Sagicor Financial Co. Ltd. Class A · TSX:SFC
Sagicor Financial Co. Ltd. Class A — SPAC Merger (February 2019)
42 slides from Sagicor Financial Co. Ltd. Class A's SPAC merger presentation, February 2019
Slide 1: Sagicor Financial Corporation Investor Presentation
SAGICOR FINANCIAL CORPORATION Investor Presentation February 2019 0
Slide 2: Disclaimer
DISCLAIMER GENERAL This presentation is qualified in its entirety by reference to, and must be read in conjunction with, the information to be contained in a final prospectus which will be prepared by Alignvest Acquisition II Corporation (“Alignvest”) in connection with its proposed acquisition of S
Slide 3: Disclaimer (cont'd)
DISCLAIMER (CONT’D) highly dependent upon economic, political and other conditions and developments in Barbados, Jamaica, Trinidad and Tobago, the United States and the other jurisdictions in which it operates; New Sagicor’s financial condition and operating results may be adversely affected by fore
Slide 4: Disclaimer (cont'd)
DISCLAIMER (CONT’D) ▪ For the purpose of this earnings analysis, we assume that SLTT and SJLIC Acquisitions close at the end of 2019. The completion of these transactions is not cross-conditional on each other, but are conditional on the close of the acquisition of Sagicor. These closing dates are s
Slide 5: Today's Presenters
TODAY’S PRESENTERS ▪ Managing Partner of Alignvest Management Corporation Timothy Hodgson ▪ Former Special Advisor to Governor Mark Carney at the Bank of Canada from 2010 to 2012 ▪ Former Chief Executive Officer of Goldman Sachs Canada BCom, MBA, CPA, CA ▪ Currently Board Director and Investment Com
Slide 6: Transaction Overview
TRANSACTION OVERVIEW ▪ Sagicor Financial Corporation Limited (“SFC” or “Sagicor”) is a leading insurer and asset manager in the Caribbean with a growing presence in the United States and Central America About SFC ▪ Sagicor was founded in 1840, is domiciled in Bermuda, and is headquartered in Barbado
Slide 7: Transaction Steps / Anticipated Timeline
TRANSACTION STEPS / ANTICIPATED TIMELINE ▪ November 27th: Transaction announcement ▪ December 3rd: Preliminary prospectus is filed with the OSC ▪ February 1st: Order of the Court in Bermuda ▪ February 7th: Alignvest filed its final prospectus in Canada ▪ Early February: Alignvest and Sagicor to mail
Slide 8: Financial Summary and Illustrative Pro Forma Ownership
FINANCIAL SUMMARY AND ILLUSTRATIVE PRO FORMA OWNERSHIP Sources & Uses Commentary Sources of Funds (US$ mm) Projections - Standalone AQY Cash(1) 308 ▪ AQY cash employed to provide liquidity to small Cash from Forward Purchasers 85 shareholders (if desired) Cash from Committed Private Placement 38 SFC
Slide 9: Valuation – A Compelling Opportunity
VALUATION – A COMPELLING OPPORTUNITY ▪ Sagicor valuation at a substantial discount to peers on both a P/B and P/E basis ▪ Strong 2019E ROE of 12%, anticipated to expand to 14% – 15% in 2020 as capital from AQY is employed ▪ Pro forma equity value of US$814 million / C$1.09 billion(1) Price / Book Pr
Slide 10: Company Overview
COMPANY OVERVIEW 9
Slide 11: Investment Highlights
INVESTMENT HIGHLIGHTS ▪ Stable and growing business lines: 56% individual life, health & annuity, 25% group life & benefits administration, Established 13% banking & investment management 1 175+ Year ▪ 50%+ market share in core markets; strong growth in net income and book value Franchise ▪ Core ope
Slide 12: SFC: Building the Market Leader
SFC: BUILDING THE MARKET LEADER Acquisition of Island Life in Acquisition of RBC Jamaica and Nationwide Jamaica was Insurance Co of Trinidad and completed and operations Tobago rebranded as Sagicor Bank Completed Acquisition of shares in Life redomiciliation of Jamaica to Bermuda Acquisition of Laur
Slide 13: SFC: Strategic Pillars
SFC: STRATEGIC PILLARS Achieved Market Implemented Best Optimized Capital Expanded Leadership 1 Practices 2 Structure 3 Internationally 4 Strategic Implemented Progressive Enhanced Capital Built Strong Platform Acquisitions Governance Framework Flexibility for Growth ▪ Jamaica: Island Life ▪ Adopted
Slide 14: SFC: Well-Positioned with Diversified Mix
SFC: WELL-POSITIONED WITH DIVERSIFIED MIX Key Highlights Diversified Business Mix and Geography P&C Other ▪ Successful 175+ year history built on customer Banking & 3% 2% Investment focus and strategic acquisitions Mgmt. 13% ▪ Core market leadership with attractive organic 2017 Individual Life, Reve
Slide 15: SFC: Three Core Segments
SFC: THREE CORE SEGMENTS Key Operating Segments Leading Market Positioning Sagicor Financial Rank Market Share Corporation Limited 2017 Net Income(1): US$62.1mm ▪ 61% Individual Life(5) ▪ 71% Group Life(5) 2017 S/H Equity: US$625mm Jamaica 1st ▪ 60% Pensions(5) ▪ 62% Group Health(5) Sagicor Jamaica
Slide 16: SFC: Leading Market Position in Caribbean
SFC: LEADING MARKET POSITION IN CARIBBEAN ▪ Leading position in multiple Caribbean countries ▪ IMF projects ~4% growth in Caribbean region in 2019 ▪ Median population ages of 26 – 40 is well below Canadian median age of 42, suggesting better long- term demand for insurance driven by demographics Eas
Slide 17: Sagicor Jamaica: Leading Financial Services Provider in Jamaica
SAGICOR JAMAICA: LEADING FINANCIAL SERVICES PROVIDER IN JAMAICA Key Highlights Consistent Growth and Profitability Equity (J$ mm) Equity (US$ mm)(1)(2) ▪ SFC has 49% ownership in Sagicor Group 551 Jamaica Average ROE of 68,502 ▪ Consistently outstanding ROE performance – 21% since 2008 403 389 443 5
Slide 18: Sagicor Life: Market Leading Caribbean Player
SAGICOR LIFE: MARKET LEADING CARIBBEAN PLAYER Key Highlights Consistent Growth and Profitability (1) Equity (US$ mm) ▪ Leading regional financial services company in Average ROE of the Southern Caribbean 14% since 2008 $375 $369 $353 $352 ▪ Strong brand and customer loyalty $271 $323 $253 $230 ▪ 201
Slide 19: Sagicor USA: Strong Growth Opportunities
SAGICOR USA: STRONG GROWTH OPPORTUNITIES Key Highlights Net Premiums Earned (US$ mm) $238.5 ▪ Simple and “easy-to-buy” Life and Annuity products targeting a familiar customer profile Growth driven by quota share termination and new product launches ▪ State-of-the-art and scalable IT platform ▪ Award
Slide 20: SFC: Prudent Canadian Reserving Philosophy Ensures Resilience
SFC: PRUDENT CANADIAN RESERVING PHILOSOPHY ENSURES RESILIENCE Provision for adverse development (PfAD) consistently 10% - 12% of net reserves through economic cycles (US$ millions) Best Estimate Reserves Provisions for Adverse Deviations $2,214 $2,092 $2,063 $2,039 $2,031 $1,984 11.6% 10.2% 10.5% 11
Slide 21: SFC: Overview of Invested Assets
SFC: OVERVIEW OF INVESTED ASSETS ▪ Jamaica – de-risked by successful debt and economic restructuring; credit spread <1% ▪ Barbados – fully provisioned for and poised for recovery ▪ Lending portfolio is recourse and fully-collateralized Investment Portfolio Breakdown (Q3 2018) Other Financial Reinsur
Slide 22: SFC: Superior Book Value Growth Over Time
SFC: SUPERIOR BOOK VALUE GROWTH OVER TIME ▪ Since IPO in 2002, growth in core book value per share has been in line with Canadian peers ▪ Company is well-positioned to continue value creation due to leadership in core markets and experienced management team Consistent Book Value Per Share Growth(1)
Slide 23: Initiatives to Grow Earnings
INITIATIVES TO GROW EARNINGS ▪ Purchase of life insurance operations of Scotiabank in Jamaica and Trinidad & Tobago ▪ 20 year bancassurance agreement to exclusively market insurance to bank customers ▪ US$240 million purchase price SLTT & SJLIC ▪ Targeted funding sources of US$140 million of excess
Slide 24: Scotiabank Bancassurance: Scope to Improve Penetration
SCOTIABANK BANCASSURANCE: SCOPE TO IMPROVE PENETRATION Commentary SJLIC/SLTT – Sagicor Product Comparison ▪ The Caribbean’s leading life insurer and bank, SJLIC/SLTT Sagicor Sagicor and Scotiabank will enter into a 20-year bancassurance agreement Individual Creditor ✓ ✓ ▪ An enhanced suite of insura
Slide 25: Financial Overview
FINANCIAL OVERVIEW 24
Slide 26: Overview of Sagicor – Corporate and Capital Structure
OVERVIEW OF SAGICOR – CORPORATE AND CAPITAL STRUCTURE Funding / Capitalization(1) Corporate and Capital Structure (US$ millions) (US$ millions) 2017 Net Income Sagicor Life $57 2017 Funding Sagicor Jamaica (49.11%) 46 Notes & Loans Payable $397 Sagicor Life USA 11 Head Office Other OpCos (3) Shareho
Slide 27: SFC De-Consolidated – ROE Breakdown
SFC DE-CONSOLIDATED – ROE BREAKDOWN ▪ SFC is an amalgamation of several businesses with varying profitability ▪ Excluding the U.S. segment, Sagicor would report a 16.8% ROE ▪ Accounting for minority interest, the core business in the Caribbean has an unlevered ROE of 17.2% ▪ Caribbean and in Jamaica
Slide 28: Sagicor USA: Offers Attractive Earnings Growth Platform
SAGICOR USA: OFFERS ATTRACTIVE EARNINGS GROWTH PLATFORM ▪ Sagicor USA has sub-scale ROE with significant opportunities to improve ▪ Robust core investment spread shows products are competitively priced relative to peers ▪ Recent premium growth demonstrates agent support and customer acceptance ▪ Gro
Slide 29: Sagicor USA: Positioned for Scale
SAGICOR USA: POSITIONED FOR SCALE Key Differentiators Steps to Expand Margins ▪ Tight focus on market that Sagicor understands: ▪ Increased production helps covers excess not competing with major players for large expenses clients ▪ Retaining 100% of gross premiums improves ▪ Simple innovative fixed
Slide 30: Standalone Net Income to Shareholders from Continuing Operations
STANDALONE NET INCOME TO SHAREHOLDERS FROM CONTINUING OPERATIONS Barbados Restructuring Write-Down (US$ mm) $87.1 $85.0 Net Income (US$ mm) Includes $43 million write- $77.0 down $62.1 $43.0 $60.3 $56.3 $53.7 $39.1 $44.1 (1)(2) (1) 2013 2014 2015 2016 2017 LTM - Q3 2019E 2020E 1. Reflects targeted f
Slide 31: Pro Forma Targets Bridges
PRO FORMA TARGETS BRIDGES ▪ 2019 excludes any income from the SJLIC & SLTT acquisitions, which may close in H2 2019 and H1 2020, respectively, subject to regulatory approval Pro Forma Net Income Bridge(1) (US$ millions) $115.0 $30.0 $85.0 $77.0 $8.0 (2) 2019 Baseline Net Income Organic Growth 2020 B
Slide 32: Unlocking Undervalued Asset Creates Investor Upside
UNLOCKING UNDERVALUED ASSET CREATES INVESTOR UPSIDE Core Earnings Potential + Balance Sheet Optimization + Upside = Value Creation Illustrative Value Creation Opportunity for Significant Share Price Value Creation Baseline Growth EPS Accretion: EPS Accretion: in Business 0% - 10%+ 0% - 4%+ EPS Accre
Slide 33: Investment Highlights
INVESTMENT HIGHLIGHTS ▪ Stable and growing business lines: 56% individual life, health & annuity, 25% group life & benefits administration, Established 13% banking & investment management 1 175+ Year ▪ 50%+ market share in core markets; strong growth in net income and book value Franchise ▪ Core ope
Slide 34: Company Supplement
COMPANY SUPPLEMENT 33
Slide 35: Overall Corporate Strategy
OVERALL CORPORATE STRATEGY ▪ Identified opportunities to consolidate Jamaica, Trinidad & Tobago, and the Eastern Caribbean Drive Further 1 ▪ Sagicor is well-positioned to consolidate within its home markets given its M&A execution Consolidation capabilities and experience Continue to ▪ Drive economi
Slide 36: Insurance Expertise + Corporate Development Acumen
INSURANCE EXPERTISE + CORPORATE DEVELOPMENT ACUMEN ▪ President and CEO since 2002, with more than 30 years experience in banking, insurance and financial industries Dodridge D. Miller ▪ Obtained an MBA from the University of Wales and Manchester Business School; also holds an LLM in Corporate FCCA,
Slide 37: Insurance Expertise + Corporate Development Acumen (cont'd)
INSURANCE EXPERTISE + CORPORATE DEVELOPMENT ACUMEN (CONT’D) ▪ Previously at ▪ Joined Sagicor in ▪ CRO since 2001, ▪ Previously at Crown Desnoes & Geddes, 2005, when the with prior role as Life, Canada Life, ATL Group, Air predecessor of Resident Actuary TD Life Insurance, Jamaica Sagicor Life and ov
Slide 38: Proposed Board Members
PROPOSED BOARD MEMBERS ▪ Currently a Consultant on Dodridge D. Miller Monish Dutt Emerging Markets ▪ President and CEO of Sagicor FCCA, MBA, LLM, LLD (Hon) BA, MBA, CPA ▪ Former Chief Credit Officer for since 2002 Global Financial Institutions & Group President & CEO Director Private Equity Funds at
Slide 39: AIM Portfolio Management Expertise to Create Value
AIM PORTFOLIO MANAGEMENT EXPERTISE TO CREATE VALUE Overview of Alignvest Investment Management AIM Senior Investment Team Credentials ▪ Offers multi-asset class solutions and Don ▪ Chair of the AIM Investment Committee ▪ Former Chief Investment Strategist and customized institutional advisory mandat
Slide 40: Valuation Supplement
VALUATION SUPPLEMENT 39
Slide 41: North American Insurance Trading Comparables
NORTH AMERICAN INSURANCE TRADING COMPARABLES ($ in USD millions) % of 52 Week High Price / ROE Market Share Tangible 2019E 2020E Dividend Div. Payout Company Cap ($mm) Price High Low BV BV EPS EPS 2019E 2020E Yield Ratio Sagicor (Pro Forma) $814 $7.50 n.a. n.a. 1.01x 1.13x 7.9x (1) 6.5x(1) 11.8% 14.
Slide 42: Caribbean Financial Trading Comparables
CARIBBEAN FINANCIAL TRADING COMPARABLES ($ in USD millions) % of 52 Week Price as a Multiple of: ROE Market Cap Implied '19E Implied '20E 3 Month Company Domicile ($mm) Share Price High Low BV Tangible BV EPS(1) EPS(1) LTM ADTV (000s) (2) Sagicor (Pro Forma) Bermuda $814 $7.50 n.a. n.a. 1.01x 1.13x