Grupo Sura 2Q 2019 Net Income Rises 37% Year-on-Year
Medellin-based insurance giant Grupo Sura announced August 14 that its second quarter (2Q) 2019 net income jumped 37.4% year-on-year, to COP$951 billion (US$276 million).
“An improved performance on the part of its investment portfolios along with higher revenues obtained from its associates via the equity method were key factors in achieving this level of results,” according to Sura.
“On a consolidated level, operating revenues stood at COP$10.5 trillion [US$3.05 billion] for a growth of 13.3%, this driven by higher levels of investment income (+50.1%) revenues obtained from associates via the equity method (+48.0%) and higher revenues from services rendered (+21.9%).
“On the other hand, operating expense came to COP$9.0 trillion [US$2.6 billion] for a 11.7% increase, which is lower than that recorded for operating revenues. Here, lower adjustments to reserves compensated for higher costs of services rendered for our healthcare business as well as higher broker commissions and other expenses.
“Consequently, operating earnings came to COP$1.5 trillion [US$436 million], for a growth of 23.7%.”
Sura’s “Asset Management” division net income jumped 48% year-on-year, to COP$430 billion (US$125 million).
Meanwhile, the “Suramericana” insurance division “continues to post significant growth rates with written premiums rising by 12.3% and revenues from services rendered increasing by another 21.9%,” according to Sura.
“The reduction in the retained claims rate is worth noting — this including net level reserves — as well as higher investment income that rose by 15.1%. However, in spite of these good growth dynamics, year-to-date net income at the end of 2Q 2019 reached COP$173 billion [US$50 million] for a decline of 33%, this due to certain specific circumstances that are not comparable with 2018, such as:
“- Life insurance segment: an increase in expense related to the latest tax reform which taxed with value-added tax (nondeductible) the commissions paid on sales of life insurance policies.
“- Property and casualty insurance segment: showing higher reinsurance costs in Chile and the inflation adjustment expense in Argentina that began to be accounted for in October 2018.
“- Healthcare segment: the current situation of the public healthcare system in Colombia produced a considerable reduction in the net earnings of the mandatory healthcare business (EPS),” according to the company.
Grupo Sura profits during 2Q 2019 also benefited from its partial holdings in Medellin-based banking giant Bancolombia and Medellin-based foods multinational Grupo Nutresa, “along with lower interest expense and the positive [Colombian peso to U.S. dollar] exchange rate effect corresponding to hedging arrangements as well as exchange differences on the Group’s indebtedness,” according to the company.