Q As your needs in life change, we re here to help you plan $5.28B 2017: $5.65B $32.02B 2017: $30.01B $68.81B 2017: $59.82B $ : $1.

Transcription

1 Q PERFORMANCE DIRECTORS STATEMENT On behalf of the Board of Directors of Sagicor Group Jamaica Limited (SGJ or the Group) we are pleased to report on the fi nancial performance of our Group of companies for the six months ended. NET PROFIT ATTRIBUTABLE TO STOCKHOLDERS $5.28B 2017: $5.65B Overview Sagicor Group Jamaica generated net profi t of $2.64 billion for Q compared to $3.06 billion for Q For the full six months period profi ts were $5.28 billion in 2018 and $5.65 in 2017 with earnings per stock unit being $1.36 compared to $1.46 in The annualized return on Stockholders equity was 15%. The Group s core business performed well during the second quarter of 2018, showing strong new business, portfolio growth and profi t improvements over last year. The Group was however beset by some events which negatively impacted 2018 results. The most signifi cant of these were declining interest rates in Jamaica, recognition of a large capital loss on certain bonds which were redeemed during February and recognition of a charge for the possible impairment of our investment in Government of Barbados bonds. From January 1, 2018, the Group adopted the requirements of International Financial Reporting Standards (IFRS) 9 Financial Instruments which deals with the recognition, measurement and classifi cation of fi nancial assets and liabilities. The impact on transition was not material to the consolidated accounts and is described in note #3 of these interim fi nancial statements. The Group also adopted IFRS 15 Revenue from Contracts with Customers. This standard introduces the core principle that revenue must be recognised at the transaction price when the goods or services are transferred to the customer. There was no material fi nancial impact on adoption of IFRS 15. Revenue, Expense and Profitability Consolidated Revenue for the six months period of $32.02 billion grew by 7% over prior year, after reflecting the investments related losses, and contributed to the net profi t result of $5.28 billion. Net Premium Income of $18.45 billion, which accounts for 58% of revenue, was 6% up on Net Investment Income of $7.97 billion, before capital gains and losses, was 4% better than last year with current interest rates trending down. Net capital gains were lower than in 2017 and we recognized a loss on some bonds which were redeemed. Credit losses were higher in the commercial bank and we had the added cost of Expected Credit Losses (ECL) with the adoption of International Financial Reporting Standard (IFRS) 9 Financial Instruments this included a signifi cant amount for the likely impairment of Government of Barbados bonds. Fee based income increased mainly from the growth of our Payments channels. Total expenditures, before taxes, of $25.63 billion increased by 10% over prior year. Group consolidated policy benefi ts, including death claims, health claims, annuity payments, surrenders and fund withdrawals, totaled $12.70 billion for the six months, net of reinsurance recoveries, compared to $10.54 billion last year. TOTAL REVENUE $32.02B 2017: $30.01B STOCKHOLDERS EQUITY $68.81B 2017: $59.82B EARNINGS PER STOCK UNIT $ : $1.46 As your needs in life change, we re here to help you plan

2 HIGHLIGHTS OPERATING RESULTS (INCOME STATEMENT DATA): Group consolidated administration expenses, including depreciation and amortization of software, of $9.00 billion, were 2% lower than in 2017 which had some non-recurring costs. The Group effi ciency ratio of administration expenses to total revenue was 33% (2017: 34%). Individual Life Net premium income for the Individual Life line of business of $11.26 billion was 10% higher than the comparative 2017 period, driven by strong new business in Jamaica, with new annualized premium income about 17% ahead of last year and improved conservation of the inforce block of policies which grew by about 7%. Apart from realized capital losses, all other revenue items were stable. Benefi ts accrued or paid to policyholders were higher than 2017 but not signifi cantly. The increase in actuarial liabilities for the quarter was off-set somewhat by releases for expenses and other effi ciencies. The result was net profi t of $2.48 billion increasing by 8% over last year. The key performance indicators in this segment all trend positively including market share and product mix. Group Insurance Net Group Insurance and annuity premiums of $7.19 billion were in line with last year. New annualized premiums were about 6% ahead of last year, influenced mainly by Group Health. Total revenue of $11.34 billion was 11% better than in Net benefi ts accrued or paid to policyholders of $7.18 billion were 27% up on last year due to business growth. Other expenditure items remained stable. However, there was a large release of actuarial reserves in Q from refi nements to assumptions which was positive to the % Change Dec 2017 Net Profi t, attributable to Stockholders - J$ billions % Total Revenue - J$ billions % FINANCIAL POSITION & STRENGTH (BALANCE SHEET DATA): Total Assets of Sagicor Group Jamaica - J$ billions % Total Assets under management - J$ billions % Stockholders Equity - J$ billions % PROFITABILITY: Return on average Stockholders Equity (ROE) 15% 19% -21% 19% Earnings per stock unit (EPS) - J$ % 3.11 OTHER MARKET INFORMATION: SGJ Share Price - J$ % Market capitalization - J$ billions % bottom line and this was not repeated in The net profi t of $1.94 billion in 2018 was therefore lower than in Commercial Banking Sagicor Bank continued its growth path and contributed net profi ts of $ million for the six months, signifi cantly more than the amount recorded in These profi ts were produced from Revenues of $5.41 billion which were 5% more than prior year. Large capital losses were recorded on certain bonds redeemed in Q Fee based income was 15% more than in 2017 as we grew our Payments channels. Meanwhile, total assets of $ billion grew 11% since and included an Expected Credit Loss (ECL) write-down on adoption of IFRS 9. Loans and advances, net of provision for credit losses (but before IFRS 9 ECL), were $65.38 billion, 18% higher than the balance and 7% ahead of the balance. Customer deposits of $96.42 billion grew 25% and 14% over the and levels respectively. The bank is reaping success from its many strategies to grow the business, expand its client base and improve effi ciencies. Investment Banking Sagicor Investments saw a challenging six months. Net profi t of $ million was produced which was lower than last year. There were capital losses on certain bonds redeemed during February 2018 and a signifi cant charge was recorded in Q for the likely impairment of Government of Barbados bonds. The company also picked-up some ECL from adoption of IFRS 9. Investment income was also pressured by lower asset yields and fell below the amount earned in Were the investments losses to be excluded, normal profi ts in 2018 would have been much higher than in 2017 mainly due to expansion of corporate fi nance fee-based income. Sagicor Investments has a number of additional initiatives and transactions that we expect to come on stream as the year progresses. Comprehensive Income Total Comprehensive Income, including net profi t for the year and movements in reserves held in Equity, was $3.06 billion for the six months compared to $6.37 billion in The 2018 amount includes net unrealized losses on securities being classifi ed as fair value through other comprehensive income (FVOCI). Large unrealized losses were recorded for the 2018 half year, especially on US$ corporate bonds with rising interest rates in the US. Assets and Managed Funds - Total assets of the Group grew to reach $ billion up from $ billion as at and higher than the Capital CAPITAL RATIOS Regulated Entities Sagicor Life Jamaica Limited Sagicor Bank Jamaica Limited Sagicor Investments Jamaica Limited Sagicor Life of the Cayman Islands Limited 10.0% 10.0% 150 Key Regulatory Ratios Minimum continuing capital and surplus requirements ratio (MCCSR) Regulatory capital to risk weighted assets ratio Regulatory capital to risk weighted assets ratio Minimum capital requirement (MCR) SAGICOR INVESTMENTS JAMAICA (SIJL) SA SA $ billion as at. Adoption of IFRS 9 during the quarter, led to ECL of $530 million being recorded on debt securities classifi ed as Amortized Cost and this reduced asset values. Total assets under management, as at, including Group Assets, Pension Funds assets managed on behalf of clients and Unit Trusts, were $ billion, a 18% increase over the $ billion as at and a 6% increase over the amount of $ billion. Cash Flows Group consolidated cash generated from operating activities was $8.43 billion (: $8.40 billion). Liquidity of the Group remained strong with available Cash and Cash Equivalents at being $24.96 billion up from $18.81 billion at. The higher cash position mainly reflects Sagicor Bank s cash reserves requirements with The Bank of Jamaica and funds held with other Financial Institutions. Stockholders Equity stood at $68.81 billion, level with the position but an increase of 15% over. Market capitalization of SGJ at was $ billion, up 3% on and 18% compared to June last year. The Group maintained its strong capital position and continues to exceed regulatory capital requirements. Minimum Requirement June 30, 2018 June 30, % 176.5% 171.0% 10.0% 14.1% 14.5% 10.0% 12.7% 12.8% 125.0% 381.3% 226.8% 2.7% 4.1% 26.5% REGULATORY REQUIREMENT EXCESS OVER REQUIREMENT Barbados Avenue, Kingston SAGICOR ( ) sagicorjamaica.com

3 Christopher Zacca, President and CEO of the Sagicor Group, shares a moment with athletes at the 35th staging of the JTA/ Sagicor National Athletics Championship. 3. Sagicor Bank CEO Chorvelle Johnson (fourth left) and the Sagicor Foundation volunteers give the Comprehensive Clinic a facelift on Labour Day, May 23, Sagicor Foundation Executive Director and Vice President, Group Marketing, Sagicor Group Jamaica, Simone Walker (right) shows off the newly installed mural at the D. Frank s Early Childhood Institution to Sagicor Foundation Chairman, Dr. the Honourable R. Danny Williams during the official handover ceremony to close out the school s participation in the 2017/2018 Adopt-A-School programme. Sharing in the moment is the school s principal Gloria McKenzie. Corporate Social Responsibility In keeping with our tagline for the Sagicor Foundation of Caring, Inspiring, and Serving Sagicor Group Jamaica executed several social activities in the second quarter of 2018, touching thousands of lives over the period. With a $12 million investment, the Sagicor Foundation completed major renovation works at the three early childhood institutions it adopted under the 2017/2018 Adopt-A-School programme; the three schools are - AME Basic School in Portland Cottage, D. Frank s Early Childhood Institution in Greenvale, Manchester and Haughton Grove Early Childhood Institution in Ramble, Hanover. The improved structures were offi cially handed over in June, at the end of the academic year. The handing over exercise included a formal ceremony and a fun day activity for the children. In May, Sagicor Foundation once again partnered with the Jamaica Teachers Association (JTA) for the 35th staging of the JTA/Sagicor National Athletics Championship. The event which was held over two days, on May 25 and 26, at the National Stadium, provided a platform for some 1000 young athletes from across all 14 parishes to showcase their prowess and athleticism. The Sagicor Foundation supported the JTA with a $6 million sponsorship and over 150 volunteers to assist in the execution of the event. On Labour Day, May 23, Sagicor team members and Sagicor Foundation volunteers lent their time to participate in the beautifi cation and refurbishing of eight health centres across the island. Over 500 volunteers were spread across the various projects and completed much needed renovations at the Black River Health Centre in St Elizabeth; Comprehensive Clinic in Kingston; Christian Pen Health Centre in Portmore, St. Catherine; Deeside Health Centre in Trelawny; Duhaney Park Health Centre in Kingston; Mandeville Comprehensive Clinic in Manchester; St. Ann s Bay Health Centre in St. Ann and the Whitehouse Health Centre in Westmoreland. In support of Read Across Jamaica Day, Sagicor team members visited twelve basic schools across the island and read to the children. The schools also received a gift package of reading books courtesy of Sagicor Foundation. In addition to the major projects completed during the period, the Sagicor Foundation sponsored and supported several other impactful initiatives, to include: a motivational conference for boys - Our Sons - geared at inspiring and engaging young men to be upstanding future leaders; a Father s Day conference - Meet a Father, Change a Life which saw over 3000 inner-city men gathering to meet and engage with numerous business leaders in the country. As is customary, the Sagicor Foundation also participated in the Jamaica Cancer Society Relay for Life vigil, which honours loved ones battling with cancer and those who have passed. Outlook The Jamaican economy remained stable with low growth. All Fiscal, Monetary Policy and Financial Sector Structural benchmarks have been met to date. All seven (7) macro-fi scal structural benchmarks for the period ending have also been successfully met. Other key economic indicators fell within target ranges or were better than expected. However, climbing oil prices could have implications for the general economy and inflation. Interest rates are trending down. The exchange rate (J$ to US$) started 2018 at a strengthened $124; by June there was a 4% depreciation; the rate declined by a further 4% in July to reach $134. We are optimistic about the economy, the business environment and the Group s prospects for We continually monitor environmental factors and adjust our strategies accordingly. Acknowledgement We offer deep appreciation to all Team members, Financial Advisors and Brokers who all contribute to the achievements of the Group; to our loyal clients for their trust and commitment; to our supportive business partners; to our stockholders for their continued confi dence and to our Directors for their diligence and wise counsel. On behalf of The Board of Directors: RICHARD O. BYLES Chairman CHRISTOPHER ZACCA, C.D., J.P. President & CEO August 10, 2018

4 CONSOLIDATED STATEMENT OF FINANCIAL POSITION as at June 30, 2018 ASSETS: Cash resources & Cash reserve at Central Bank Financial investments Derivative financial instruments Loans & leases, after allowance for credit losses Pledged assets Investment properties Investment in joint venture Investment in associated company Intangible assets Property, plant and equipment Retirement benefit assets Deferred income taxes Taxation recoverable Other assets TOTAL ASSETS STOCKHOLDERS EQUITY AND LIABILITIES: Equity attributable to stockholders of the company Share capital Equity reserves Retained earnings Total Equity 29,175,411 22,854,216 24,071, ,940, ,357, ,108, , , ,010 65,468,016 55,622,180 61,431,486 73,875,049 8,108,980 81,608, , , , , , ,391 7,462,486 7,184,292 7,050,842 4,934,437 5,365,312 5,127,730 4,998,530 4,691,180 5,063, , ,261 3,668,801 3,918,183 2,351,201 2,714,358 2,735,497 2,332,714 20,573,998 15,306,446 19,209, ,425, ,205, ,036,520 8,855,511 8,614,246 8,415,051 4,909,993 4,949,178 7,522,083 55,043,938 46,258,106 52,564,997 68,809,442 59,821,530 68,502,131 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME for the six-months ended Net profit for the period Other comprehensive income: Items that may be subsequently reclassified to profit or loss Fair value reserve - available-for-sale securities: Unrealised gains/(losses) on available-for-sale investments Gains/(losses) reclassified and reported in profit in the Income Statement Provision for expected credit losses - IFRS 9 Impairment losses on available-for-sale investments recognised and reported in the Income Statement Change in actuarial liabilities arising from fair value movements in available-for-sale securities Re-translation of foreign operations Unrealised gains on owner-occupied properties in associates Items that will not be subsequently reclassified to profit or loss Unrealised gains on owner-occupied properties: Gains recognized by subsidiaries Q Q Full Year 2,638,463 3,058,914 5,278,554 5,652,277 12,069,823 (2,370,328) (70,314) (3,530,158) 1,006,472 3,348,594 (2,481) 168,502 (392,915) (87,105) (1,188,071) 206, , , , , ,793 (550) 502,296 (358,486) 657,564 (1,782,651) 278,849 (2,895,106) 742,092 3,144, ,400 (6,872) 568,719 (19,452) (436,728) , ,403 3, , ,764 Liabilities Deposit and security liabilities Derivative financial instruments Redeemable preference shares Taxation payable Retirement benefit obligations Other liabilities Policyholders Funds Insurance contracts liabilities Investment contracts liabilities Other policy liabilities 181,371, ,558, ,167, , , ,010 2,061,415 2,051,083 2,054, , , ,160 3,533,459 6,168,518 3,533,463 20,688,356 14,840,414 18,859,895 79,227,326 69,567,098 77,918,513 13,096,547 13,775,415 13,777,110 4,309,090 3,862,829 3,797,426 Re-measurements of retirement benefits obligations Total other income recognised directly in stockholders' equity, net of taxes Total Comprehensive Income attributable to stockholders of the parent company ,849,880 (1,248,848) 275,210 (2,221,984) 722,641 5,744,370 1,389,615 3,334,124 3,056,570 6,374,918 17,814,193 Total Liabilities TOTAL STOCKHOLDERS' EQUITY AND LIABILITIES 96,632,963 87,205,342 95,493, ,615, ,384, ,534, ,425, ,205, ,036,520 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the six-months ended RICHARD O. BYLES Chairman August 10, 2018 CONSOLIDATED INCOME STATEMENT for the six-months ended Revenue: Net premium revenue Net investment income Fees and other income Total revenue Benefits and Expenses: Net insurance benefits incurred Changes in insurance and annuity liabilities Administration expenses Commissions and related expenses Amortization of intangible assets Other taxes and levies Total benefits and expenses Share of profit/(loss) from joint venture Gain on disposal of interest in associate Share of profit from associate Profit before Taxation Taxation NET PROFIT Net Profit attributable to stockholders of the parent company Earnings per stock unit for profit attributable to stockholders of the parent company: Basic and Fully diluted CHRISTOPHER ZACCA, C.D., J.P. President & CEO Q Q Full Year 9,111,872 8,882,331 18,450,774 17,409,955 40,998,535 3,728,317 4,096,905 7,832,134 8,635,638 21,429,115 3,357,529 1,955,257 5,736,186 3,968,898 8,016,159 16,197,718 14,934,493 32,019,094 30,014,491 70,443,809 6,507,155 5,095,055 12,695,834 10,540,087 21,908, , , , ,342 10,675,068 4,421,110 4,353,624 8,765,596 8,929,155 17,832,337 1,361,277 1,091,956 2,622,477 2,376,554 4,884, , , , , ,739 (116) 1, , , ,992 13,092,904 10,949,128 25,628,813 23,258,602 56,592,924 16,343 25,304 15,573 16,528 (9,710) ,584 81,346 75, , , ,846 3,202,503 4,085,669 6,629,051 7,005,545 14,993,605 (564,040) (1,026,755) (1,350,497) (1,353,268) (2,923,782) 2,638,463 3,058,914 5,278,554 5,652,277 12,069,823 2,638,463 3,058,914 5,278,554 5,652,277 12,069,823 $0.68 $0.79 $1.36 $1.46 $3.11 Period ended June 30, 2018: Balance as reported 31 Cumulative transition adjustments on adoption of IFRS 9 Restated balance as 1 January 2018 Total comprehensive income for the period Transactions with owners - Dividends paid to owners of the parent Treasury shares Total Transactions with owners Transfer between reserves - Gains on equities reclassified and reported in retained earnings Total transfers between reserves Balance as at June 30, 2018 Period ended June 30, 2017: Balance as 1 January 2017 Total comprehensive income for the period Transactions with owners - Dividends paid to owners of the parent Treasury shares Total Transactions with owners Transfer between reserves - Total transfers between reserves Balance as at June 30, 2017 Share Capital Equity Retained Earnings Total Stockholders' Equity 8,415,051 7,522,083 52,564,997 68,502,131 - (296,398) (164,353) (460,751) 8,415,051 7,225,685 52,400,644 68,041,380 - (2,221,984) 5,278,554 3,056, (2,577,719) (2,577,719) 440,460 - (151,249) 289, ,460 - (2,728,968) (2,288,508) (3,330) 3, (90,378) 90, (93,708) 93,708-8,855,511 4,909,993 55,043,938 68,809,442 8,552,562 4,203,984 43,654,436 56,410, ,641 5,652,277 6,374, (2,733,944) (2,733,944) 61,684 - (292,110) (230,426) 61,684 - (3,026,054) (2,964,370) - 22,553 (22,553) ,553 (22,553) - 8,614,246 4,949,178 46,258,106 59,821,530

5 CONSOLIDATED SEGMENTAL FINANCIAL INFORMATION for the six-months ended Individual Lines Employee Benefits Investment Banking Commercial Banking All other Eliminations Group Operating results: External revenues 12,825,766 11,332,527 1,233,535 5,398,707 1,228,559-32,019,094 Inter-segment revenues (172,851) - 30,860 11,117 69,747 61,127 - Total revenue 12,652,915 11,332,527 1,264,395 5,409,824 1,298,306 61,127 32,019,094 Benefits and expenses (8,930,198) (9,059,685) (776,630) (3,729,794) (1,431,884) 122,873 (23,805,318) Change in actuarial liabilities (318,672) (2,626) (243,105) (564,302) Depreciation (30,588) (16,943) (5,628) (123,347) (102,083) - (278,589) Amortization of intangibles (7,401) (64,388) (32,567) (83,661) (154,899) - (342,916) Finance costs Other taxes (4,756) - (4,425) Asset tax (92,684) (24,945) (183,920) (264,757) (66,957) - (633,263) Total benefits and expenses (9,379,543) (9,168,256) (998,745) (4,201,559) (1,760,478) (120,232) (25,628,813) Share of profit from joint venture ,573-15,573 Share of profit from associate , ,197 Profit before tax 3,273,372 2,164, ,650 1,208,265 (223,402) (59,105) 6,629,051 Investment and corporation taxes (796,294) (224,552) 72,128 (436,013) 34,234 - (1,350,497) Profit after taxation 2,477,078 1,939, , ,252 (189,168) (59,105) 5,278,554 Segment assets: 55,399,014 66,687,053 85,141, ,047,828 28,718,437 (11,637,200) 361,356,498 Unallocated assets - Investment in joint venture 420,074 Investment in associate 7,462,486 Deferred income taxes 3,668,801 Retirement benefit assets 517,257 Total assets 373,425,116 Segment liabilities: 45,915,460 53,344,490 76,661, ,070,405 19,825,378 (12,735,413) 301,082,215 Unallocated liabilities - Retirement benefit obligations 3,533,459 Total liabilities 304,615,674 Other Segment items: Capital expenditure: Computer software 122,854 Property, plant and equipment 191, ,647 Geographical information: Cayman Total Jamaica Islands Other Group Revenue 30,698,207 1,320,887-32,019,094 - Total assets 352,665,112 20,339, , ,425,116 - Individual Lines Employee Benefits Investment Banking Commercial Banking All other Eliminations Group Operating results: External revenues 12,424,334 10,170,899 1,918,578 5,143, ,999-30,355,333 Inter-segment revenues (81,201) 74,630 (12,137) 16, ,532 (140,633) - Total revenue 12,343,133 10,245,529 1,906,441 5,160, ,531 (140,633) 30,355,333 Benefits and expenses (8,323,372) (7,347,903) (747,100) (3,977,506) (1,669,784) 122,149 (21,943,516) Change in actuarial liabilities (981,262) 677, (162,024) (465,342) Depreciation (25,423) (17,485) (6,870) (111,155) (82,189) - (243,122) Amortization of intangibles (7,668) (62,332) (33,186) (79,003) (148,943) - (331,132) Finance costs Other taxes (1,639) (2,256) - - (1,258) - (5,153) Asset tax (81,586) (37,046) (192,987) (246,552) (53,008) - (611,179) Total benefits and expenses (9,420,950) (6,789,078) (980,143) (4,414,216) (1,955,182) (39,875) (23,599,444) Share of profit from joint venture ,528-16,528 Share of profit from associate , ,128 Profit before tax 2,922,183 3,456, , ,116 (864,995) (180,508) 7,005,545 Investment and corporation taxes (629,268) (301,397) (243,963) (282,910) 104,270 - (1,353,268) Profit after taxation 2,292,915 3,155, , ,206 (760,725) (180,508) 5,652,277 Segment assets: 51,059,222 60,359,591 82,195, ,059,957 31,366,616 (10,334,553) 328,706,259 Unallocated assets - Investment in joint venture 397,068 Investment in associate 7,184,292 Deferred income taxes 3,918,183 Total assets 340,205,802 Segment liabilities: 41,707,705 49,303,522 72,977,676 95,495,033 25,930,190 (11,198,372) 274,215,754 Unallocated liabilities - Retirement benefit obligations 6,168,518 Total liabilities 280,384,272 Other Segment items: Capital expenditure: Computer software 379,915 Property, plant and equipment 287, ,897 Geographical information: Cayman Total Jamaica Islands Other Group Revenue 28,393,963 1,961,370-30,355,333 - Total assets 315,039,656 24,769, , ,205,802 - CONSOLIDATED STATEMENT OF CASH FLOWS for the six-months ended Cash Flows from Operating Activities: Cash Flows from Investing Activities: Investment in joint venture Investment in associate Proceeds from sale of interest in associate Dividend from associate Purchase of investment poroperty Purchase of property, plant and equipment, net Purchase of intangible assets, net Net cash used in investing activities Cash Flows from Financing activities: Purchase of treasury shares, net Dividends paid to stockholders Net cash used in financing activities Cash and cash equivalents: Effect of exchange rate on cash and cash equivalents Increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year Comprising: Balances with Banks Short - Term Deposits Securities purchased under resale agreements Short - Term Loans Bank overdraft Explanatory Notes Full Year Net Profit Adjustments for: Items not affecting cash and changes to policyholders' funds: Adjustments for non-cash items, interest and dividends Changes in other operating assets and liabilities Net Investment purchases Interest received Interest paid Income taxes paid Net cash generated from operating activities 5,278,554 (6,018,514) 14,008,943 (10,661,745) 10,258,054 (2,076,526) (2,360,397) 8,428,369 5,652,277 (6,238,417) (947,204) 5,856,598 10,054,319 (2,726,804) (3,253,345) 8,397,424 12,069,823 (5,492,548) (3,859,346) (1,240,901) 20,950,971 (4,834,532) (4,876,734) 12,716,733 (18,724) (19,459) (19,460) - (834,984) (865,346) , , (188,012) (283,812) (820,999) (122,854) (379,915) (504,188) (329,590) (1,518,170) (1,112,834) 289,213 (230,426) (704,994) (2,577,719) (2,733,944) (4,999,212) (2,288,506) (2,964,370) (5,704,206) 337,216 41,505 (291,767) 6,147,489 3,956,389 5,607,926 18,811,881 13,203,955 13,203,955 24,959,370 17,160,344 18,811,881 16,667,979 12,590,747 12,652,317 7,633,021 7,081,100 5,987,298 3,028,212 1,928,876 2,042,760 (2,332,438) (4,200,872) (1,572,433) (37,404) (239,507) (298,061) 24,959,370 17,160,344 18,811, Identification and Principal Activities Sagicor Group Jamaica Limited (SGJ, the company) is incorporated and domiciled in Jamaica and is listed on the Jamaica Stock Exchange. It is 32.45% ( %) owned by LOJ Holdings Limited which is also incorporated and domiciled in Jamaica and is wholly owned by Sagicor Financial Corporation Limited (SFCL). The ultimate parent company is SFCL, which is incorporated and domiciled in Bermuda. SFCL has an overall interest of 49.11% ( %) in the company. The other signifi cant shareholder in SGJ is PanJam Investment Limited with a 31.55% ( %) holding. The registered offi ce of the Sagicor Group Jamaica Limited is located at Barbados Avenue, Kingston 5, Jamaica. Sagicor Group Jamaica comprises many companies offering a wide range of fi nancial products and services. These include life and health insurance; annuities; pensions administration; investment services; commercial banking; investments banking; captives management; property management and real estate sales and rentals. 2. Basis of preparation These condensed consolidated interim fi nancial statements have been prepared in accordance with IAS 34 Interim Financial Reporting, unless otherwise noted. The condensed consolidated interim fi nancial statements should be read in conjunction with the accounting policies as set out in Note 2 of the audited fi nancial statements for the year ended 31. Effective January 1, 2018 the Group adopted IFRS 15 Revenue from Contracts with Customers. The standard introduces the core principle that revenue must be recognised when the goods or services are transferred to the customer, at the transaction price. Any bundled goods or services that are distinct must be separately recognised, and any discounts or rebates on the contract price must generally be allocated to the separate elements. The Group has reviewed transactions which may be affected, and concluded that there was no material impact on adoption of IFRS 15. Effective January 1, 2018, the Group adopted IFRS 9 Financial Instruments. Prior period amounts are in accordance with IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 has resulted in changes in accounting policies related to the classifi cation and measurement and impairment of fi nancial assets and liabilities.

6 IFRS 9 introduces key changes in the following areas: (i) Classification and Measurement - requiring asset classification and measurement based upon both business model and product characteristics. There are three categories for the classification of financial assets: Amortised Cost Fair Value through Other Comprehensive Income (FVOCI) Fair Value through Profit & Loss (FVTPL) There are two categories for the classification of financial liabilities: Amortised Cost Fair Value through Profit & Loss (FVTPL) Accounting for embedded derivatives have also been simplified. Initial measurement at fair value remains similar to IAS 39, however subsequent measurement and accounting is based on the new classifications. (ii) Impairment introducing an Expected Credit Loss (ECL) model based on a three-stage categorization, and forward-looking information which replaces the Incurred Loss Model under IAS 39. This results in earlier and more timely recognition of expected credit losses. (iii) Hedge accounting introducing changes to and wider eligibility criteria for hedging of financial instruments. 3. Cumulative transition adjustments on adoption of IFRS 9 (i) Reconciliation of Statement of Financial Position from IAS 39 to IFRS 9 The following tables provides the impact from the transition to IFRS 9 on the Consolidated Statement of Financial Position at transition date, January 1, CONSOLIDATED STATEMENT OF FINANCIAL POSITION as at January 1, 2018 Classifiaction under IAS 39 IAS 39 Carrying Amount Reclassification Allowance for Expected Credit Losses (ECL) ASSETS Cash resources Amortised Cost 12,652,317 12,652,317 Amortised Cost Cash reserve at Central Bank Amortised Cost 11,418,839 11,418,839 Amortised Cost Financial investments Short term deposits Amortised Cost 4,631,095 4,631,095 Amortised Cost Fair value through profit or loss FVTPL 29,874,388 29,874,388 FVTPL Available for Sale AFS 124,895,650 (4,281,281) 120,614,369 FVOCI Available for Sale AFS 4,281,281 4,281,281 FVTPL Loans and receivables Loans & Receivables 64,315,138 (131,531) 64,183,607 Amortised Cost 223,716,271 0 (131,531) 223,584,740 Less Pledged assets (81,608,214) (81,608,214) 142,108,057 0 (131,531) 141,976,526 Derivative financial instruments FVTPL 278, ,010 FVTPL Loans & leases, after allowance for credit losses Loans & Receivables 61,431,486 (348,554) 61,082,932 Amortised Cost Pledged assets 81,608,214 81,608,214 Investment properties 530, ,000 Investment in joint venture 356, ,391 Investment in associated company 7,050,842 7,050,842 Intangible assets 5,127,730 5,127,730 Property, plant and equipment 5,063,646 5,063,646 Reinsurance contracts 465, ,546 Retirement benefit assets 517, ,261 Deferred income taxes 2,351,201 24,570 2,375,771 Taxation recoverable 2,332,710 2,332,710 Other assets 18,744,270 (5,235) 18,739,035 TOTAL ASSETS 352,036,520 0 (460,750) 351,575,770 STOCKHOLDERS EQUITY AND LIABILITIES: Stockholders Equity Attributable Stockholders of the Company Share capital 8,415,051 8,415,051 Equity reserves 7,522,083 (409,009) 112,613 7,225,687 Retained earnings 52,564, ,009 (505,115) 52,468,891 Total Equity 68,502,131 0 (392,502) 68,109,629 Liabilities Deposit and security liabilities Securities sold under repurchase agreements Amortised Cost 59,322,292 59,322,292 Amortised Cost Due to banks and other financial institutions Amortised Cost 16,633,429 16,633,429 Amortised Cost Customer deposits and other accounts Amortised Cost 81,285,114 81,285,114 Amortised Cost Structured products Amortised Cost 5,926,746 5,926,746 Amortised Cost Redeemable Preference Shares Amortised Cost 2,054,231 2,054,231 Amortised Cost 165,221, ,221,812 Derivative financial instruments FVTPL 278, ,010 FVTPL Taxation payable 148, ,160 Retirement benefit obligations 3,533,463 3,533,463 Other liabilities 18,859,895 18,859,895 Policyholders Funds 0 Insurance contracts liabilities 77,918,513 (68,248) 77,850,265 Investment contracts liabilities 13,777,110 13,777,110 Other policy liabilities 3,797,426 3,797,426 95,493,049 0 (68,248) 95,493,049 Total Liabilities 283,534,389 0 (68,248) 283,466,141 TOTAL EQUITY AND LIABILITIES 352,036,520 0 (460,750) 351,575,770 Note : The ECL transition adjustment for Amortised Cost Debt Securities backing Insurance Contract Liabilities, results in a corresponding reduction in the Policy Holders' Fund of $68,247,000 and Change in Actuarial Liabilities in the P&L during Q IFRS 9 Carrying Classification under Amount IFRS 9 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the three-months ended 30 Expected Credit Losses Loans & leases, after allowance for credit losses 1,529, ,646 1,884,371 Investment securities at Amortised Cost 130, ,674 Investment securities at FVOCI 554, ,613 Note : The ECL Allowance amounts are shown net of Other Loss and before taxes Accumulated Provision for Expected Credit Losses under IAS 39 as at December 31, 2017 Fair Value through Other Comprehensive Income (FVOCI) Actuarial Liabilities Transition provision for Owner Occupied Properties Total Investment and Fair value Balance as reported 31 (1,137,035) (46,975) 1,587, ,656 Cumulative transition adjustments on adoption of IFRS 9 52, ,024 Restated balance as 1 January 2018 (1,085,011) (46,975) 1,587, ,680 Net gains recycled to revenue on disposal and maturity of FVOCI securities (396,245) (396,245) Net unrealized losses on FVOCI securities (4,093,629) (4,093,629) Deferred tax on unrealized capital gains 1,089, ,403 1,193,545 Shadow accounting 502, ,296 Currency translation Total comprehensive income for the year (3,400,732) 502, ,403 (2,794,033) Balance as at 31 (4,485,743) 455,321 1,692,069 (2,338,353) Retained Earnings Reserve Capital redemption reserve Special investment reserve Loan Loss Reserve Total Other Balance as reported 31 1,595,131 1,086, ,488 (596,199) 2,498,438 Cumulative transition adjustments on adoption of IFRS (348,424) (348,424) Restated balance as 1 January ,595,131 1,086, ,488 (944,623) 2,150,014 0 Total comprehensive income for the year Transfers between reserves - (90,375) (90,375) Total transfers between reserves (90,375) (90,375) Balance as at 31 1,595,131 1,086, ,488 (1,034,998) 2,059,639 Stock Options Reserve Investment and Fair Value Total Investment and Fair value Other Total Other Currency Translation Reserve Equity Balance as reported 31 30, ,656 2,498,438 4,589,022 7,522,083 Cumulative transition adjustments on adoption of IFRS ,024 (348,424) (296,400) Restated balance as 1 January , ,680 2,150,014 4,589,022 7,225,683 Net gains recycled to revenue on disposal and maturity of FVOCI securities (396,245) 0 (396,245) Net unrealized losses on FVOCI securities (4,093,629) 0 (4,093,629) Deferred tax on unrealized capital gains 1,193, ,193,545 Shadow accounting 502, ,296 Currency translation , ,719 Total comprehensive income for the year 0 (2,794,033) 0 568,719 (2,225,314) Transfers between reserves - 0 (90,375) (90,375) Total transfers between reserves 0 0 (90,375) 0 0 Balance as at 31 30,967 (2,338,353) 2,059,639 5,157,741 4,909,994 (ii) Reconciliation of Accumulated Expected Credit Losses from IAS 39 to IFRS 9 The following table reconciles the closing accumulated provision for Expected Credit Losses for financial assets in accordance with IAS 39 to the opening allowance under IFRS 9 as at January 1, CONSOLIDATED ACCUMULATED EXPECTED CREDIT LOSSES as at January 1, 2018 Accumulated Provision for Expected Credit Losses under IFRS 9 as at January 1, ,529,725 1,039,933 2,569, Accounting Estimates and Judgments Certain amounts recorded in these unaudited consolidated financial statements reflect estimates and assumptions made by management about insurance liability reserves, investment valuations, interest rates and other factors. Actual results may differ from the estimates and assumptions made. Interim results are not necessarily indicative of full year results.