Grupo Sura 3Q 2017 Net Income Falls Year-on-Year; Completes Mexico Swap

Medellin-based insurance and pension-fund giant Grupo Sura announced November 15 that its third quarter (3Q) 2017 net income fell 11.6% year-on-year, to COP$460 billion (US$152 million).

For the January-through-September nine months 2017, net income fell 26.6% year-on-year, to COP$1 trillion (US$331 million).

The decline came “mainly due to a negative impact of the [Colombian peso/U.S. dollar] exchange rate as well as non-recurring provisions recorded during the first half of the year,” according to Sura.

“Were we not to take into account the aforementioned effects, the parent´s net income would have dropped by just 0.3% based on the levels of operating performance obtained by its subsidiaries and the amount of revenues obtained from associates via the equity method.

“Nevertheless, our subsidiaries continue to secure significant levels of growth thereby reinforcing their competitive standing in all those countries in the region where we are present while maintaining positive levels of operating performance in the core lines of business,” according to the company.

The Suramericana insurance division saw earnings before taxes rise 3.5% year-on-year “thanks to a good level of performance from its regional operations as well as higher contributions from all those businesses acquired from RSA, which are now offsetting the increase in interest expense and amortizations incurred with this acquisition” according to Sura.

However, Suramericana’s net income fell 9.4% year-on-year, to COP$393 billion (US$130 million), “mainly due to higher income tax,” according to the company.

At the end of 3Q 2017, Grupo SURA’s consolidated financial liabilities rose 5% year-on-year, to COP$10.2 trillion (US$3.3 billion), including a US$191 billion bond placement in February 2017 as well as a separate US$350 million issue of international bonds (for Sura AM division) in April 2017, “for the purpose of replacing its liabilities and improving their maturity structure,” according to Sura.

The corporate segment, as recorded in Grupo Sura´s consolidated income, includes Grupo Sura, Suramericana and Sura AM. “This segment includes the amortizations relating to the acquisition of the former ING operations, which in no way affect cash,” according to the company.

However, this consolidated statement “does not include the amortizations carried out with regard to the acquisition of the former RSA companies, since these are directly posted in the non-life segment. The main changes to this segment for this past quarter consist mainly of the effect of the exchange rate on the dollar-denominated debt carried as well as the derivatives held by Grupo Sura and SuraA AM to hedge said debt,” according to the company.

Insurance premiums for 3Q 2017 rose by 8.8% “thanks to the level of performance secured by the different segments throughout the region, with life insurance accounting for more than half of this increase,” according to Sura.

“Likewise, the auto [insurance] solution continues with its good dynamics in the region, driven by the signature in September of a new agreement with UBER in Mexico,” the company added.

Completes Mexico Internal Swap Deal

Also on November 15, Sura announced that the Suramericana insurance division completed the buyout of the Mexican life-insurance portfolio formerly belonging to Sura Asset Management.

“Suramericana, with 73 years of experience in the insurance industry, shall be extending its portfolio to cover the aforementioned insurance interests held in Mexico,” according to the company.