology which follows our [previous] taking of a 25 per cent interest in Island Car Rentals (ICR),” Duncan said.

Pointing to some other plans, he said that the upcoming enabling of online onboarding will soon see JMMB clients being able to open accounts digitally.

The implementation of new measures geared towards improving the client experience, the CEO said, is also aimed at increasing current dividend yields.

Duncan repeated his call for a phasing out of the asset tax, which, since its implementation in 2013, has resulted in the company making over $6 billion in payments. This, he said, will further auger well for shareholder value when removed. Another area in need of renewed focus, he said, is the pushing up of JMMB’s share price which now trades on average at about $21 per stock unit.

At the end of the 2023 financial year, March 31, 2024, JMMBGL secured a net profit of 11.8 billion on the back of improved revenues totalling $22.4 billion.

“Going forward we remain committed to delivering increased value for our shareholders. Diversification continues to work for us because where we were impacted in one area, we were still able to deliver $11.8 billion in profitability with a 25 per cent return on equity. This year will be another one of adjustment for us, but as interest rates come down, we expect core performances in our countries of operation to improve and we also expect that SFC will continue to perform,” Duncan said.

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JMMB banks on SFC ‘Smart growth’ diversification strategy remains active

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