Sagicor Financial Corporation

For the Half Year (HY) ended June 30, 2012, Sagicor Financial Corporation (SFC) reported diluted earnings per share (EPS) of US$0.036 up from a loss per share of US$0.007 in HY 2011.

SFC recorded Revenue of US$639.9m a 7.1 per cent decline in relation to the corresponding period 2011. This was the result of an 8.9 per cent and a 2.1 per cent decline in Net Premium Revenue and Net Investment and Other Income respectively. This reduction is the outcome of the Group's strategy to reduce its International Insurance Portfolio.

Year on Year a 14 per cent decline for Benefits was reported. The Chairman of the Group stated that the lower levels of Insurance Benefits is attributable to the extraordinary catastrophe claims included in the 2011 figures and to the reduced levels of Premium recorded in 2012. Expenses reduced by 2.1 per cent because of reduced Commission expense. Consequentially, there was an overall decline in Total Benefits and Expenses of 10 per cent from US$673.1m to US$606.5m.

Income before Taxes was reported to be US$33.4m compared to Income before Taxes of US$15.6m in HY 2011. Subsequently Income after Taxes was US$24m an increase of 115 per cent.

For the period, SFC's Assets grew by 4.64 per cent to US$5.5b, due to growth of US$283.9m in Financial Investments. Similarly its Liabilities grew by 3.9 per cent to US$4.7b arising mainly from long-term insurance policy contracts. Shareholders' Equity increased by 10.31 per cent to US$615m.

The Group indicated that the prevailing economic environment show only modest signs of improvement in the main regions to which it remains exposed, North America, Europe and the Caribbean. Its performance was influenced by marginal economic growth and high unemployment levels. These contributing factors affect the Insurance Policies which were sold, in particular the Life, Health and Annuity policies.

In April of this year, Sagicor Life Inc and Sagicor General Insurance Inc acquired the Health Insurance and Property Portfolios of British American Insurance (BAICO) in Barbados. In an update on the proposal to acquire PEMCO operations in the US, made in February, a hearing is set for September 13 to review the proposed request. AM Best affirmed a stable outlook, an issuer credit rating of "bbb-" and a debt rating of "bbb" for SFC.

At a price of $7.58, SFC is trading at a Market to Book of 0.58 times, one of the cheapest in the Non-Banking Finance Sector and is trading at a discount relative to its five year average Market to Book of 1 time (See Exhibit 1). The dividend yield for the stock remains relatively attractive at 3.38 per cent above its five year average of 2.8 per cent. BOURSE recommends a BUY in the medium term.

AnsaMcAl Company Limited

Ansa McAl Company Limited (AMCL) reported a 14.6 per cent fall off in Earnings per share (EPS) to $1.40 from $1.64 in HY 2011. An interim dividend of $0.30 was declared and will be paid November 9, 2012, to all shareholders on the Register of members as at October 29-31.

The period's results were impacted by an underperformance due to non-recurring provisions of approximately $45m in the Financial Services Company in Barbados and also the addition of Restructuring Costs for the Group's Barbados distribution business. Also, the Manufacturing Sector in Trinidad was significantly affected by the Trinidad Cement Limited labour strike.

The Group's Revenue increased 8.5 per cent, but because of increased provisions, Operating Profit suffered an 11.9 per cent decline to $414.1m. This gave rise to a deterioration of Operating Profit Margin which declined from 18.9 per cent to 15.35 per cent. Share of Results from Associates and Joint Ventures experienced a 7.5 per cent decline. More encouraging however, AMCL benefited from a 3.7 per cent decline in Finance Costs, a consequence of the $700m in debt (a RBC bond) that was repaid in Q2.

Overall Profit before Tax (PBT) dropped by 12.9 per cent, all segments reporting declines with the exception of Automotive, Trading and Distribution. (See Exhibit 2)

The 8.1 per cent fall in PBT from the Manufacturing, packing and brewing segment is a product of the shortage of cement and the slowing down of construction activities. With the advent of Trinidad Cement Limited returning to full production and the end of an ongoing strike, it is expected that this trend will not persist.

Within the Group's Insurance and Financial Services segment, the positive growth in performance was reflective of a 5.7 per cent increase in EPS recorded by Ansa Merchant Bank Limited.

At a current price of $62.92 AMCL is trading at a trailing P/E of 19.4 times. The dividend yield on the stock stands at 1.75 per cent. BOURSE recommends a HOLD on the stock.

ANSA Merchant Bank Limited (AMBL)

ANSA Merchant Bank Limited (AMBL) reported a Basic Earnings per Share (EPS) of $0.93 for the six months ended June 30, 2012 which is 5.7 per cent higher than the Basic EPS of $0.88 for the corresponding period last year. The Group's EPS has improved from the sharp decline in HY 2010 maintaining this positive upward trend in half year 2012. (as shown in Exhibit 3). An interim dividend of $0.15 was declared, which is consistent with the interim dividend that was paid for the same period last year.

For the period under review, AMBL's Income and Expenses increased, but only marginally, by 3.7 per cent and 3.9 per cent respectively, the net result of which boosted Operating profits by 3.2 per cent to $102.2m.

Despite sluggish economic activity for the first half of 2012, AMBL's Profit after tax improved by 7.2 per cent to $79.3m. This performance can be attributed to the positive contribution of the Insurance business segment due to more efficient management of claims cost and expenses, specifically that of their General Insurance company.

Life Insurance improved because of initiatives to reduce exposure in International Investments.

AMBL's strategy going forward is the acquisition of the Barbados-based Consolidated Finance Co Limited (CFC) by the fourth quarter of 2012, an initiative which is expected to create synergies for the company. Overall, AMBL and its subsidiaries have maintained a healthy balance sheet position and have remained competitive as a non-bank financial institution against the backdrop of a weak economy.

At a current price of $36.10 AMBL's stock is trading at a trailing P/E of 16.2 times, compared to the 3 year average of 14.8. A 2.4 per cent Dividend yield is being earned on the stock. In light of the aforementioned, Bourse recommends a HOLD on the AMBL stock.