Sagicor Shines Among Financial Sector, While QWI And IronRock Report Lower Earnings

Sagicor outperformed financial sector stocks reporting earnings this season, as the company reported a higher net profit, while QWI reported a drop in earnings and IronRock (ROC) a net loss. Net profit grew by 31.3% for Sagicor’s Q1 2022, fell by 28.7% for QWI’s H1 2022, and dropped 291.7% to a loss of $8.55Mn for ROC’s Q1, year-over-year.
Sagicor’s Individual Life insurance segment performed well, while the Employee Benefits segment showed strong recovery, which supported earnings growth despite the softening in asset prices due to global market conditions. QWI’s revenues were however impacted by weaker asset prices as its portfolio took a hit in its second-quarter as the pace of its stock portfolio gains slowed. The effect of the war in Ukraine and turbulence in the USA market resulted in weaker stock portfolio gains.
Meanwhile, IronRock has had a difficult Q1 as the pricing of property and motor insurance continues to be an issue, especially as the increase in the rate of inflation is likely to increase the cost of claims.
Going forward we expect this trend of a mixture of over-performance and under-performance among financial stocks to continue. A confluence of factors affecting the financial markets, such as withdrawal of all the measures under the Disaster Risk Management Act (DRMA), elevated inflation, rising interest rates, tight liquidity, and still low FX supply, are impacting the various sub-sectors of the financial sector differently.
All three stocks have witnessed an appreciation in prices year to date- Sagicor (+0.1%), QWI (+3.9%), and ROC (12.9%). At their present prices, SJ and QWI are currently trading at P/Es below the Main Market Financial Sector Average of 13.4x, while ROC is trading above the Junior Market Financial Sector average of 13.3x. However, we expect positive market reaction to Sagicor’s results. As such, the stock price and multiple may rise this week.

(Source: Company Financials and NCBCM)