Sagicor Financial (TSE:SFC) reported softer first-quarter 2026 core earnings as adverse mortality experience in North America and market-related losses weighed on results, though management said it continues to view the company’s underlying return profile as intact.
On the company’s earnings call, President and CEO Andre Mousseau said the quarter was “a bit unusual” because several strategic initiatives are moving in a positive direction, while core earnings came in below what management considers the run rate of the business.
Core earnings to shareholders were $25 million, including $8 million of negative core insurance experience, which Mousseau said was “substantially all” related to mortality in the North American segment. He said Sagicor often observes mortality pressure in the first quarter, but unlike last year, gains elsewhere did not offset the impact.
“Absent that mortality, we estimate that we would have hit a core ROE of approximately 13%,” Mousseau said.
Group CFO Kathryn Jenkins said core ROE was 9.9% in the quarter and would have been approximately 13% when adjusted for core insurance experience losses. She also said reported net results were negatively affected by $49 million of market experience losses tied to lower asset prices in U.S. and Canadian fixed income and equity markets, partially offset by liability revaluations.
North American Mortality Weighs on Earnings
Sagicor Canada generated core earnings to shareholders of $23 million, down 9% from a year earlier, driven by insurance experience losses from higher-than-expected mortality. The segment posted a net loss to shareholders of $1 million as unfavorable market-related impacts from higher interest rates and negative equity returns reduced reported results.
New business contractual service margin, or CSM, in Canada was $10 million, while net CSM declined 2% quarter-over-quarter in U.S. dollars to $557 million because of a weaker Canadian dollar, Jenkins said.
Sagicor Life USA reported new business production of $298 million, which Jenkins described as in line with management expectations. Core earnings to shareholders were $5 million, down year-over-year, also affected by adverse mortality experience. The U.S. segment recorded a net loss to shareholders of $7 million, with adverse market experience from higher interest rates partly offset by favorable changes in actuarial assumptions. Net CSM rose 5% quarter-over-quarter to $158 million.
During the question-and-answer session, Mousseau said mortality results are not available in real time and that it was too early to judge second-quarter trends. He said Sagicor’s Canadian book had negative mortality experience in the first quarter in each of the past two years, with different outcomes in the second quarter. In the U.S., he said the company has seen negative first-quarter mortality for four consecutive years.
Mousseau characterized the quarter’s mortality pressure as “at the edge, but not necessarily an outlier” and said the company does not plan to manage the business to hit quarterly annualized targets. He said Sagicor believes it is “properly reinsured and adequately reserved.”
Caribbean Segments Show Premium Growth, Merger Costs
Sagicor Jamaica delivered 7% net premium growth year-over-year on what Jenkins called robust insurance sales. Sagicor’s share of Sagicor Jamaica’s core earnings to shareholders was $10 million, unchanged from a year earlier, as improved core net investment results from larger loan and investment portfolios were offset by a modest amount of residual Hurricane Melissa-related experience recognized in the quarter.
Sagicor’s share of Sagicor Jamaica’s net income to shareholders was $6 million, below core earnings because of timing differences related to asset tax payment and recognition. Net CSM increased 2% to $298 million on strong new business production.
In Sagicor Life, core earnings to shareholders were $10 million, down 7% year-over-year. Jenkins said the decline reflected favorable mortality experience in the prior-year period that did not repeat. The segment recorded a net loss to shareholders of $11 million due to unfavorable mark-to-market impacts from interest rate movements and non-recurring reinsurance-related costs. Net CSM rose 2% quarter-over-quarter to $268 million.
Mousseau said the company incurred charges in the Caribbean as it works through open issues and advances integration plans ahead of a planned merger of its Caribbean businesses. He said the transaction is expected to close toward the end of the year because of required approvals, but the company is already working on business process redesign, technology upgrades, vendor relationships and organizational structure.
“When completed, we will have radically transformed our businesses across the Caribbean,” Mousseau said, citing a better customer experience, improved employee experience and margin enhancements. He said additional costs are expected in 2026 in preparation for the merger.
Capital Position and Dividend
Jenkins said Sagicor remained well capitalized despite asset price declines during the quarter. The group LICAT ratio was 134%, and the financial leverage ratio was 27.5%. Book value per share was $7.18, or CAD 10.01. Deployable capital, defined as shareholders’ equity plus net CSM to shareholders, was $2.1 billion, or $15.47 per share and CAD 21.57 per share.
The company also announced its 26th consecutive quarterly dividend since listing on the Toronto Stock Exchange. The dividend was declared at $0.075 per quarter, or $0.30 annualized, marking the second dividend at the higher level.
Asked about share buybacks, Mousseau said repurchases have been lighter in recent quarters as the company allowed market liquidity to develop. However, he said the further the stock trades from book value, the more attractive buybacks become from a return-on-equity perspective.
Management Reiterates ROE Targets
Mousseau cautioned investors against annualizing the quarter’s $25 million in core net income, just as he said they should not have annualized stronger results from the second quarter of last year. He said management believes Sagicor’s current core ROE run rate is approximately 13% and that quarterly fluctuations around that figure have “little long-term information value.”
He also said that, if the second quarter had closed at the time of the call, market volatility would likely be “mildly positive” for the company, though he noted such impacts remain subject to market conditions.
Sagicor reiterated its targets for core return on shareholders’ equity of 14% in 2027 and 15% in 2028. Mousseau said the path to higher returns includes growth in the U.S. business, margin improvements from the combined Caribbean operations and potential asset allocation changes in Canada.
The company also highlighted the hiring of Eric Sandberg as president of its U.S. subsidiary. Mousseau said Sandberg joined from National Life, where he served as CFO and chief risk officer, and will focus on accelerating U.S. growth. He said Sagicor expects further product diversification beyond its current emphasis on multi-year guaranteed annuities.
About Sagicor Financial (TSE:SFC)
Sagicor Financial Company Ltd. (TSX: SFC) is a leading financial services provider with over 185 years of history in the Caribbean, over 90 years of history in Canada, and over 70 years of history in the United States. Sagicor offers a wide range of products and services, including life, health, and general insurance, banking, pensions, annuities, investment management, and real estate. Sagicor's registered office is located at Clarendon House, 2 Church Street, Hamilton, HM 11, Bermuda, with its principal office located at Cecil F De Caires Building, Wildey, St.
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