- This was made possible by the sound levels of business performance recorded by SURA Asset Management and Suramericana as well as revenues from associates such as Bancolombia and Protección and higher returns on investment portfolios.
- Operating income rose by 13.3% to COP 21.9 trillion (USD 6.679 million), which was higher than the increase in consolidated expense which rose by 12.3%.
- A proposal was approved for a total dividend payment of COP 634 per share, which is 15.3% higher than that paid out last year, which shall be submitted for the consideration of the General Assembly of Shareholders at their Annual Meeting to be held next March 27.
Grupo SURA reported its consolidated financial results for 2019, which show the organic growth of SURA's insurance, pension, savings and investment lines of business throughout the region, along with the sound management of our subsidiaries' own investment portfolios together with the benefits of the Group’ s well-diversified sources of income. All this produced a historical net income of COP 1.72 trillion (USD 523.8 million*) for a year-on-year growth of 27.9%.
Also, worth noting is that 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.
"We are very pleased with these results, which shall allow us to provide greater added value to our shareholders and society as a whole. This also comes as a consequence of the progress made with bringing to fruition our strategic priorities of business transformation, strengthening our financial position, extending our investment capacity, as well as creating greater added value for more than 38.4 million SURA clients in Latin America", stated David Bojanini, Chief Executive Officer of Grupo SURA.
Operating revenues increased by 13.3%, for a total of COP 21.9 trillion (USD 6,679 million) thanks to the growths obtained by Suramericana in its Life (22.2%), Property and Casualty (4%) and Health Care (24%) insurance segments, as well as SURA Asset Management with its Mandatory Pensions (8.3%) and Voluntary Savings (17.7%) lines of business. Contributing factors include higher returns on investment, as a result of the current recovery seen on the capital markets, higher revenues obtained by Grupo SURA from associates via the equity method, particularly Bancolombia and Protección.
On the other hand, operating expenses rose by 12.3% to COP 18.9 trillion (USD 5,758.7 million) which represented a slower pace than for operating income, this in keeping with our efficiency and cost control efforts, despite the increase in the claims rate. All this led to a 19.5% growth in consolidated operating income, which closed at COP 3 trillion (USD 920.4 million), with the aforementioned net income figure rising by 27.9% compared to year-end 2018.
Finally, there was the 7% decline in Grupo SURA's individual debt compared to year-end 2018, after amortizing a total of COP 380,000 million. It is worth noting that the Group’s indebtedness has been reduced by COP 853,698 million since 2017, which is in keeping with our strategic priority of strengthening our financial position.
In the light of the above, as well as the non-strategic divestments carried during the course of last year, assets declined by 2.9% to stand at COP 69 trillion (USD 21,067 million) along with a 7.3% drop in liabilities, amounting to COP 40.9 trillion (USD 12,495.4 million), while Shareholders' Equity rose by 4.4%, ending up at COP 28.1 trillion (USD 8,571.8 million), this driven by the increase in consolidated net income.
SURA Asset Management (an expert player in pensions, savings and investment) contributed a net income of COP 724,989 million (USD 221 million) to the Group’s overall figure, for a year-on-year growth of 95.4%, after posting a year-on-year increase of 35.1% in operating income. At year-end 2019, this subsidiary posted a growth of 15.5% in Assets under Management (AuM) totaling COP 483.5 trillion (USD 147,536 million**), while its client base reached 20.5 million, 3.7% more than at year-end 2018.
"2019 was an important year for more than 20 million of our clients in terms of seeing their savings grow. We have seen a significant recovery with the investment market that in turn is allowing us to provide much higher rates of return. We continue with our task of creating more benefits for our clients, so that they may maximize their savings and plan for their future", stated Ignacio Calle, Chief Executive Officer of SURA Asset Management.
On the other hand, Suramericana, the Group´s insurance and risk and trend management subsidiary, produced a net income of COP 17,1 trillion (USD 5.224 million) for a year-on-year growth of 13.5%. A positive level of business performance —17.9 million clients in nine countries— and a firm control over expenses partly offset the increase in the retained claims rate, due to external situations such as: high inflation and devaluation in Argentina; the impact of events relating to a wave of protests that took place in Chile; a significant increase in the membership base of our Health Care Provider, EPS SURA (Colombia), due to additional users migrating from other Health Care Providers currently being wound up; as well as the VAT tax levied on life insurance commissions. Consequently, net income came to COP 390.327 million (USD 119 million) which was 25.6% less than for 2018.
"Over the last year there were specific factors impacting our results, but even so we managed to go 2% above our budgeted revenue figure and, more importantly, we made great strides in consolidating ourselves as a superior trend and risk management firm by delivering new capabilities, in the same way as we are already doing with our Sura Enterprise program (Empresas SURA in Spanish), the purpose of which is to encourage greater competitiveness amongst our SME clients throughout the region"¸ stated Gonzalo Pérez, Chief Executive Officer of Suramericana.
The Board of Directors at a meeting held on February 27 approved a proposal for a total dividend payment of COP 634 per share on a total of 489,037,260 ordinary shares and 112,940,288 preferred shares which shall be submitted for the consideration of the General Assembly of Shareholders at their Annual Meeting to be held next March 27.
This proposal includes an ordinary dividend of COP 583 and an extraordinary dividend of COP 51, for a total increase of 15.3% compared to 2019. The ordinary dividend is expected to be paid out in four equal installments in April, July and October 2020, as well as in January 2021; the extraordinary dividend would be paid in a single installment in July of this year.
*Figures taken from the Statement of Comprehensive Results, based on the average exchange rate for 2019: COP 3.281.09 per US dollar
* *Figures taken from the Statement of Financial Position based on the exchange rate corresponding to year-end 2019: COP 3.277.14 per US dollar