Grupo Sura Posts 2Q 2023 Net Loss on Tax Charges Taken for Nutresa Stock Sale
Medellin-based insurance and asset-management giant Grupo Sura on August 15 posted a second quarter (2Q) 2023 net loss of COP$11 billion (-US$2.7 million) — a sharp reversal from a COP$557 billion (US$136 million) net profit in 2Q 2022.
Sura blamed the net loss on its decision to accelerate tax charges into 2Q 2023 for the sale of its former interest in food manufacturing giant Nutresa.
Negative 2Q results also reflect “the greater devaluation of the Colombian peso compared to the rest of the currencies of the region and the consolidation of [pension fund administrator] AFP Protección,” according to Sura.
Despite the 2Q net loss, total 2Q revenues rose 26.8% year-on-year, to COP$9.5 trillion (US$2.3 billion), “explained by an increase in 19.6% in issued premiums” that were “driven mainly by Suramericana Colombia operations, thanks to rate increases and an increase in insured values of the mobility sector [car insurance], as well as the performance of health, life and ARL [disability insurance] solutions, due to a greater number of affiliates,” according to Sura.
Investment income grew 84.9%, hitting COP$1.4 trillion (US$343 million) “due to the good dynamics of inflation-indexed assets and fixed-income and alternative assets in Suramericana, as well as the continuous recovery of the legal reserve in Sura Asset Management (AM) due to the better performance of the global financial markets,” according to the company.
During 2Q 2023, income from Sura’s investments in Bancolombia fell 18%, while income from its prior investment in Nutresa fell 35% “due to an increase in financial expenses due to the high levels in interest rates compared to the previous year,” according to Sura.
As for its first half (1H) 2023 results, net income dipped 17% year-on-year, to COP$823 billion (US$201 million), hit by the tax impacts from the sale of its Nutresa holdings.
The Suramericana insurance division accounted for 20% of total 1H 2023 profits, while the Sura AM division accounted for 22%. Sura’s holdings in banking giant Bancolombia accounted for 40% of 1H 2023 profits, according to the company.
During 1H 2023, Suramericana delivered a net profit of COP$471 billion (US$115 million), up 81%, thanks to profit boosts in life insurance (18%), health insurance (23%) and a 73% hike in investment income.
Sura AM profits totaled COP$493 billion (US$121 million), “driven by the growth of income from commissions, the increase in the returns on investments of the pension funds (cash reserve) and efforts to control expenses,” according to the company.
As for the longer-term impact of Sura’s sale of its previous share in Nutresa, “we are convinced that this transaction generates value for Grupo Sura and its shareholders and we will continue on the path of profitability above the cost of capital,” added Sura Vice President Ricardo Jaramillo.
After the close of the second quarter, Sura subsequently announced the pending sale of its Suramericana insurance operations in Argentina (netting US$19 million) and in El Salvador (netting US$43 million), “thus optimizing its capital management to consolidate and maintain a regional footprint in seven countries,” according to the company.
