Sura Full-Year 2019 Net Income Jumps 27.9% Year-on-Year; Hits All-Time Record

Medellin-based multinational insurance, pensions and finance giant Grupo Sura on February 27 reported a full-year 2019 27.9% hike in net income year-on-year, to COP$1.7 trillion (US$523.8 million) – an all-time high.

Revenues also rose 13.3% year-on-year, to COP$21.9 trillion (US$6.68 billion), while expenses rose less — by 12.3%.

While Sura’s corporate-wide, full-year 2019 profits rose, fourth-quarter (4Q) 2019 net income actually dipped 5% year-on-year, to COP$226 billion (US$64 million).

Despite the 4Q profits dip, 4Q 2019 revenues actually rose 9% year-on-year, to COP$5.7 trillion (US$1.6 billion), according to the company.

The company mainly credited its full-year 2019 record net income to “sound levels of business performance recorded by Sura Asset Management and Suramericana” as well as its profitable holdings in Medellin-based multinational banking giant Bancolombia and Medellin-based pension-fund administrator Protección.

“This level of performance was made possible even in what was a demanding social and economic environment, taking into account the impact that Argentina’s complex macroeconomic reality had on our operating performance as well as the recent protests in Chile and the current situation of the Colombian health care system,” according to the company.

Consolidated operating income also rose 19.5% year-on-year, to COP$3 trillion (US$920 million) while corporate debt fell 7%, “in keeping with our strategic priority of strengthening our financial position,” according to Sura.

Meanwhile, total assets dipped 2.9% year-on-year, to US$21 billion, thanks to “non-strategic divestments.” Shareholders’ equity rose by 4.4%, to US$8.57 billion, according to the company.

The Sura Asset Management division (pensions, savings and investment) saw net income jump 95% year-on-year, to (US$221 million), along with a 35% rise in operating income.

“The year 2019 was important for more than 20 million of our clients in terms of seeing their savings grow,” added Sura Asset Management CEO Ignacio Calle. “We have seen a significant recovery with the investment market that in turn is allowing us to provide much higher rates of return.”

Revenue improvements in 2019 mainly came from the “Suramericana” division including life insurance segment (up 22.2%); property and casualty (up 4%); and health care (up 24%), plus boosts from Sura Asset Management’s mandatory pensions fund (up 8.3%) and its voluntary pensions fund (up 17.7%), according to the company.

Nevertheless, the Suramericana division’s full-year 2019 net income actually declined 25.6% year-on-year, to COP$390 billion (US$111 million).

“This drop is mainly due to the results obtained by our Argentinean subsidiaries, having sustained a greater loss due to the prevailing macroeconomic conditions that in turn increased the average costs of claims and the reserves for long term coverage,” according to Sura.

“Likewise, the Chilean subsidiary presented an increase in its claims rate in the last quarter of the year due to a burst of mass social protest.

“Meanwhile, the EPS health care subsidiary in Colombia posted at year-end a higher cost of services rendered, compared to the previous year, but this was nevertheless lower than for the first half of 2019. This subsidiary also recorded a higher than expected increase in users due to the mandatory migration of users from other EPS that were being closed down, which produced a negative impact on costs due to a higher claims rate sustained on issues pending from prior failed health care providers.”

Even so, the life insurance segment showed a gain of 24.2% in net income, to COP$58.7 billion (US$16.7 million), “this mainly driven by the results obtained by our Colombian subsidiary which included a 30.1% growth in written premiums corresponding mainly to the health care, group life and workers compensation solutions,” according to Sura.

“The health care segment showed a 137.8% growth in its net income for this past quarter, this driven by lower costs for services rendered given the way the health care segment and claims rate have been handled [in Colombia] especially over the last two quarters of the year. The cost to income ratio came to 87%, compared to 88% for the same period last year,” according to the company.

While Sura’s corporate-wide, full-year 2019 profits rose, fourth-quarter (4Q) 2019 net income actually dipped 5% year-on-year, to COP$226 billion (US$64 million). Nevertheless, 4Q 2019 revenues actually rose 9% year-on-year, to COP$5.7 trillion (US$1.6 billion), according to the company.

The company mainly credited its full-year 2019 record net income to “sound levels of business performance recorded by Sura Asset Management and Suramericana” as well as its profitable holdings in Medellin-based multinational banking giant Bancolombia and Medellin-based pension-fund administrator Protección.

“This level of performance was made possible even in what was after all a demanding social and economic environment, taking into account the impact that Argentina’s complex macroeconomic reality had on our operating performance as well as the recent protests in Chile and the current situation of the Colombian health care system,” according to the company.

Consolidated operating income also rose 19.5% year-on-year, to COP$3 trillion (US$920 million) while corporate debt fell 7%, “in keeping with our strategic priority of strengthening our financial position,” according to Sura.

Meanwhile, total assets dipped 2.9% year-on-year, to US$21 billion, thanks to “non-strategic divestments,” while shareholders’ equity rose by 4.4%, to US$8.57 billion, according to the company.

The Sura Asset Management division (pensions, savings and investment) saw net income jump 95% year-on-year, to (US$221 million), along with a 35% rise in operating income.

“The year 2019 was important for more than 20 million of our clients in terms of seeing their savings grow,” added Sura Asset Management CEO Ignacio Calle. “We have seen a significant recovery with the investment market that in turn is allowing us to provide much higher rates of return.”