Grupo Sura 2Q 2021 Profits Jump 43% Year-on-Year
Medellin-based multinational insurance, finance and health-care giant Grupo Sura announced August 12 that its second quarter (2Q) net income jumped 43% year-on-year, to COP$461 billion (US$120 million).
Revenues likewise rose 15% year-on-year, to COP$6.1 trillion (US$1.58 billion), according to the company.
As for first half (1H) 2021, net income is up a whopping 174% year-on-year, to COP$672 billion (US$175 million), from COP$245 billion (US$63 million) in 1H 2020, according to the company
The profit surges are “due to a faster-than-expected recovery of the group’s different businesses, with Sura Asset Management (Sura AM) recording improved operating revenues, associates scoring higher net income figures along with a firm control over operating expense,” according to the company.
“Thanks to positive levels of business performance, written premiums posted a growth of 10.2% with fee and commission income securing another growth of 16%. Likewise, the increase in revenues obtained via the equity method was driven by higher net income figures posted by [stock holdings in] Bancolombia, Grupo Argos and Protección,” the company added.
Total costs and expenses rose by 13.2% for 1H 2021 and 20.4% for 2Q 2021, “mainly due to the continued impact of the pandemic on [health insurer] Suramericana, including Covid-19-related costs and expense amounting to COP$1.1 trillion [US$286 million] on a year-to-date basis and COP$686 billion [US$178 million] for the second quarter,” according to the company.
During the latest quarter, “Grupo Sura continued to execute the share buyback program, reaching a total of COP$30 billion [US7.8$ million] to date where 86% corresponds to common shares and 14% are preferred shares. The company will continue buying back shares as a measure that we perceive as an efficient capital allocation which creates value for both the company and our shareholders,” the company added.
The Suramericana insurance division saw written premiums rise by 10.8% through 1H 2021, “driven by the health care and life insurance segments with individual increases of 34.9% and 11.7% respectively,” according to the company.
“On the other hand, retained claims rose by 26.7% due to the effect of the pandemic, with Covid-19 claims accounting for a total of COP$1.1 trillion [US$286 million], compared to COP$236 billion [US$61 million] at the end of the first half of 2020, when infection curves were still at an early stage,” according to the company.
“These higher claims rate was partially mitigated by lower fees and commissions paid, which showed a decline of 10.7%, along with greater efficiencies that kept the growth in administrative expense to just 0.6%.
“Investment income decreased by 21.3%, mainly due to the prevailing increases in interest rates that in turn affected securities that are value at mark-to-market. In the light of this, the [Suramericana division] recorded a net loss of COP$750 million [US$195 million] on a year-to-date basis.
“However, Suramericana reported a net income of COP$9.8 billion [US$2.5 million] for the second quarter 2021, also impacted by Covid claims given higher infection curves, mainly in Colombia, as well as by lower investment income,” the company added.
As for Sura Asset Management results, “operating revenues reached COP$1.4 trillion [US$364 million] so far this year, with growths of 21.1% in pesos and 15.5% in local currencies.
“This positive level of performance was mainly due to a 15.2% increase in fee and commission income, improved revenues obtained via the equity method, mainly from [pension-fund administrator] Proteccion, which came to COP$68 billion [US$17.7 million], coupled with better returns from its reserve requirements.
“Likewise, Sura Asset Management continued with a firm control over spending, which, in addition to higher revenues, produced a net income of COP$305 billion [US$79 million] at the end of 2Q 2021, this representing a growth of 154% compared to the same period last year.
“Furthermore, good levels of performance on the part of its Investment Management and Inversiones Sura divisions continued during this past quarter producing positive levels of operating earnings,” the company added.