Grupo Sura 2Q 2020 Net Income Falls 17.7% Year-on-Year; 1H 2020 Down 74%

Medellin-based multinational insurance, pensions and investments giant Grupo Sura announced August 14 that its second quarter (2Q) 2020 net income fell 17.7%, to US$87 million, while first half (1H) net income dropped 74%, to US$66 million.

During 1H 2020, “despite the [Covid-19] pandemic, revenues totaled COP$10 trillion [US$2.72 billion, down 4% year-on-year], with expense rising by just 2% and operating income standing at COP$922 billion [US$250 million, down 39% year-on-year],” according to Sura.

While both 1H 2020 and 2Q 2020 earnings are down year-on-year, 2Q 2020 net results nevertheless “represent a recovery compared to the first quarter of this year, thanks to positive levels of earnings obtained during the second quarter,” according to Sura.

“Contributing factors included a growth in written premiums and revenues from services rendered on the part of Suramericana (specializing in insurance and risk management), as well as stable flows of commission and fee income on the part of Sura Asset Management (pensions, savings, investment and asset management sectors), in spite of the adverse effect on the region’s job markets,” according to the company.

“The results for the first half of the year proved to be better than what we had initially projected in the light of this pandemic, thereby demonstrating the capacity of both Suramericana and Sura Asset Management to transform, adapt and remain resilient, having made a gradual recovery over recent months,” added Grupo Sura CEO Gonzalo Perez.

“Likewise, our insurance and pension fund management subsidiaries obtained higher returns on their proprietary investments, following the sharp falls sustained on the capital markets in March,” he added.

Cost controls and efficiencies adopted in the latest quarter helped to limit the higher cost to the company of health-care services for its Colombia clients during the Covid-19 pandemic, according to the company.

Sura’s partial stock holdings in profitable foods manufacturer Grupo Nutresa “helped with the overall result,” but its partial holdings in profits-challenged Bancolombia undercut Sura because of “higher [Bancolombia loss] provisions having to be set up that in turn affected the bank’s earnings, a prudent measure given the uncertainty prevailing with a possible impairment of [Bancolombia’s] loan portfolio” during the Covid-19 crisis, according to Sura .

The Suramericana insurance division saw 1H 2020 net income jump 68% year-on-year, to US$79 million, including a 10.5% rise in total revenues, to US$ 2.39 billion, “thanks to growth in the property & casualty (up 7.5%) and life (up 7%) insurance segments as well as health care services rendered (up 21.5%) in Colombia,” according to the company.

“Furthermore, higher returns were posted on the portfolios held by the insurance subsidiaries, particularly in Argentina,” the company added.

Meanwhile, the Sura Asset Management division saw its asset base grow 7.9% year-on-year, to US$131.6 billion. This division now has 20.9 million clients.

“In spite of the effects of the Coronavirus on the regional job markets, fee and commission income for the mandatory pension business only fell by 1.8% at the end of 2Q 2020, having risen by 14.2% in the case of voluntary pensions, thanks to optimum sales management and a greater tendency to save on the part of our clients throughout the region,” according to Sura.

In July 2020, Wall street bond rater S&P confirmed Suramericana’s “AAA” rating for its local debt along with its main subsidiary, Seguros Sura Colombia. Fitch Ratings likewise reaffirmed Grupo Sura its long-term and local AAA rating, with a stable outlook, the company added.